Episode 89: We’re in a Recession – What’s Next?

Episode 89: We’re in a Recession – What’s Next?

Brandon Schoen:
You're having a lot of issues with hiring or no. So potentially this might have a positive effect right on the fact that more people would be looking for jobs in this recession. And maybe it'd be easier to hire. I don't know, but maybe that's a potential benefit.

Brandon Condrey:
Well, it is a potential benefit. It's a potential upside. It's also a really fine line to walk. So like let's stick with our construction metaphor. They laid off the framer for the house building company. And there was no other construction jobs right now because it dried up well that person's spouse may be more likely to enter the job market if they are not. Now the downside of it, the fine edge to walk side of it is that if the recession is too hard, too great, you end up with 2008 where not only your potential employees looking for work, but your customers also lost their jobs. And now they're going to start canceling cleaning, which is why we needed to build out some system to find some leading indicators of what a local recession might look like.

Announcer:
Grow your cleaning business, make more money, have more time. This is the Profit Cleaners podcast with your host Brandon Condrey and Brandon Schoen.

Brandon Schoen:
Hey, everybody. Welcome back to another episode of the Profit Cleaners. The only place where you can learn from the top 1% of cleaning business owners from around the world to take it to the next level. And when I am your host, Brandon Schoen and I am joined by my amazing cohost in the house.

Oh, amazing. I got amazing on that one. I'm Brandon Condrey with my coffee. That's right. And together guys, we are the Profit Cleaners and we're broadcasting to you live and Sharon, some amazing, maybe not amazing. I don't know some crazy news about the economy and all the situation that we're finding ourselves in and the recession, the coming recession,

whatever it might be. So we're going to talk about that a little bit more on today's show and just some leading indicators, some possible solutions and actions we'd be taking as this all progresses. So, and then we might have something fun at the end of the show to share with you guys. So stick around as always, it's going to be a great show.

So, but yeah, let's jump in Brandon. Let's tell people, first of all, I just want to just say that you were just in California and I'm up in Colorado. And I just want to say that it's really cool that we still have a cleaning business going. We still have all these systems in place, moving everything along and we're out doing stuff.

Yeah. This is the first vacation I've taken since my daughter was born. So that's predating the cleaning company by three years. So she's the cleaning is five. So yeah, in five years I didn't really take a vacation, but yeah, it was great. We took a week off, took the kids to SeaWorld. We got a kick ass Airbnb that was two blocks from mission beach and it was awesome.

So yes, it does get better if you're in the first two years right now, and you were freaking out about how much you're getting paid and how you're never going to be able to do anything again, don't worry. Like we were there too. Yeah. Yeah. And that's the point, like I think a lot of you guys out there, including ourselves,

like we started, you started the business for a reason, right? And it was for maybe it was for more time, maybe it was for freedom. I think a lot of that word freedom encompasses a lot of what people start a business for, but the freedom to do what you want to do, where do you want to do it with who you want to do it when you want to do it,

that's what we're talking about. And so like the fact that we were able to just take this time with our family recently, I think that's huge. And I think that's just encouraging to know that after a certain amount of time, you can do that. And that's what you start a business. It's never going to be done. It's never going to be finished.

But if you build the right systems, if you put the right things in place, even in a crazy economy, the systems and things are going to keep things going and the business will keep moving forward. You got to keep innovating. And obviously you got to keep pushing things forward. You can't just lay over and roll over. Like some people will and businesses will go out of business.

But this is also an amazing time guys, because if the economy is going crazy, that means people are going to give up. And that means this is an opportunity for you to be more creative, to be more innovative and keep going and kind of take the spot of the people that just kind of put their head in the sand and give up. So I think over the next few years,

you're going to see a lot more of that. And now's a great time to be starting a business or be in business in general, especially in the cleaning business. You're solving problems for people. People need problems solved all the time and you're going to be the one to help them. Yeah. But yeah, let's get into it though. Brandon Let's talk recession.

I think I mentioned it before on the podcast, but I like economics. If I did college over again, maybe I'd be in a social science like economics, but so I listened to a lot of economics podcast. I find it interesting, but I also find it applicable to owning a business. I think that's important to keep track of those things. So a lot of these podcasts are talking about recession like an inbound recession as a direct result of high inflation.

