Though economists may disagree about whether we’re in a recession, there’s no doubt that the housing sector has suffered the most severe setback in decades. Foreclosure rates have doubled in the past year, while housing prices have dropped nearly 17% in the 10 largest urban areas. Though the downturn varies from region to region, no business involved with housing has entirely escaped the impact, with many countertop fabricators either going out of business, or downsizing their businesses dramatically.

Businesses that survive tough market conditions are well-positioned to thrive when prosperity returns, as it always does. But what steps can you take now to help ensure that your company will be a survivor?

Energy & Gas Savings

Review aspects of your business to reduce costs without overly negative effects on productivity, customer service or marketing.

Energy efficiency is an option. I operate my home-based business out of a building that’s less than five years old. We had extra insulation installed during construction, and bought an air conditioning system that uses Puron, a refrigerant that causes much less atmospheric ozone depletion than Freon. Initially, we ran the air conditioning whenever it was hot, but our utility bills ran on the high side.

We now control the office temperature using window blinds, opening windows when cool breezes blow and using efficient window fans. Air conditioning is only used when it’s unusually hot.

When it’s cold, we rely on sweaters and radiant space heaters, and use central heating only when it’s very cold. We’ve cut our utility bills in half.

Gasoline prices have also risen. I own a countertop repair business, so we rarely need trucks capable of hauling 12' countertops. We do need to haul a variety of power tools and supplies, though. Until two years ago, we relied on minivans such as the Dodge Caravan (which gets 19 MPG, according to the recently revised EPA mileage estimates).

Typically, we were using less than 25% of the freight capacity of our minivans. So we decided to start buying smaller, more fuel-efficient vehicles.

We settled on the Honda Fit, which gets 30 MPG, and is less expensive than a Dodge Caravan. It may seem strange to use a very small passenger car for construction purposes, but the Fit has a variety of very flexible seating configurations. Most commonly, we operate these vehicles with the rear seats folded flat, which creates a surprisingly large cargo area. When we need to carry longer items, the front passenger seat can also be folded flat to accommodate our needs. On the rare occasions this can’t do the job, we rent a cargo van for the day.

We drive 100,000 miles per year in our three Honda Fits, and the increased fuel efficiency saves us nearly $8,000 per year in gas costs.

Obviously, countertop installers need larger vehicles. However, a construction vehicle should be seen as a necessary tool to be selected with cost and fuel efficiency in mind.

Salespeople and those who measure and template countertops do not need to drive gigantic gas guzzlers. Recently, I met a painting contractor who drives a bright yellow two-seat Smart Car which gets 36 MPG. Prices start at $12,000. With his company logo painted on the side, he gets lots of attention in this tiny vehicle, and he can still haul up to 25 gallons of paint in the cargo compartment.

Material Costs

Next, take a careful look at your raw material costs. Perhaps you’ve been buying certain items from the same supplier for many years, and have forgotten to compare prices. Try to find other sources offering lower prices. Before you switch, call your existing supplier and let them know the situation. If your payment history is good, you may be able to negotiate better payment terms, since no distributor wants to lose a good customer.

Review the invoices and statements from your suppliers carefully. I recently noticed an obscure entry in a distributor’s statement. When I questioned it, I learned that I had accidentally paid an invoice twice.

Take a look at the payment terms you impose on your customers. Tightening up your requirements regarding deposits and payments is worth considering.

If many of your customers pay by credit card, consider offering a discount to pay by check. This can help improve cash flow.

Job Costing

If you have a job-cost system, you also have a powerful tool to use. This software tracks labor and material costs of each job, grouping jobs into categories based on similar characteristics.

Let’s say a fabricator offers five categories of countertops – plastic laminate, solid surface, granite, quartz and butcher block. With a job-cost system, you rank these categories of products according to their profitability.

When times are tough, reduce your prices slightly on the most profitable items, and increase your marketing efforts to increase their sales volume. Next, take a look at your least profitable segments. Can you take steps to reduce costs in order to increase profitability without compromising quality or raising prices? Will the market accept a slight price increase? If the segment can’t be made more profitable, it may be necessary to drop that product. Be aware, too, that certain “bargain” products may be “counter cyclical,” and grow in sales during a recession.

Don’t neglect networking, and utilize the resources of groups such as your local Chamber of Commerce or ISSFA. Companies that are generous with charities gain credibility in their communities. We participate in the American Cancer Society’s Relay for Life and, as a result, met a manager for Pixar, the renowned animation studio, who hired us to refurbish several marble countertops in the lobby of the film studio.

In marriage, 25 years is called the silver anniversary. Who knows what prize is awarded to those who devote 25 years to the countertop industry? At the very least, it is the knowledge gained by studying at the School of Hard Knocks for a very long time. One such lesson has to do with surviving the vagaries of business cycles.

The early 1990s were a tough time, comparable in some ways to 2008. At the time, I was the general manager of a countertop fabrication company. I had a good rapport with the owner, but a few years later, he sold the business. The new owner assured me that he was confident in my abilities, and would keep me on, but as the recession deepened, it eroded my employer’s sales. We suffered 10% pay cuts, and then were cut to a four-day week. I was his highest paid employee, but was still shocked when he laid me off one day in an angry outburst.

I decided to start my own business, and have now been self-employed for 15 years. However, losing my job in such a harsh way was a real blow to my self-esteem.

Layoffs are sometimes necessary but never pleasant. If you must discharge workers to save your business, please do so with sensitivity and compassion.