The contracting industry has historically been relatively resilient to economic downturns. Since the economy is constantly fluctuating, businesses must adapt to survive. A slower economy can mean a decrease in consumer spending and for businesses this means less revenue. However, there are ways to cope with a slower economy and even thrive in these conditions.
Many homeowners see their homes not only as a place to live but also as a financial investment, and they are willing to invest money in home improvement projects to increase the value of that investment. However, the current economic climate, brought on by the COVID-19 pandemic, has created several challenges for contracting companies.
One major challenge has been the disruption to the supply chain. The pandemic has led to widespread shortages of building materials as well as delays in the delivery of those materials. This has led to increased costs and longer wait times for customers.
Despite these challenges, there are some positive signs for the home improvement industry in the current economic climate. One positive trend has been the increased popularity of home improvement projects because of the pandemic. With many people spending more time at home, they’ve been more likely to notice areas of their home that they’d like to improve, such as updating a kitchen or bathroom, adding a deck or patio, or finishing a basement.
Additionally, the ongoing shift towards e-commerce has led to more customers shopping for home improvement products online, which could help to boost sales for contracting companies who have invested in their online presence.
Moreover, as the economy recovers, people may start to think about spending on home improvement projects again as many people see their home as a long-term investment; they want to keep it updated, comfortable and valuable, which allows them to feel secure in uncertain times.
Some specific areas of the home improvement industry that are likely to see growth include projects related to home offices and remote learning, as well as outdoor living spaces such as decks and patios. With more people working from home, the demand for home office space as well as areas for remote learning is likely to increase.
Additionally, with many people spending more time at home, outdoor living spaces have become more important as a way to enjoy time outside without having to leave the safety of home.
Here are some strategies businesses can use to deal with a slower economy in 2023:
- Cost cutting — One of the most obvious ways to deal with a slower economy is to reduce costs. This can include cutting back on unnecessary expenses, such as travel or office supplies, or negotiating better rates with suppliers.
- Diversifying product or service offerings — Another way to deal with a slower economy is to diversify product or service offerings. This can mean expanding into new markets or offering new products and services that appeal to a different customer base. By diversifying, businesses can reduce their dependence on one market and decrease the risk of a slowdown in that specific market.
- Emphasizing value — In a slower economy, consumers may be more cautious about their spending, so emphasizing value can be a good strategy for businesses. This can mean offering special deals or discounts, providing high-quality products or services at a fair price, or highlighting the benefits of a product or service that set it apart from competitors. By emphasizing value, businesses can help consumers see the value in what they have to offer and entice them to spend money.
- Building strong relationships with customers — Building strong relationships with customers can be crucial during a slower economy. This means going the extra mile to provide excellent customer service, being responsive to customer complaints and feedback, and staying in touch with customers through regular communication. By building strong relationships, businesses can create loyal customers who are more likely to continue spending money, even during tough economic times.
- Investing in digital marketing — Investing in digital marketing can be a smart strategy during a slower economy. This can include updating your website, launching a social media campaign, or advertising online. Digital marketing is relatively low-cost and can help businesses reach a large audience, even on a tight budget. By investing in digital marketing, businesses can also track their return on investment and adjust their strategy accordingly.
- Prioritizing employee wellness — Employee wellness is more important than ever during a slower economy, as it can have a direct impact on the health of the business. By prioritizing employee wellness, businesses can reduce employee turnover, increase productivity, and promote a positive work environment. This can include offering mental health support and benefits, encouraging regular breaks, and promoting work-life balance.
- Seeking out government assistance — Finally, businesses can seek out government assistance during a slower economy. This can include loan programs, grants and tax incentives that can help businesses stay afloat during difficult times. By seeking out government assistance, businesses can get the help they need to weather an economic storm and come out stronger on the other side.
The home improvement industry is not immune to the effects of a slowing economy, but it is expected to continue to remain relatively stable and resilient even in the current economic climate. A slower economy can be difficult for businesses, but with the right strategies in place, they can survive and even thrive. QR
Scott Siegal is the owner of Maggio Roofing in Washington, D.C., and also owns the Certified Contractors Network. You can learn more about CCN by going to the website contractors.net.