So inflation is not very good for an economy. It makes things very unsustainable very quickly. And so here in the United States, the federal reserve is going to counteract that by raising interest rates. And so we've got listeners in Australia and all over the world, but all of those countries have central banks and they essentially all do the same thing. So the idea behind that is you raise the interest rates.

You make it more expensive to borrow money, which just slows everything down. So that means companies may not be so interested in taking out a loan to build a building if it costs 6% instead of 2%. And so you try and raise interest rates to slow it down. So like the fed in the United States is trying to engineer what they call a soft landing quote unquote.

So it's going to be like a dip into a recession and then like, Hey, everything's normal. Again, like that's their plan. This is not 2008 where there's some big driver behind it. That's causing the problem. It's not COVID 2.0 it is literally just the fed raising interest rates. And so as a direct result of that, and what's happened is we've had two successive quarters where GDP gross domestic product has gone down,

has gone negative. And so a lot of economists will define that. That is the definition of recession. You have two successive quarters where it went down. And so we're in that they made that announcement this morning. We are recording today on July 28th. And that announcement came out this morning that they had a second quarter with drop in GDP. And so hypothetically we're in a recession right now.

Right. And so what does that mean? Like when they're doing that, is it supposed to combat all these raising prices and bring that back down? So it's more livable again, or like what's the point of them doing that in the first place? It's all supposed to have trickle down effects, right? So if you made the money more expensive to borrow,

that means the people that are building houses, they're not going to build as many houses. And so John, like companies that would have financed an expansion in a different city by borrowing money to do it by opening a line of credit or getting alone would maybe think twice about doing it. And then if it gets worse and the recession sense companies may lay people off.

And I know if you're paying attention to it, you've seen headlines as well. But most of that's in the tech industry right now. So tech companies start laying people off, but Tech's kind of volatile anyway. But like if you take the construction example, it's expensive to get a construction loan to build a house. So you're not going to do it.

All right. I have to lay some of my staff off. I got to lay off all these framers. I got to lay off. I'm going to stop calling my plumbers often because we don't have as many jobs. So the plumber is going to lay off some people because they don't have as many work. And so those affects kind of trickle down and that's the definition of the recession really?

And so that helps the economy because it lowers the demand for people buying stuff, because you got laid off or your job cut your pay or cut your hours or whatever. You're less inclined to go buy anything. And so consequently prices should come down. Like that is the idea behind raising interest rates and inflation. There are lots of funny acronyms or terms for this,

not acronyms, but like idioms. So like prices go up on an elevator and they come down on the stairs. Like it doesn't happen very quickly. So, or like they go up on a rocket and come down in a parachute, like something like that. So this isn't going to turn around tomorrow, but here's the other thing about recession. And here's why we're talking to you about it on a cleaning podcast.

The recession is not going to affect everybody equally. It's not going to affect all industries the same all areas the same. And so we had talked about this at our quarterly meeting and we kind of touched on it in the last two part episode, but what can you do as a cleaning company locally to see if your local market has entered your personal definition of a recession,

the company's definition of a recession. And so we had spent some time looking into that. And that's what we wanted to talk to you guys about on this episode. Yeah, absolutely. And I think just as another side note, while you're talking about all that, Brandon, we have been talking a lot recently about the hiring kind of crisis and the issues we were having a lot of issues with hiring right now.

So potentially this might have a positive effect right? On the fact that more people would be looking for jobs in this recession. And maybe it'd be easier to hire. I don't know, but maybe that's a potential benefit, But it is a potential benefit. It's a potential upside. It's also a really fine line to walk. So like let's stick with our construction metaphor.

All right. They laid off the framer for the house building company. And there was no other construction jobs right now because it dried up well that person's spouse may be more likely to enter the job market if they are not. So like, if their wife is a stay at home, mom watching the kids right now, but dad can't get construction jobs while maybe they switch roles.

And a mom goes out to find what she can and cleaning. Historically speaking has been a lot of Hispanic females in our area. That's the market that we want to be target, but it's just who applies for the jobs in Albuquerque. So that is a way that it could work. Now the downside of it, the fine edge to walk side of it is that if the recession is too hard,

too great, you ended up with 2008 where not only your potential employees looking for work, but your customers also lost their jobs. And now they're going to start canceling cleaning, which is why we needed to build out some system to find some leading indicators of what a local recession might look like. Yeah. So yeah, we just basically have a list of bullets from our annual meeting that we're like,

these are the leading indicators we want to look for to be like, oh, this is like, oh crap, we need to start doing something. This is happening. And then we have a list of actions or solutions to take right on the other end of the, We've got potential indicators and potential solutions to take, but you need to come up with whatever is going to look at you.

