2020 has certainly proven to be an eventful year. Aside from a global health pandemic, national economic shutdown, social unrest, and a heated presidential election, the events of this year have wreaked havoc on the emotional well-being of most every American. We saw Main Street shut down in the blink of an eye. Professional, collegiate, and local sports totally disrupted in almost every way imaginable. And educational institutions completely reengineered in a matter of months. In retrospect, 2020 has been as close to a cataclysmic event for modern day society as we may get. Or hopefully get, as it’s not over yet!
Despite an economic shutdown, a stock market crash, record unemployment, and a virus that seems to have dominated the headlines of every media outlet on the planet, business continues. In the restoration and damage repair industry, not only is it continuing, a case can be made that it is flourishing for companies that were even moderately well-positioned and properly managed.
In my previous article, Pandemic-Proof Your Business, I explored four ways small business owners can position their company and pandemic-proof their business. Amidst the observation and testing of this theory in real life, we can conclude there are 5 truths which have now been proven about the continuity and growth of business in a time of significant disruption.
Truth #1 – Cash is still King
How do you save a country from economic ruin when you tell 330 million people to all stay at home and not travel, go out to eat, get their hair cut, attend social events, or many of the other thousands of ways necessary for the life cycle of a dollar to turn? Simple. You dump a few trillion dollars in cash into the marketplace.
How can you explain a >5% national increase in real estate values AND historically low interest rates despite the highest unemployment since the great depression? Simple. There is plenty of cash in the marketplace and people are willing to spend it.
Cash has sustained and is driving the United States economy in 2020. It is the fuel of consumer spending, real estate transactions, auto sales, home improvement projects, and much more. It is creating a backlog of demand that is displacing other areas of spending which were lost, such as food service, entertainment, travel, and hospitality.
The U.S. Federal Reserve and the SBA solidified the King’s rule with the PPP and EIDL loans by giving even well-positioned companies more cash. While a portion of this money was used to ward off even higher unemployment figures, we saw many companies use their supplemental income for reinvestment, training, new technology, and other prudent ways to grow their business. This, coupled with debt reduction and restructuring strategies, enabled contractors in the restoration industry to reap the benefits of yet another catastrophe.
Truth #2 – Business development efforts are essential
While some restorers have viewed the events of 2020 as “Corona-cation,” savvy ones rolled up their sleeves and put the hammer down on business development efforts. Not being able to do route stops, BNI meetings, or chamber of commerce events was not about to stop these folks from continuing to promote their services. The results were consistent with Grant Cardone’s 10X Rule mentioned in my last article. Effort = Result. It’s that simple.
The activities looked different, of course, and many were very creative. (Even an operations guy will give credit where credit is due.) After all, how can you not appreciate a virtual happy hour with clients, a video-recorded cold call, or my personal favorite, Zoom meetings to debrief a recently completed project held live from the sales rep’s patio or kitchen table. Regardless of what they looked like, these alternative points of contact increased among successful members of the restoration community and filled the gaps left by the restrictions of face-to-face activities.
Interestingly enough, the greatest return did not come from new business. Despite consumers’ ridiculous amount of online activity, restorers saw the best ROI from existing referral relationships with an increase in business from familiar sources. Perhaps this speaks to brand loyalty or trust—both of which increased commensurate to a company’s ability to stay ahead of CDC and government restrictions by positively promoting service delivery in safe and healthy ways. Still others capitalized on the opportunities of community involvement by helping those struggling during the pandemic. The end result from all of this extra effort was a solid backlog of work for those who put their best foot forward.
Truth #3 – Lean and scalable operations always prevail
There is nothing more effective at exposing the ugly warts of an operation than a global pandemic! Unbalanced, top-heavy, inefficient, or otherwise inflexible service sector companies have really taken a beating in 2020. Far be it from me to pass judgment on these companies. It would be more productive to focus on what was learned and proven effective from the companies who have excelled this year.
