Recession and Service Businesses

I just revised a chapter in my Psst - wanna work for yourself book (yes, everyone who bought it WILL get a free download of the new version later this month). That chapter talked about recessions and service businesses, noting that there are quite a few types of businesses that can actually flourish in economic downturns. As other businesses try to do more with less, as everyone repairs and makes do rather than buying new, service and repair businesses can do very well.

I said:




Obviously your advertising and marketing strategy would change in such a market. You'd want to stress maintenance and expertise more than shiny brand new stuff. You also need to be even more alert than usual for opportunity. In the computer field, your old RedHat 9 customer who has let maintenance lapse may not realize that you could modernize him with Fedora without him losing his "RedHat" knowledge. That old SCO customer might finally be ready to listen to your Linux pitch now because the $70,000 Windows system is completely out of reach.

Any maintenance related business will probably do well in a recession. So will security related work: alarm systems, theft prevention. Saving money for people or businesses is always popular, but becomes even more so when money is tight. Plumbing, electrical, roof repair, termite proofing and other home repair functions may get put off for a bit, but sooner or later they have to be done.

Debt collection? Of course. Health care is another expense that can only be put off so long.

Recession doesn't mean the end of business.

On the other hand.. we've never had a situation quite like this before. If all the businesses you service are closed, you have nobody to sell to. If most are closed, they get to pick and choose the services you provide from a lot of competition and there will be plenty of new competition from the pool of laid off workers.

There's something else different now: the widespread availability of low cost high speed internet access allows some service businesses to compete in places they have never competed before. That can be good for you because it increases your markets, but it also increases your competition.

That easy remote access also means that some competition who never would have succeeded in the pre-internet era may succeed today. For example, a socially inept "computer geek" might never have been able to get customers in the days when all this sort of work was done on site. The face to face interactions could be too much of a drawback. Today, there's often no need for any social interaction, so these people can compete. That's good if you are that socially inept computer geek, but bad if part of your success came from social skills and you are now competing where those skills don't matter.

So where are we? I honestly don't know. I've been working for myself for more than a quarter century but this kind of mess is as new to me as it is to someone in their twenties: neither of us has any life experience to draw from. I feel confident that I will survive, but I'm not sure how tight and scary things might get. We've never been here before.

The population has never been like this before either. We have a tremendous bulge of "baby boomers", many of whom are at or near retirement age. If they (we, I'm in that group) do retire, that lessens competition (while adding to Social Security and health care costs, of course). If they can't afford to retire, they'll remain part of the pool competing against you - or are likely to vote to increase social programs and raise your taxes if they can't find work!.

Other problems: we're entangled in foreign wars. Whether you think these campaigns are necessary or foolish doesn't really matter: they are costing us a lot of money. Again, that can be good for some types of businesses but the overall point here is that there are an awful lot of stress points today that are very different from anything we've experienced before. It's too complex, too confusing.

My best advice is to stay alert, be flexible, be knowledgeable. Don't blindly trust "experts" because nobody is expert at what we have now.

Knowledge is your best defense in a changing world. The more you know, the more chance you have of landing on your feet when the world suddenly heaves and tosses us into the air.

Recently several sites I read have reviewed The Millionaire Next Door by Thomas J. Stanley and reported his claim that "the average millionaire reads one non-fiction book a month". Some people laugh at that and admit they haven't read a non-fiction book since college. My reaction was "Only one?".

Knowledge is critical. Those who survive bad times are those who are prepared and who work hard.

I don't mean that there's no time for fiction, no time for play. You need a break now and then, but you do need to be very aware of priorities. For example, I was really annoyed that a reporter at yesterday's Presidential press conference asked a question about the steroid use admissions of some baseball player. THAT WAS AN INAPPROPRIATE AND MORONIC QUESTION TO BE ASKING THE PRESIDENT AT THIS TIME. It wasted everyone's time because it has nothing to do with what's really important right now. That reporter isn't seeing reality. I can certainly understand that these issues can be important to the greater fabric of society - drug use by sports figures isn't a great example for our youth. But it's of far lesser importance than our economic crisis right now.

Oh well, I dislike team sports anyway, so I'm probably overreacting. The important thing is that if you aren't continuing to educate yourself (and no, the sports pages are not educational!) you may land upside down and break your neck. Take a look at The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read for example - that's a good jump start if you haven't been reading.

I strongly suggest reading a lot of history, too. "Those who cannot study history, are doomed to repeat it." - George Santayana. We've had far too much "repetition". Mark Twain observed that "History doesn't repeat itself, but it does rhyme" and rhymes are exactly what you need to be listening for.

There's always opportunity - you just have to be able to see it. The more knowledge you carry in that stuff between your ears, the more chance that you will recognize opportunity when it comes.



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