So we're going to cover what the indicators first, and then we'll talk to you about what to do after. So, all right. So one of them that we could be looking for is cancellations, obviously. So like cancellations actually occur all the time. Like there's organic cancellations, I'm moving like whatever, but did the number of cancellations where they specifically mentioned that I lost my job.

What was the increase of people doing that? It's like, that is a point that we track. We track with people tell us that they got laid off and you shouldn't do. And so if the cancellations from I lost my job, like suddenly spike, that means that a big employer or many employers locally have started laying off people. So they're not going to pay for cleaning.

Like that's part of it. And then the other side of that cancellation coin is there's kind of a lead in to fully canceling. They may change their service from bi-weekly to monthly or like weekly to monthly. And so if suddenly the number of customers we have are switching service starts to skyrocket. It means that they're feeling the crunch, but they don't want to cancel yet.

They really like the cleaning. I want to keep it. But if those suddenly start to go up and up and up, then that's like a warning sign that like, Hey, something's happening in the local market. Yeah. So we're tracking those. We look at those numbers every week. I would say it has been a little bit more, right.

What'd you say, Brandon, like just in general cancellations and we have more customers than we've ever had too, but Yeah. So job loss hasn't Really, but what has changed a lot as a result of inflation? So again, we're talking about monitoring a recession, not necessarily monitoring inflation. So what's happened on the inflation side is the bulk of our cancellations now are due to personal finance reasons.

Essentially they call in and say, I love you guys. You're awesome. I would keep it if I could, but I just can't afford it anymore. And so what that means is that they're fully employed. Like they did not get laid off, but the cost of two things is driving inflation that's fuel. And that includes like gasoline for cars, but it also includes like natural gas for hot water and heating your house.

And then the other side of that is food. And so nobody's going to live without food. And so a lot of people need to make sacrifices to be able to like still afford groceries. And so that's where our biggest increase in cancellations has come from. But at the same time, we've also got a borderline record number of leads coming in that are super interested.

And when we quote those people pricing, they're not like, oh my God, this is like cost prohibitive. I can't ever do it. A lot of these people are coming in from out of state. They're, you know, like we're still seeing an influx of people moving from California in the bay area and things are very, very expensive. And so to them,

we're still reasonably priced. So I don't think that we're at a cause for concern locally, but there is definitely a bumping cancellations as far as it's expensive. Yeah. We're seeing more cancellations, but like you said, there's more people coming in because we're still generating a lot of leads with the marketing and the other stuff that we're doing out there for visibility,

that it just replaces the people that can't pay it with the people that can, which is kind of a good scenario, but it's not, if too many people just can't afford it anymore, it's hitting even harder, which it could happen hasn't happened yet. But like you said, as of today, Brandon, we're officially in a recession, right. Two quarters with lower GDP.

Correct. And if this is the soft landing, the next quarter could be just fine. You never know. But like right now we're going to approach it as we are. So now we need to be watching for when it hits us. Then the next one that we talked about was like, ad spend efficiency goes away, paid traffic drops off or leads fall off.

So we just talked about how we've got loads of leads. Like the example that we had the other week was we came in on a Monday after the weekend and there were 31 leads in the inbox waiting to be responded to. That's a ton like for us over a two day period. So what you want to be watching for there is you're spending way more per lead on ads.

Like that number would go up, website, traffic goes down because if you're in a recession, you lost your job. One of the things you're Googling is not going to be housecleaning. You're not going to be Googling. How do I get house clean? You're not going to pay for that. So those three are kind of related leads, fall off ads,

get worse. Organic traffic drops. Yeah. And if you guys are just watching your website, traffic, like your analytics, if you notice just in general, like organic would be like just natural search, naturally people finding you through searching if that's going down and those numbers are going down, or as Brandon said, if you're spending, let's say normally you're spending 20 or $30 or maybe less,

hopefully less to acquire a lead. Well, now that that doubles or triples and you're spending a hundred dollars an hour or $70 per lead, that's a major sign that maybe the ads aren't working as well. So maybe switch them up, maybe target different people. But also this kind of goes into a solution. Well, we'll talk about in a little bit,

but you have to decide at this point, if this happens, are you going to continue being aggressive with your marketing? Or are you going to pull back on the a little bit and just say, Hey, we're going to wait it out. So we'll talk about that here in actions. In the second one, the pandemic started, we chose to be really aggressive.

