The consolidators have come and gone in many cities. Now many of the businesses that were small to medium size, people-oriented service companies are part of a corporate conglomerate. They have a recognizable name and promote the fact that they are part of a nationwide network of service companies with a standardized look and procedures. And that's OK, because, if you are not one of the consolidated businesses, there is now a market niche left wide open for you.

Not all customers are eager to call large, national service companies. Some prefer to deal with local service companies, where they feel they will be able to deal with the company on a more equal footing. They are more comfortable calling a local company, particularly one who they trust and have dealt with before.

Your Market Position

You have heard me speak about or read my past columns about selecting a market position and sticking with that identification. One such market position is the high-quality, locally-owned service company. Instead of taking a "me too" attitude and agreeing to match consolidated service companies' claims, set your own standards and claims - ones they can't match.

Obviously, national firms can't promote the fact that they are locally owned. You can identify other advantages you offer that the competition can't, too. Your unique market position will answer the question customers always want to know about companies they deal with: "Who are you?"

You are the local, high-quality, full-service, or 60-minute response, or 24-hour availability, or most-friendly service company. That's who you are.

Coinciding with the appearance of national, consolidated companies, is another market advantage in your favor, although it may not seem so at first glance. We are facing an economic downturn, maybe not a severe one, but a downturn nonetheless. We see news stories of massive layoffs and consistent news that there are signs that the economy is slowing down.

People avoid buying new household items and fixtures during times like this and prefer to have the old ones fixed instead. That translates into more service business. So it's a good time to build your business - and your profits. However, it is also a time to be careful about how you do it.

Small & Nimble

Since you are smaller than a national concern, you can move fast and take steps to control your business.

Downturns are the times that put all businesses to the test, really determining how efficiently you are running your business. I have been through three major economic slumps and got better at adapting my practices so I could succeed during each one. Fast responses to changing markets seem to be the key.

In the first recession, I was slow to cut discretionary equipment purchases and unnecessary expenses. I kept too many non-essential people on the payroll, and I paid them too much.

Then about 10 years after that, in the second economic downturn, I was in a rapid growth mode - acquiring companies and trucks and hiring technicians as fast as I could. I had to cut that growth quickly to survive.

I have never seen a company rapidly grow its way out of a declining marketplace, without preparation. When business falls off, it's time to cut expenses, and now! That action is especially important if you aren't prepared for changing conditions.

I learned to keep the structure of the business like an accordion, where it could expand and contract easily and quickly.

The last business slump came in the early-1990s. By then I was prepared. During that time, I was able to maintain business and grow by attracting displaced employees from other service companies. I had kept my cash reserves up and was in a position to negotiate very favorable deals for trucks and equipment.

At the same time, I knew customers would be looking for a company that was ready to help them save money by fixing what went wrong in their homes instead of replacing it.

The System Is The Solution

If you wait until a recession to establish good management and financial controls, it may be too late. The solution for challenging economic times is to have a system in place before the tough times arrive.

A good goal is to implement as effective a system as you can for running your business as lean as possible. I'll share some specific examples to demonstrate what I am talking about.

Many owners and managers are reluctant to delegate authority to those who work for them. Consequently, even small decisions with little potential for harm have to be delayed until the boss can make a decision.

Meanwhile, decisions are piling up and important activities are ignored until they become critical decisions. Routine decisions should be made by people who are in the best position to efficiently resolve the situation everyday, at the lowest level that is practical. (That means you may have to both trust and train your subordinates.)

The business owner should not be doing the day-to-day work of the business, but should be running it - making the strategic decisions that make the business run. The business should work for the owner, not vice versa.

The chief executive of any company, including service and repair businesses, needs to be deeply involved in some fundamental tasks. I'll give you four examples:

  • Recruiting. The CEO should be spending time recruiting the team members necessary to effectively run the business. That doesn't mean waiting until someone quits or is fired to replace them.
    By always having people in mind for positions, whether brought up from within the company or interviewed from outside the company, the company won't suffer when you need a person to do a good job. You'll be prepared for any changes that occur.

  • Training. It is always the CEO's responsibility to identify which employees, including technicians, need training to do their job properly (and training to assume more responsibility in the organization, when they are ready). Whether the owner does the training or sends the employee to a training course, good people perform their best when they are trained to do the job.
    I am not just talking about technical training either. People in the organization will need to receive training in dealing with people, the latest in customer service skills, telephone techniques and more. You have many alternatives from live training to audio/video materials and workbooks. Regardless of the means you choose, training pays dividends.

  • Motivation. No one is in a better position to keep the spirit alive. (If you have ever flown Southwest Airlines you'll know what I mean. CEO Herb Kelleher leads by motivating his people to be creative and put their personalities in the business. Hard to argue with his success.)
    To effectively motivate the people in your company, you must be motivated yourself to do the best job, to be excited about the business, and to want to excel. Your people will notice your enthusiasm and follow suit. Counsel those who have barriers to being excited about working for your company, or replace them.

  • Planning. Although it should be understood, I can't forget planning as another attribute of a successful CEO. They are the captain of the ship and set its course, through the tough times as well as the good times. Your team of people will know how confident and prepared you are for that task by your mannerisms. If you spend the time working on the business systems, instead of working in the business everyday, they will know you are the leader they want to follow. You'll be able to recruit and keep the best people.
One of the systems you will need is effective financial controls. Without timely management data you will not be able to make lightening-fast decisions and keep the company headed where you want to go.

Recognize that companies that did not participate in the consolidation movement have their market niche, too, and they can be a unique opportunity for your business. Go where the competition can't. Guide your company with quick responses to the market - by performing the functions best performed by the CEO.