The greatest movement to capture the essence of lean and scalable operations was the move to virtual. The entire world embraced this shift in record time. Big corporate offices emptied, schools went online, healthcare and other professional services shifted to virtual appointments. Even restorers effectively moved their administrative, sales, and management positions out of the office and proved to the world that people are just as effective, if not more effective, working remotely than in an office. Not only was this move economical, it is also sustainable and is here to stay.
All lean principles are based on the theory of waste reduction. While most of the country cut discretionary spending for at least a three-month time span between March and May, so did businesses without losing a step in production. Many employed the strategies outlined in my previous article with amazing results. Many were also able to shift labor and other resources to service lines that have remained profitable all year. This put a bold exclamation point on the importance of diversification of services. Being able to shift gears quickly with cross-trained employees and flexible work schedules gave nimble contractors a significant advantage over competitors who were of the one-trick pony variety.
Then there is the issue of labor. As if the shortage of tradesmen wasn’t bad enough before, the world of COVID-19 only made things worse. However, like I always tell my kids who complain about playing on poor field conditions, the other team is playing on the same field too, so deal with it! Resource management, particularly labor and subtrades, isn’t about your ability to improve the field; it’s about your ability to put the right resources on the right projects at the right time. The companies who have mastered this shell game in 2020 are coming out as winners.
Truth #4 – There is no substitute for hard work
From the moment we learned about the impact of COVID-19 on individuals with compromised health conditions to the countless complaints of employees not wanting to return to work because they were making more money on unemployment, I have been searching for the correct word to accurately describe an event that exacerbates the gap between the strong and weak, successful and unsuccessful, or dare I say, winners and losers. While I’m still searching for an appropriate term, I can accurately describe the 2020 pandemic as a watershed event that has divided the world based not on sex, race, religion, or politics but based on Darwin’s theory of natural selection and survival of the fittest.
Since I’m not nearly qualified enough to discuss the finer points of biological evolution, we’ll stay focused on the business impacts and the fundamental principles of work ethic. The successful survivors of the 2020 pandemic have not played victim to government-mandated shutdowns. They have not rolled over and used COVID-19 as an excuse for shrinking pipelines or lackluster performance. They have buckled down, adapted to an ever-changing environment, and worked very hard to widen the gap between themselves and those who have not been willing to work for it.
There is no substitute for hard work. Whether in times of business disruption or global health crises, results are always commensurate to effort and those who work for them will be rewarded. The critics may call them crooked and the naïve may call them lucky. Regardless of how you look at it, the winners in 2020 have worked their tails off to maintain market position and ensure the survival and continuity of their business.
Truth #5 – Change is inevitable
The first book that a boss ever bought for me was Spencer Johnson’s Who Moved My Cheese. This fabled classic is quite possibly the most influential piece ever written about change. It captures the essence of the challenges we all face in dealing with change and the adaptations necessary to embrace and overcome it. The book is a classic example that summarizes 2020 quite well.
Just as in life, change in business is constant and inevitable. The rules in business are always in a state of flux. Government regulations, tax laws, customer preferences, technology, resources, and countless other elements that shape and influence the field of play all evolve at a rapid pace. However, the fundamentals of business remain the same. Focus, discipline, and perseverance are all required tools of the trade in the field of restoration and any other business. Winners understand this.
The businesses who come out on top in 2020 will not be the ones that cheated the system, possessed the most superior technology, or invented some “secret sauce.” They will be the ones who adapted to the changes in their environment while maintaining respect for the fundamentals of business. They are the ones who embrace change, not fight it.
Perhaps it’s fitting that I’m writing this article on the 19th anniversary of 9/11. Not just from a patriotic sense, but because it is known by many as “the day the world changed forever.” Personally, 9/11 was the catalyst for my career in the restoration industry. Had it not been for that day, I might still be selling building materials to contractors or perhaps even building homes myself. Instead, I was forced to look for opportunities on the new field of play. So far, it has worked out pretty well for me.
Many of you reading this will now view 2020 as another event that “changed the world forever.” The road ahead will be filled with many challenges, but it will also be abundant with opportunities. Most everything we hypothesize about continuity in life and business is playing out right before our eyes. The truths are evident. Know them, understand them, and use them to build a better business for many years to come.