And I think that paid off really well for us. So I think it did too. Like we grew a lot during the pandemic and we definitely have competitors that bailed. And so we had trusted business advisors telling us to pull back on marketing, to like save money so that we could weather the storm. But the way we weather the storm was by bringing on new customers.

Because if a competitor folded during the pandemic, they went out and Googled, I need more house cleaning. And so we were, the ones are at efficiency during the pandemic just went way up. We got shown to a lot more people. Yeah. So that is the cool part about that. And we'll just say it like an action you would take.

I think even in the hardest of times guys, with your businesses, the opportunity is going to be being aggressive and continuing to push hard with your marketing, doing whatever you can to get out there. Because a lot of people are going to give up. A lot of your competition is going to just fold. Like Brandon said, that happened and it's going to continue to happen as these things happen because people are going to give up with challenges.

And that's just how it is the nature of business and everything. So stick it out persistent. Yeah, Totally. I do think it's worth reiterating that this is not like the recession we're talking about now is not like 2008, 2008 was a no holy bleep word, like recession, like a, they called it a once in a generation recession or whatever.

And then we had another man with the pandemic, which is funny, but they were both like the pandemic was external forces and 2008 was a gross mismanagement of wall street funds and stuff. So this is not that this is kind of, this is an intentional recession that the fed is trying to orchestrate gracefully so that they do engineer the soft landing, not the push us into crazy territory.

And again, if they did that, they have the interest rates. Like if the recession got too bad, they would lower the interest rates so that you could start borrowing money to do stuff again. So there are people branch of government essentially dedicated to watching this. So we're not trying to induce panic and cite fear in anybody. Like, we're just telling you that like,

look, you should be paying attention to these things. And we do have a couple of ways for you to react. If your numbers suddenly start changing in a way that you weren't expecting, this is what you should be expecting. And we're telling you to watch for it. Yeah. And more importantly, it's more like, this is like proactive thinking versus like this happens.

And then you're like, just reacting. You're like, no, we were planning on this and we're proactively planning this right now. This is why we're talking about it because some of this stuff is likely to happen. So just be proactively ready for when it hits the fan, you guys are going to be ready with us and we're going to have a plan and we're going to know how to solve it as opposed to some of your competitors that are just going to be like,

they throw their hands up in the air and they give up and that's not who you want to beat. So yes. Some of the other ones you've mentioned talking to like the local landscaper, Brandon, right? Just like different industries. Hey guys. So how can Profit Cleaners help you three ways first off head over to a podcast, or if you're on YouTube,

we've got loads of free content. We're republishing the podcast here as well. Check out the podcast. That's a great place to start Next. You can grab And X marketing course to help you bring your business up to seven figures, get a bunch of customers. You can check that out at Profit Cleaners dot com slash courses. And then lastly, if you just hit the website in general Profit Cleaners dot com,

there's lots of free tools on there. All the podcast episodes are on there. And then there's also a free Masterclass that we run every week that you can still Register for. Yeah. Check out the show notes and all sorts of resources. So hopefully that helps you guys. We'll see you guys soon. Take care, keep clean, keep it quick And consider a cleaning like a luxury service.

Like most people don't get their house cleaned. And most of our customers are like upper middle class, not blue collar people. So if you can target other businesses that you don't compete with, like we have a friend that runs a landscape company, I've got a friend that runs a plumbing company and you could talk to them like, Hey, have you noticed a big drop off?

Like if, if the recurring landscaping stuff and the neighborhoods that we service for cleaning are all starting to cancel. That's probably also an indicator that something is going on in their labor markets, in those zip codes. So, and with the plumber, like that's less service oriented, but more like if he stopped getting new construction jobs, like that's an indicator that the local construction company is,

are pulling back on building more stuff. And so that's how we lead into that construction metaphor that we've been following, where they start laying off people. Yeah. So you'd want to really compare it to a similar industry. That's a little more of a luxury. I think like landscaping is a great one because it's like, it's not totally needed versus the plumbing.

