How to find a $ niche, in a down market?
Many of us have been through two or more complete economic cycles during our business lives in the trades. Seems like a good time to share some experiences on how we turned lemons into lemonade during the down periods.
Did you keep doing the same kind of work?
or…Did you expand the types of work you took on?
or…Did you narrow your focus to one specialty?
Did you go from contractor to sub? or visa versa?
Did you learn a new skill set? On the fly? From someone else?
Did you increase your radius of travel?
What other avenues did you explore?
How did your new ideas work out in practice? What do you believe was behind your success or failure? Honestly.
How did these changes effect your business strategy when the economy rebounded?
BTW, I’ve been retired from contracting for a few years so these questions and your advice are meant for others, who may be going through the down cycle for the first time and can benefit from having someone older propose a few good hypothetical questions.
Edited 9/3/2009 10:53 am by Hudson Valley Carpenter
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Good, being able to do what was in demand at the time was the reason behind success, and I am defining success as not starving. I guess what I am saying is that I felt forced in certain directions and made the best of it.
I am always eager to learn new things, add to skillsets, anything to make myself more marketable.
Good, being able to do what was in demand at the time was the reason behind success, and I am defining success as not starving. I guess what I am saying is that I felt forced in certain directions and made the best of it.
Sounds very familiar. I'd say willing too. Attitude has a lot to do with success, don't you agree?
Would you mind giving us an example or two of what you did to cope with changes in your economic opportunities?
Four things.
1- I've gravitated towards necessary work. What that means depends on where you are. Here, it's remodeling older houses that will always be sliding down the hill, and seismic retrofits. Not always fun, but hey.
2- Aggressively sniff out buying opportunities. I've been watching craigslist for vehicles, and trucks and trailers are not selling. KBB means nothing. I am (nicely and apologetically) making very low offers on two vehicles that have been listed for weeks. I present those offers as a starting point for the seller to leverage other offers higher. If no other offers come in, they can take mine, if they choose.
3- Trim non-investment expenses like crazy. It may seem weird to shell out tens of thousands on the one hand, and pinch pennies on the other, but that's what I'm trying to do. No buying coffee out, fewer beers, rice and beans, etc.
4- Honor existing clients. Go a little above and beyond for them. Understand that they may be freaked out right now too, and that they'll remember that you were understanding and not aggressive with them.
k
Aggressively sniff out buying opportunities.
Personal/business acquisition or re-sale for profit?
"Personal/business acquisition or re-sale for profit?"
Great question. I went in strictly looking to upgrade and expand my business vehicles. Newer truck, dumping trailer, maybe dump truck, if the right one showed up at the right price.
But I've been watching craigslist for 6 weeks or so, and there are 7 or 8 quality trucks that have been getting re-listed every week for a bit less. I'm starting to feel like truck re-selling might be profitable, if you weren't going to get caught in a credit pinch.
Re-sale for profit has absolutely crossed my mind, and I had no thought at all of doing that when I started looking.
I don't see people plunking down $30-$40k for the huge brand new Toys any time soon. Maybe they'd buy a 4 yr. old one with 70k mi. instead.
I could see buying every 3-9 year old Tundra with fewer than 100k mi. on craigslist in my area, and holding them for a while. But I'm afraid that if I cleared out the existing craigslist stock, a bunch more guys who've been holding back might list. I could float the costs for a while, but I don't know if that's a game I really want to play.
Still, it has crossed my mind. I think you could get most of the trucks I've been looking at for %80 of KBB value. There's a significant margin between what dealers are asking for the trade-ins and what private parties are able (or not able, more to the point) to get.
KFC Used Trucks? Maybe. Probably not.
k
Probably not.
I can see buying one or two which are still under warranty at 20% or more below KBB wholesale prices, on spec. But it's still risky in my book, unless you have a use for them.
I've always been intrigued by the "buy low, sell high" captalist ideal but I've usually gotten bit by what happens between the buying and the selling because I didn't really understand that particular market. Kind of like learning a new card game with "friends" with your money already invested in chips. Tends to diminish the fun and the profit.
