Inflation and Recession – Laundry Operator Survival Tips

Practically every hour of the day, news media outlets and federal policymakers are talking not only about 8%-plus yearly inflation, but also the growing prospects of an economic recession as the Federal Reserve Board raises interest rates in an effort to tamp down rising prices. An upcoming article in Textile Services magazine will offer operators and supplier partners insights on how they can fight back against rising costs as well as the widely predicted economic downturn that could strike in the near term. A sampling of suggested responses to both inflation and recession challenges include:

Growing your customer base. It bears repeating: We can’t overemphasize the importance of increasing the number of customers that a linen, uniform and facility services operation has. After all, the unexpected loss of a big customer or contract can impact even the most financially stable commercial laundry business.

Make the most of established customers and clients. It’s unfortunate that steady customers are often the first to go during tough economic times. An economic downturn or recession means that now is the time to take care of your loyal customers, since they could also bring the business new customers via referrals. Telling customers how you appreciate their business and rewarding them through discounts, loyalty cards and gift certificates can reap big dividends.

Win a competitor’s customers. Any business hoping to prosper in tough times must continue to expand its customer base – and that often means drawing customers away from competitors. You can do this by offering something more or different than your competitors. Providing better customer service is one of the easiest ways to outdistance the competition.

Market smarter and more aggressively. In tough economic times, many linen, uniform and facility services professionals make the mistake of cutting their marketing budgets or even eliminating them entirely. However, lean times are exactly when the business needs marketing. Customers are restless, and they could make changes in their buying decisions. Enhanced communications and incentives can aid in customer retention.

At the same time, now is the time to help prospective customers find your products or services. That means the operation should market itself aggressively. Prospective customers, who also could be feeling an economic pinch, will likely be on the lookout for special offers and freebees that can provide them with some financial relief.

Add automation. Streamline and automate processes, including commonly overlooked areas such as accounting, payroll and scheduling. This is another step that can help companies cope with inflation as well as potentially reduced income.

Diversify with care. While you could achieve growth by expanding your service to new market sectors, such as outpatient healthcare, far too often laundry professionals blur the concept of “diversification” to mean simply “more products.” That’s risky because merely adding stockkeeping units (SKUs) in the form of extra products or services isn’t diversification. It’s potentially a waste of time and money. Worse, it can damage the operation’s core business by taking time and resources away from what the business does best. Take steps to recession-proof your operation by dropping the extras and focusing on what your linen, uniform and facility services business does best and what’s most profitable for the company.

Incentivize employees. During any economic downturn, your employees will have their own financial challenges. In most cases, that means taking care of their families is their top priority. They can advance that goal either by getting a raise from their current employer, or by taking a job with one of your competitors.

Losing well-trained, quality staff is something that no linen, uniform and facility services business, large or small, can afford to let happen. Employees should always get fair compensation for doing their jobs. However, when they go above and beyond, you should reward them through a formal, tied-to-profit, pay-for-performance plan. This means developing a pay-for-performance plan tied to profit for each key individual – and involving the employee in the planning process.

Watch for additional details to come in September’s edition of Textile Services.