It's like, yeah. If your pipes break, you're probably not. So, I mean, I don't mean plumbing in the, I need an emergency repair sense. I mean, it, in the, they're not getting like remodeled Like new construction or like, if it really is like a bad recession, like you're going to hold off on remodeling your bathroom until things are better.

Do you know what I mean? So like maybe their request to go in and remodel bathrooms has gone way down. Like, that's just another piece of it's another data point to hit. And so yeah, outside of cleaning, you've got, I don't know, like car detailing maybe would go down or landscaping we've talked about, but like something that does a recurring service all the time.

Like, I don't know, hair salons, like hair salons are expensive. Like maybe those drop-off and the nicer ones stopped taking as many appointments. I don't know. Yeah. So just like, yeah. Be aware of similar industries like that, that are a little bit more of a luxury. You could just go Google luxury services on find a bunch,

but like, yeah. Talk to people in those industries. See if they're seeing the same thing, that would be an indicator. And then another one we had Brandon was profit margin drops. Let's talk about that one. You know, I gotta be honest. I don't really remember what we talked about in the meeting with respect to the profit emergent dropping.

Is there a profit margin would definitely drop if we went from five houses, data, four houses a day. Right. We would see reduced without that. I don't know. I feel like the profit margin on any given job would still be the same. It's just that I suppose the overall profit margin may drop if cancellations went way up, because we'd still have cleaners on board,

but it's a natural balance. Like if we suddenly had cancellations to the point where we weren't looking at expanding to another team, then we'd be laying off cleaners at the same time. So yeah, Perhaps it was, we were talking about how lower lowering prices was it lowering prices and then Profit Mean that was an action that we take like later. But yeah.

I mean, you should be watching that, I suppose your profit margin, if it changes. I don't remember. As far as it being a leading indicator of recession, why that would be a problem. So my apologies for the notes. Yeah. Okay. But in terms of actions that you Can take, like the bullet on there. Yeah. I mean like Brandon already covered marketing spend and how you should be aggressive,

but there's two actions you could take with your market's been, you go up or down. So you go up when your competitors are peeling back, that means that you get seen more often because there will be people in any market that are still looking for it, a recession doesn't wipe out the country like that's great depression stuff that's happened once. So some industries in every recession are going to go up.

So like those people, that would be the ones that are still be looking for services like that. So you could potentially increase. Yeah. I was just going to say on that note, one of the things we mentioned in our annual or quarterly meeting was targeting people that are more, I guess, less affected by the recession. So like for example,

on nextdoor.com, you can target specific neighborhoods. You can get super hyper-local in certain neighborhoods, or if there was ways to target in our market, we have big, what do they like government agencies, right? Like the labs at Sandia laboratories or certain company that just employ people that it's a little bit more of a guaranteed job. So if you can somehow target those customers,

whether they're higher net worth individuals, that aren't going to have job losses easily, or just targeting those companies, like we've thought of advertising in the newsletter, for example, on the Sandia labs, they're just companies that those customers would need, their house gets cleaned, but they're probably not going to lose their jobs anytime soon in a recession. So that would be a really good one to offset some of that and just continue gaining customers that are from a different customer base,

maybe not your normal, your typical customer, and maybe you're going to target get some different customers that are a little bit more well off that aren't going to cancel. So yeah. So you could adjust the market spend, you could also adjust the type of marketing. So like in the pandemic we switched from saving your time to being part of the solution.

In the example of a recession, you could switch marketing to be like, we've been with you for five years. We really appreciate your support. Like we'd love to continue like cleaning your house. Like there's ways to do that. Or you would put more money into like running ads for recruiting instead of that. And that's, if you're growing, obviously if you're really contracting,

you're not going to be hiring people, but if you keep that market budget, you just got to get creative with where and how you're putting it out there. So that's an action to take. Another one would be offering flex plans with staffing. And so that would be, if we start dropping in terms of like business volume, then we can start having people work different hours,

like instead of laying them off. But like maybe there's a desire for part-time to get out of work earlier to pick up your kids or things of that nature. So you can switch how you staff and how many hours and things like that as well. Yeah. And speaking of staffing, we are still really working our way through this challenge here. I'm sure as all of you guys are as well,

but yeah. I mean, we're actually looking at spending more money right now, instead of just marketing more than ever. We're looking at like putting money into the staffing and recruiting because it's just guys right now. I mean, with the market as the way it is like, we're getting creative and we're going to have some upcoming episodes sharing more of what we're doing on that as well,