Yeah, I agree. I don't think I want to learn an entire new game with my remaining capital cushion right now. I think I'll patiently acquire a couple of vehicles for the company, at least they'll have a good shot at recouping their cost. Deduction-wise, this might not be the best year to buy a couple trucks, but still, I'm really excited by what I'm seeing out there.
Even if it's a good time to buy, who's to say it'll be a good time to sell anytime soon. Still, I've gotta think there's a lot of guys hanging on with their old trucks for another year or two. Eventually, they're going to need a truck...
Can't quite shake the thought. Almost certainly won't act on it, but it's there.
k
Would you mind giving us an example or two of what you did to cope with changes in your economic opportunities?
In general terms, when housing was slow I moved to heavy industrial, upon finding myself in heavy industrial I saw a need for welders and took training classes for welding.
Going back to housing as heavy industrial became slow, I took classes in AutoCAD at the local JC and also studied to get my contractors license.
Wherever I found myself I tried to find what was needed, and tried to learn to do it. Sometimes it seems that no sooner than I became competent at something what was needed changed. Welding for example, I am amazed at all the different process and different skills required to be really good at them, and no sooner do you really feel like your in a groove when the job is over with and the next job is a different process and the curve begins again.
I'm impressed that you looked for ways to learn skills that were needed...and applied what you learned effectively.
Adapt and overcome.
When I was a teenager first exposed to home building/general contracting, a few differences between the various trades jumped out at me. Electricians and plumbers made more per hour than carpenters.
As I worked my way through my 20s and early 30s I noticed the same about people who chose one aspect of carpentry to specialize in - like foundations, framing, drywall, trim, cabinetry, stairwork, roofers...others that don't spring to mind right now.
But. I also noticed job foremen and general contractors tended to be folks who started as carpenters. All around carpenters.
So at some point I recognised that while an electrician might make more per hour, she also needs far more jobs to stay working all year, since she was on site so much less than the carpenters.
And. The other huge thing I noticed early on was carpenters could create work for themselves by building, or buying and remodelling on speculation. All those sub trades had to have someone else 's job to work on, or else hire every other part of the same speculative venture the carpenter could create.
So. While the good times roll, and the phone is ringing off the hook, and we have our choice of jobs for hire, we try to pay down debt. And aquire properties to be worked on in slower times. And reduce our cost of living and doing business in anticipation of the inevitable slowdown.
Then, when that slowdown comes, we hold on for dear life just like everyone else. But maybe we're in a slightly stronger financial position and can take advantage of opportunities that are abundant when times are hard.
Anyways. It has seemed to work so far.
You one observant SOB, JB. :-) I have to admit that, although I've noticed all those things at one time or anothr, I've never formulated anything nearly as useful from them as you have here. Thanks for the time and the attention to detail.
I'm pretty much taking on the same type of jobs I have for the past 20 yrs as a remodeling contractor. With no huge backlog of jobs (good up to Thanksgiving) I have concentrated on each and every referral I've gotten. Some have turned me down, I have refused a couple........but for the most part-I have bid and gotten what's come up.
I am living off of the good name I have developed since going on my own. Previous customers I work for now are reminded I'm always looking for new work. I haven't sent out a note yet to them all but it has crossed my mind.
The hardest thing lately is taking care of the emergencies that come up from both new and past customers. I never drop off a current job to do these service items unless there's absolutely no alternative. Usually I have just crammed more days into the work week.
And at 60, that's having a detrimental effect on my golf game.
A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
And at 60, that's having a detrimental effect on my golf game.
Man canst not live by bread alone. He must have golf. And peanut butter.
I'd raise the hourly rate on those emergency calls. That'll make 'em more DIY friendly.
Well, we don't want to lose the emergency work.........so still bump it and make that more DIMSelf friendly?
I like your style.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
OK but bump it 'til after your golf game. Or give it a stitch in time, then go play and come back to it later.
I'm an early bird golfer. So I'd play nine, leave to do the emergency job, then return for lunch and the back nine. Just needs a big pair bib overalls and, as Stan Laurel said to Ollie, "No one will be the wiser". ~!~