Navigating the Home Improvement Market Amidst a Potential Downturn
It’s no secret the home improvement industry has been thriving in recent years. With low-interest rates, increasing homeowner demand, and a favorable housing market, business has been booming. But before we get too ahead of ourselves, like everything in business there are ebbs and flows.
Many experts are predicting a potential market downturn in 2024. Many will panic, but not you. You know that fortune favors the prepared. Read on to understand the warning signs pointing to an upcoming slowdown and prepare yourself with some essential strategies to ride out the market.
Current State: A Booming Home Improvement Market
If you’ve been working the last few years, you are well aware that the market has been hot. Home improvements have been soaring, keeping the industry buzzing with activity. Homeowners have been investing in remodels, repairs, and upgrades like never before. Contracting businesses have been thriving and books have been full.
Warning Signs of a Downturn
While the last several years have been great, economic indicators are starting to blink red, and pointing to a potential market downturn in 2024. Rising interest rates and economic uncertainty are affecting consumer confidence, borrowing and spending. In fact, according to a survey by Today’s Homeowners, roughly 50 percent say they will be spending less on these projects, with 28 percent saying they will spend “significantly less.” Additionally, Forbes is reporting that home improvement spending will continue to decline for the foreseeable future.
Preparing Your Business for a Downturn:
Like anything in your business, if you see a potential issue coming you want to get ahead of it as much as possible. In the case of a shifting market, you’ll want to assess your current business model and financial stability. How will your business adapt if the market takes a nosedive? It’s crucial to have a contingency plan that includes diversification of your services and leveraging technology to streamline your processes and payments.
Diversification: Broadening Your Scope of Services:
When the going gets tough, the tough get going. Diversification is your secret weapon to moving through a challenging market. One of the most critical skills to have is the ability to adapt and be flexible. In construction, consider offering both essential and discretionary services. Maybe you’ll take on more repairs and maintenance jobs than you typically do alongside your remodeling projects. This approach not only keeps your income flowing, but also attracts a broader customer base to continue working with as time goes on and the market recovers.
Elevate Your Work, Effectiveness and Reach:
You know you need the right tools to remodel a new bathroom, but do you have all the right tools to support your business? Ensuring your business is searchable is always important, but even more so in a slow market. A strong online presence and effective branding are key to standing out among your competition. Showcase your work through an easy to set up image gallery on a plug-in website template and leverage social media to engage with potential customers.
Consider implementing a referral program to keep the leads coming in. And when you’re working with clients, make sure the experience is seamless.
Online project management tools will streamline your operations and create a better experience for you and your customer as you work through the project. A recent MyCraft survey showed 96% of homeowners prefer their contractor use technology to manage their projects, payments and communication. See how we can help you diversify, market, and manage your projects and payments here.
Reduce Risk & Manage Cash Flow:
Mitigating financial risk and optimizing your cash flow is your lifeboat. Assess how you can cut costs, schedule projects more efficiently, and better manage your inventory. Understanding where you stand in these areas will keep you ahead of any surprises that could have a financial impact.
Additionally, an accounting software or expense tracking app can help keep you on top of your finances. Financial management and risk mitigation were key drivers behind MyCraft’s “pre-funding” option. The intention with this innovative feature is to support contractors cash flow by reducing their risk with an escrow-like experience. By offering this to your customers, it not only protects both parties’ financial risk (and helps your cash flow), but it builds credibility and trust.
Stay Connected to Your Network and Industry Associations:
You already know that so much of your business comes from word-of-mouth (i.e. relationships) So, it should be no shock that active participation with your peers and in local and industry-related associations will go a long way to supporting your business through tough times. These relationships provide support, opportunities for knowledge sharing, and valuable networking. Staying up-to-date with industry trends and regulations is your ticket to staying competitive and informed.
The Right Tools to Support Your Business:
The home improvement market has been hot and jobs were easy to come by over the past few years, but the warning signs of a potential downturn in 2024 should not be ignored. Now is the time to assess your business model, embrace diversification, market yourself, and adopt technology to prepare your business for the potential shifts ahead. Efficient financial management, active industry involvement, and the smart utilization of technology will help ensure your business works through the challenges to come out on the other side, in a stronger market, with a stronger business.