guys. But we shared a little bit on the last episodes, but yeah. I mean, let's just keep working through this together because yeah. You can't grow your cleaning company if you can't hire people. So it's kind of a major problem. Yeah. So, all right. The other one we could do is adjust your goals or strategies we put for expansion on here,

but you could do that in general. So if you have plans to expand to a second city, or maybe you're looking at, even within the same city, maybe we're expanding to a different neighborhood or something. So if this recession trigger comes in, like maybe a way that you immediately just like, okay, cool, we're going to table the expansion to whatever nearby town until things come back up,

like until these indicators flip the other way. So that way you're not right. Cause like your competitors that may be looking at growing and they're not following this, maybe they're going to make like the worst case investment at the wrong time. Like they're going to throw a bunch of money at buying a building at super high interest rate to expand at this other city.

And then the recession hits and they weren't paying attention to the numbers. And now they're like, oops, that's the situation where people close, like businesses fold because they made like pie in the sky decisions when they should have been looking at some numbers that they probably already had. They just weren't paying attention to. So adjust your goals, adjust your strategy for certain things like expansion being one of them,

The number one reason businesses fail is lack of capital. So like what you said right there, they make a bad decision. And this is why going back to like, I think always being aggressive, even in a downmarket is really smart because there's always going to be a chance, especially when things are going bad, people are going to act kind of a radically,

make a logical decisions and act out of fear and uncertainty. And so there's a good chance your competitors are doing this right now, or they're going to do it. And so lack of capital because they made a bad business decision or spend all their money into the wrong place and you're still advertising and you're still moving forward. You're going to get those customers.

You're going to pick up that market share. And so that's why I think it's always just a good idea to keep moving forward. And don't give up, especially in the next few years as this continues to happen. Yeah. This next type of applies locally to us. Cause like Brandon mentioned that we have a lot of federal jobs in towns. Like we have the Sandia national labs,

which is a boatload of people. There's Kirtland air force base. The government is never going to shut down national labs and air force bases. Those are like national security things. The national labs here are all revolved around nuclear weapons. So they're always there. So what we had put on here was proactively target federal contracts or contractors. So we could try and get federal contracts to clean things as a way to make up for it.

Now that's about of our niche of housekeeping, but if you're really just trying to get creative with it and go with the flow, cool. Let's build a pickup, a federal contract to clean a couple of buildings at XYZ location. Like whatever it may be. Or the other part that we talked about was you find out who the federal contractors are, all that stuff is public record.

Like what the federal contracts have been contracted with. Find out who the companies in town are that have the federal contracts, those things don't get canceled just because we hit a recession, the government doesn't turn around and cancel these contracts. Those things are good for a year. So find out who signed those contracts and then try and reach out to them and offer them something like if there's big ones like big defense contractors,

just start flyering outside them or reach out to their like HR department or something and say like, Hey, we've got a deal to offer your employees. Like, could we get in the employee newsletter or something? So there's lots of ways to do that. And then the kind of other side of that coin is to look into different types of cleaning that maybe you're not doing.

Like we did this during the pandemic and always have been aggressively focused on house cleaning, but we had commercial contractors that were, I mean, commercial cleaning, people that were reaching out about, Hey, can you come sanitize our space for COVID reasons? We were declining things like daycares that needed at three times a day and stuff like that. But we did take on some small offices like law offices,

dentist's office, maybe small retail, like that type of stuff. You could reach out to them and say like, Hey, can I come clean your space again? If it's a crazy recession, they're probably not going to be spending money on that. But if it's just, I know if it's a soft landing recession, then you can reach out to the federal contractors,

like the ones that are definitely going to be in business. And essentially there are businesses that are essential that will not close. And so those are the ones that you could be reaching out to. Yeah, exactly. And just like what you said earlier, start now before this is becomes a problem. Start focusing on getting more customers. Now that wouldn't be in a position to lose their jobs potentially,

or just have maybe they're business owners, maybe, you know, start targeting people that are a little more stable than just the normal everyday person that could lose a job at any time. So we're doing that. Like I said, we're currently experimenting on nextdoor.com and just targeting some like some more higher net worth neighborhoods that we haven't targeted as much in the past.

