What should independent laundries be doing right now to prepare for when our country open backs up for business? The answer may surprise you. What do you think the strategy is for national companies, and what are they doing to prepare?
Performance Matters team members have more than 200 years of experience in the industry, with some of the team spending time with the nationals. If the markets are any indication, the nationals are not in a position financially to go into acquisition mode. Most have seen their stock value drop by as much as 50%. They have the capital to retain much of the workforce, and will retain most of the sales force. They will keep the best ones for sure. Most likely right now they are planning strategies to begin aggressively taking your customers away so they do not have to acquire independents to grow and please their shareholders. They have to replace the revenue and profit losses caused by Covid 19 and there is little doubt what their tactics will be:
- Price Increases for current customers. Most likely before they service the customer again there will be increases across the board. They will look to take advantage of customers that have other focus areas while starting back up.
- They may add additional lines of fees/charges they justify due to this crisis.
- Sales teams will target segments most affected by Covid 19 with aggressive pricing. As they typically do, the words used by the salesperson may not always match what is in the fine print.
- They may tell your customer that due to the lapse in service that they are no longer bound by your contract. You may not have them under an agreement.
- They will aggressively pursue A/R during and especially once things are back open. Especially if companies are getting government assistance to cover expenses.
- They will use your invoice against you. They will portray your unit rates as high.
- They may tell your customers that many small businesses are going out of business or that you have gone out of business.
What can you do to prepare?
- Hold the line on pricing. This is a time to build trust and help your clients stay in business and develop trust.
- Communicate to your team what your competition is doing to take market share. Train your sales and service team to educate your customers.
- Leverage the relationship you and your Route Rep have with the clients. You’ve developed even more good will with your customer during this crisis.
- Be sure to talk with your customer before they get the pitch from the nationals. Assure them the level of service they have always gotten will still be there.
- Determine your A/R strategy. It is possible that these companies will receive federal grants to cover expenses, so it may make sense to continue billing, but work with customers for the benefit of both.
- Use this time to train sales and service team on invoice charges and definitions. Use this time to clean up invoices per account. You may find some additional revenue there.
- Communicate, communicate, communicate. Be there for your customer during this and let them know you’ll be there for them after.
One of the nationals recently announced 2019 was their 48th year out of the past 50 that they set record revenues and net income. They paid shareholder dividends totaling more than 220 million dollars. No doubt there will be intense pressure internally for the nationals to recover quickly and recover losses. They know that most small businesses are likely to go into a defensive mode to cut expenses and survive. They will take this opportunity to strategize and train their people to take your business. Most indicators are that the recovery from this downturn will be a “V” shaped recovery, which is to say there will be much to do in a short period of time. Explore federal grants, SBA, and unemployment assistance to lighten the burden on small business (you and your customers) to help us all get through this while retaining our best people and our customer base. Here are a few more tips to survive and even thrive:
- Retain your best people and re-purpose them for training, communication with customers, servicing open customers, and preparation for the recovery phase.
- Use the opportunity to extend agreements. If you give up something, get something.
- Use all methods to communicate: personal, e-mail, social media, and networking.
- Look for additional sources of revenue for now for the customers remaining open or even expanding. There are segments of business that cannot hire fast enough (healthcare, groceries, delivery, home improvement, and more).
- Stay current on the many changes and opportunities from local, state, and federal government. It’s changing almost daily.
- Network within industry to see what like-minded laundries are doing. Performance Matters is offering webinars, and support, as are others. Consult your cost groups. Check in on your friends in the industry. These can be tough times.
- Make a plan and be prepared to adjust it based on the ever-changing environment.
We are working each day with Owners and Operators who are looking for the best path forward. So, as leaders in a battle zone continually gather all available intel so informed decisions can be made, we hope some of these tips attached will help.
That said, if you are concerned with the speed of your revenue returning… if you are concerned you may not have the best battle plan, we are here and can help. If you haven’t already had a Strategy call with our team and you’d like to just let me know. Different times call for different decisions.
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