Last updated on October 28th, 2022 at 03:44 pm
As the saying goes, what goes up, must come down. And with the recent heat in the economy, there are worries of a recession or slowing in the real estate market. In fact, we are seeing this throughout the United States already with several markets down 20% or more. The National Association of Realtors shows nationwide, we are down 5.9% year over year.
The question now becomes, how long is this expected to last and what should you do about it? Well, we have compiled a list of strategies based on proven results of what home inspection companies should do during a market downturn or recession.
Review Service Offerings & Adjust To Offer More Value
The first thing any home inspector should do is review their service offerings and see if you can adapt to the current market conditions. Currently, many home buyers might be skipping inspections entirely or be on tight timelines for needing a home inspector.
Here are a few ideas you can consider to offer more value and adapt to the market.
- Offer same-day inspections due to tight timelines. Consider working earlier, later, or on weekends.
- Offer walk-throughs instead of full home inspections.
- Offer post-sale home inspections.
- Market pre-listing inspections.
While these are just a few ideas, you should brainstorm as many as you can think of. Then, reach out to some trusted real estate agents, friends/family, or past clients to see if they think you are on the right track. Ultimately, if you adjust your service offerings and tailor your value to what the market needs you can set yourself up for more sales during an already tight market.
However, once you decide on how you are going to adjust to the market, you need a marketing strategy.
Here are a few ideas to help market your new service offerings and added value.
- Create pages on your website for these services and describe them in detail.
- Write a blog about the market and what your company is doing to adjust.
- Create a series on your social media accounts.
- Send mass emails to your real estate agents and clients.
- Ask to speak at a real estate office.
- Consider Google or Bing Ads.
After you put new marketing strategies in place, be sure you have plans for tracking return on investment such as using call or form tracking.
Next, let’s look into some other strategies to help during market slowdowns.
While completing home inspections might be slow, there could be opportunities with other services such as pest control, handyman services, painting, pressure washing, or insurance inspections.
While those are just a few ideas, you should pick something you know you can easily pickup or complement well with your inspection business.
However, an important aspect of this particular tip is to not let these services overtake your core inspection services. For example, if someone calls asking for a home inspection, you always need to take that over your diversified service. Otherwise, you risk giving the impression you are not as available for home inspections.
As the market tightens, other home inspection companies are going to be doing the same thing and they will “jump ship” to their new service offerings. You, however, will want to stick with home inspections because when the market rises again, your business would have gained more market share since other companies have left.
Next on our list of recommendations, is reviewing your finances.
This is possibly the most important step. You need to get a grip on your business cash flow and income statements. If you are unsure where to even start with this, reach out to someone (like an accountant) for help.
You will want to cut all unnecessary expenses and find ways to increase profit margins to give you the most breathing room possible.
If you are wondering where you should cut and how the Harvard Business Review gives the following recommendation:
Where the business opportunities are uncertain or declining, it may be time to part with brands or products that were ailing prior to the recession and are on life support now. For those that remain, companies should concentrate their marketing resources on maintaining relevance to core customers in order to sustain brands through the recession and into the recovery.Harvard Business Review
Set reminders to review your finances on a weekly basis at a quick glance and then monthly in more detail. That way, you are staying on top of your spending and seeing how revenue is adjusting month or month in real-time.
Increasing Marketing Spend
After 2008, ad spending in the U.S. dropped by 13%. Oftentimes, advertising expenses drop during recessions because fewer companies can afford to advertise. Not to mention, it’s the easiest thing to cut financially.
As home inspectors go dormant during slower periods, this is a vital time to advertise and show your core messaging since your share of voice increases dramatically.
Companies that convey trust and focus long-term during market downturns tend to have the best performance during market slowdowns.
There have been many studies, like this one, that point out the advantages of maintaining or even increasing ad budgets during a weaker economy.
Should you raise or lower prices in a recession?
Companies are going to compete on price during a recession, there’s no doubt. However, you should do whatever aligns with your branding and what is possible. For example, if you are known as the premium brand in your market do not lower prices. Instead, you can create a service offering that is known as your cheap option for a limited time. Just be sure not to market it too much so as to confuse your audience.
Should You Let Go Of Employees?
This is a tough question for sure, but we recommend looking beyond laying off employees. Laying employees off is terribly expensive, especially when looking at hiring them back on again once the market turns around. It also hurts company morale overall.
Instead, furlough employees cut hours, or adjust the pay structure around performance.
Advice From Other Home Inspectors
Diversifying your business would be helpful, but don’t do it at the expense of your inspection business. In other words, don’t give up home inspection business for handyman work. Remember, other companies will be going out of business at this time so you can gather their market share.John Shishilla, Honor Services
Have a contingency plan and increase your growth activities to gain market share.Chris Heywood, Horizon Inspect
Increase marketing/growth efforts, increase territory, we aren’t boxed in, so inspections will go on you may have to drive a little further to get them.Stephen Rager, Champion Home Inspection
As you navigate a tough market, you should review your finances, brainstorm new service offerings and added values, diversify your business, and increase marketing spending.
However, through it all, you must stay true to your core values as a company and brand messaging. Companies that focus on long-term sustained growth and focus on creating trust with consumers have the best performance.
If you need help marketing your business, WolfPack Advising offers digital marketing for home inspectors!
What are you doing during a market slowdown? Comment below!