So we'll let you know how that goes, but just get creative guys. Just start thinking outside the box on, on what can you do to proactively position yourself to avoid like there's a big old wave coming. So what can you do to stabilize yourself and get as many things down as possible? So you're not going to get his heart is basically what we're doing.

Yeah. So like you had mentioned getting more customers onboard now that aren't as likely to be affected by a recession. But the other thing you could be doing is identifying people that you're going to be contacting. If a recession does come into play. So you could get a list together of those federal contractors right now. Like there's no reason to wait until it's already happening.

Like do the legwork now get the list of people and figure out how to get in front of them. And then when it actually does come on board, like cool, we already planned for this. So we're going to set aside 15% of our marketing spend and try and target these four or five companies in their employees, which you can do with like LinkedIn ads are Very Specific for trying to target people that are at a very specific employer.

So there's options to do that. Yeah. We have someone that reached out, we'll have him on the podcast in, but there's a guy that reached out to us recently in the last few months. And he's like a specialist on getting these federal contracts and all sorts of other commercial contracts too, which we don't focus on commercial as much. But like Brandon said,

sometimes you guys got to get creative and look for other ways to drive business. So we'll look at having that gentlemen on the show here, maybe he can share some more insight, but if you guys have ideas all, I mean, this is just brainstorming ideas with you guys. But if you guys have ideas outside of this, let us know, and then we'll share them with everybody else on the show and we can all help each other.

Hello, at Profit Cleaners dot com feel free to reach out always with any of those ideas. And then there's one more Brandon, we've got to share with them here on the actions. So this is probably the most obvious one for everybody, but that would be a discount program for your existing customers. So if someone calls up and say, Hey, I got laid off or I can't afford this anymore.

You can say, Hey, I feel you like the recessions heart. Inflation's hitting everybody, whatever it may be. But Hey, we have this like short term program where like, I can get you 20% off over the next three months or 25% off or whatever it is and see if they'll take it. And so like the phrase I always use of that is like,

I'd rather have a hundred percent of something than 0% of nothing. So if they called to cancel and you said, all right, well, I'll see you later. Bye. Well, that just means that their entire revenue walked out the door. But if you played ball with them and say like, Hey, we can drop your pricing and try and recruit.

You've been a customer for a long time. I don't want to lose you. So what if we lowered it by this? Well, then that way you're still making money on that person. It's just on that customer. It's just that that's where your profit margin would drop as if you were heavily discounting across the board, your profit margin would go down.

But as long as you're covering overhead and expenses, then that's better than having zero of that customer. Yeah. It's just kind of a nice segue. That's exactly what we've done in the last couple of times. We've done price increases when someone's like, Hey, this is ridiculous. I can't pay this well, then we work with them, right? It's a case by case basis.

And it brings us to, we're actually getting ready to do another price increase here really soon. Right. Brandon and we might run into that. We might run into people that are like, I can't afford this. Well, what can you afford? Let's work together on something, right? And you can still keep those customers, but maybe at a,

at a special program, discounted rate just to keep them on and keep a good customer experience going for them and help them out a little bit. We had a lot of customers help us out at, during the pandemic and just, they kept paying for services, even though we weren't even cleaning at some certain points. So like find ways you can work with your customers.

And we're going to probably have a whole episode coming up on that pricing increase. But we could tell them a little bit about that if you want right now, Brandon, but that's another way we're kind of offsetting some of this cause there's a lot of inflation and price all over the place. Yeah. I mean, in terms of the inflation recession argument,

you should also be looking at increasing your own pricing. If you're not increasing pricing and a heavy inflation market, that means that you're just absorbing the hit. So we are paying like for right now, it's come down a little bit, but we're paying just about $4 a gallon in gas. I think at the peak, it was approaching four 90 Costco,

which is where we get our discounted gas from. So gas has come down a little bit, but compared to a year ago, it was like $2 and 50 cents. So we drive a lot. We've got 10 cars that are out six days a week. Well, 10 of them are out five days a week and one is on the sixth day. So that is a huge cost increase.

And so when we do that price increase, it'll be a single digit percent. Like it will be 8%, something like that, 9% when we're working on those numbers to be able to cover things. But like we're trying to work into their raising the base rate for the cleaners as part of our effort to like help with staffing issues, but also to cover just general expenses.

