8 Smart Ways To Recession Proof Your Service Business

by | January 1, 2023

Recently, Jamie Dimon, CEO of JPMorgan Chase shot a cannon over the bow when he said “Brace yourselves – there is an economic hurricane heading our way and the only question is will it be a small one or will it be another super Sandy.”

While the subject is debated as to whether we will either go into a recession or sidestep it altogether, it is clear we are in one off the most complex economies and markets that we have seen in a long time. Mr. Dimon believes we have a 65% chance of going into a full blown recession primarily based on the highest inflation in 40 years which will require a significant response by the Fed, the continued effects of supply chain interruptions and the Ukraine war.

The question for all service professionals (lawyers, accountants, bankers, consultants, RE brokers, etc…) who provide professional services – are you prepared to withstand a recession and do you have the necessary parts in play to not only survive but to thrive?

Having worked with professionals for over 25 years, I have seen what occurs when a recession hits and the impact it has on the professionals who are unprepared and depend on referrals from other professionals for the preponderance of their business.

Typically, as the pie for referrals shrinks due to a contracting economy, these same professionals significantly step up their networking activities. Why? The pipeline is drying up and there is not a plan in place to fill it other than to put themselves out there networking as the proverbial “fly paper” to see if they can get anything to stick.

None of us has a crystal ball and projecting when a recession will occur is difficult at best. But, we are definitely seeing some telling signs that it is approaching as Mr. Dimon suggests. There is ample time to prepare yourself and your business so that you continue to thrive in your specialty area.

Here are 8 smart ways to recession-proof your service business:

1. Clearly articulate the utility of your business

You must be able to clearly and concisely explain to others what SERVICE you provide and you who best serve. We all want to work with people who know where they are going and how they will get there. There is no time for ambiguity.

2. Communicate a good value proposition

One of the main considerations in choosing a referral partner is the perceived value he or she offers to clients that are referred. Make sure you offer what their clients need and want. Let them know how you stand out from your competition and that you are best option. Be clear that you can deliver on your promises and that you have the ability to perform. There is a big difference in being just a “technician” and someone who brings value by understanding the needs and desires of a client and what needs to be done to meet those needs and desires.

3. Be Your Authentic Self

 In any economic environment people want to do business with with people who are real. Those who stand for nothing, or try to be someone they are not, will find it very difficult to gain referral partners particularly in a recession.

4. Do not just focus on networking 

 Once a recession hits it is very easy to get caught up in the vortex of networking especially if you tell yourself that more is better. The fact is that networking – at least the way many people do it – yields very little business if any. In a contracting economy, service professionals find themselves in a completely different macro-economic environment. Where it was once easy to find clients, the new reality is that there are now more service professionals in all disciplines and a shrinking pie made up of fewer clients. This is a stark contrast to previous years of prosperity, where it seemed good clients could be found everywhere. The game changer makes one thing clear: to be of value to their firm, service professionals must not only do quality work, but also must drive revenue by bringing in new clients.

5. It is important to be able to differentiate yourself

 If you cannot give people a reason to choose you over your competition…why should they? In a highly competitive environment you’ll just come across as another “me too”. Likewise, it’s critical that you build your brand in the mind of someone who’s in a position to send their clients to you. Your brand which is your name, and everything it stands for, must be distinctive in the mind of the referrer. It’s critical to your success to build a strong presence in specific markets and market segments. It is not in your interest to try to be all things to all people with the hopes that someone will send any kind of a referral.

6. It is about the quality of your relationships not the quantity of acquaintances

Some professionals measure their success by the number of names they have in their contact management system and not by the depth of their relationships with others. Focusing on quantity rather than quality will always impede one’s ability to create the necessary mindshare needed to get the referrals you want. This is especially true in a contracting economy where there are too many professionals chasing too few client referrals. Referral partnerships that are in place where there is a commitment to help each other with a significant event gives both partners a higher degree of probability in hitting their numbers.

7. Have a plan in place

Those who go into a recession with no plan other than winging it are using hope as their primary strategy. Many people begin a new year by telling themselves they need to get out and repeat what they did last year to see if they can get some referrals. That is not a plan. One of the key benefits of having a plan is that it gives you a direction and blueprint for the results you want to achieve. It is particularly helpful in a recession since it will help you focus on the clients and income you want. By following your plan you will not waste time doing things that won’t get you where you want to be.

8. A bonafide distribution system is a must

 Every good business depends on a distribution system to get its products or services into the hands of those who will benefit from them. No business can afford to be without having a distribution system it can count on, especially in a recession. As a service professional your distribution system is critical to your success. We call it your “relationship system”. Having 10 to 15 referral partnerships in place who are looking out for you as you are for them, exponentially increases the probability of getting the results you want.

You are the captain of your ship….

 

Economic cycles come and go. For the last 10 years we have enjoyed a level of prosperity and for most professionals referrals have been plenty. Now that It appears that the economy may very well go into a recession, success can still be yours if you have a plan and execute effectively.

To help you, we have developed a mobile app called “Relpip” that will help you create the referral partnerships you need in a recessionary environment. It is based on the very successful “ProGrowth Relationship System” that has helped professionals build winning businesses over the last 25 years.

Our goal is to build a unique community of professionals throughout the U.S. who are like you and understand the benefits of a referral partnership over networking acquaintances. Please checkout our informational site at https://relpip.com and then download the Relpip app in the Apple App Store or the Google play store. Your first referral partnership is within your reach!

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