So when we send that out, like again, we've told you this before, but you always got to tell the customer, why, why are we increasing prices? You did this last year. Yep. We did do that last year, but this is a smaller cost of doing business adjustment than the big price correction we made because we hadn't done one in like two and a half years,

three years. I think at the last one we did was in 2018. Anyway, you should be looking at raising prices. And then that again is another fine line to walk. You don't want to do a 20% increase when inflation is at 10%, you're going to lose a boatload of people. You need to be a little bit more thoughtful of who your audience is.

So now the other thing that you can do is kind of a, if you're nervous about the price increase, increase it for quotes. So bump up your proposed number. Let's say you're going to do eight. I'm going to do 8% increase. Okay. Bump the new quotes that are going out by 10% and see if people start telling you like, oh,

this is ridiculous. You were the most expensive service I've ever had in my life. Okay. 10% was too much. Let's dial it back. And so like, that's a little risk game. They're like, you're running an experiment on leads that you paid to get from your ads, but it's also a great indicator without pissing off your existing customers. So like,

if you can dial it in with leads that are all comfortable with paying your 10% increase, they don't know that it's higher than your existing number. They have no idea. So yeah, run that experiment. It's like AB testing. If they tell you that it's too high, all right, we'll come back down and then find some number that works for you.

Yeah, absolutely. That's a great way to do it. And we've talked about even just doing that with new customers as well and increasing it even higher than that than our normal 8% we're going to do with all our existing customers. But it seems like you said, Brandon, if inflation's at 10% or whatever it is now, if you come in a little bit below that and you explain that to people and we always send out an email or a letter of some sort to explain this to our customers and say,

Hey, but if you tell them the reason why you tell them some good stuff you're doing and why we're paying employees more, where cost of gas is more, but in our case, we're rolling out a new customer experience system. We're making everything better for you all the time. And you tell them the reason why, I mean, people will understand.

And of course, you're going to have some mad customers that are going to be like, Hey, I can't do this anymore. Maybe you can work with some of them, but at the end of the day, if 10 or 20 of them leave where you've got 10 or 20 new ones that are going to pay the new pricing that are going to come on and you just freed up those spots.

So you just have to look at it as a, an opportunity costs. That's the best way to look at it is yep. They left. But if you were already had your new customers priced higher than that, then that just freed up a spot to get a higher paying customer, then that one would have paid with the price increase. So that's a good strategy that we've employed is charging more for new customers that don't know they're paying a slight bump over those.

And then if they cancel it well, I mean, there's someone right behind you, it took do with it. So yeah, I think that's it for this episode, but here's the call to action for you guys. So a do this stuff, put some things in action, but we really need you guys to do is reach out to us. Hello at Profit Cleaners dot com,

shoot us an email. Tell us what your idea for an indicator of a recession might be in your local market and what a potential action might be that you would take. And the bigger one is that we're going to have an upcoming sort of deep dive episode on staffing, the tight labor market and the constant ideas and brainstorming that we're doing behind the scene,

trying to rise above it. Like we're not going to solve the tight labor market as one company, but we are going to be constantly trying to get something through there. And so when that comes out in, before that comes out in the meantime, like right now, if you have any ideas on how you are getting new staff through the door, something maybe non-typical that you've done to make yourself stand out as an employer.

We would really like to hear about it. We want to let everyone know as a group. And if there's anything that you want us to cover on that episode, specifically, shoot us an email at hello at Profit Cleaners so that we can make sure that we have it on there. Absolutely. Yeah. We're going to do this together guys. We always say,

this is a movement. This is a community that tribe that we're building that is going to help everyone. So please contribute guys, and please reach out and tell us what's working. What's going well for you guys and how you're doing it. If there's anything outside of what we're talking about. So like Brandon said, hello at Profit Cleaners dot com, send us an email,

let us know any time, even if you're listening to this episode and it's another completely different time, it'd be just want to reach out with something you want to share that's working or something that worked in your business. Well, let us know. We love hearing that stuff and we want to share that with everyone in the community. So, yeah. And other than that,

anything else Brandon, you want to share with people other than subscribe, leave a review, share the wealth, share the love. I think that's for sure, but no. I mean, keep it clean guys and keep going. We're all going together. It's going to be awesome. Absolutely. All right guys, I'm Tom. Next time. Keep it clean.

Keep It clean. Thanks for joining us today. To get more info, including show notes, updates, trainings, and super cool free stuff. Head over to Profit Cleaners dot com and remember keep it clean.

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