328: Rocky Road in 2023?
Brought to you by Pet Sitters Associates. Use ‘Confessional’ at checkout
Summary
Reports and analysts are saying 2023 is not shaping up to be a good year for the global economy. Monetary policy and interest rates are slowing the economy down, and most suggest a recession is in the work in the next 12 months. How do we digest this data and apply it to your business? What does this mean for the pet services industry? We break down several key questions for you to think through in your business. We also address the very real need for a support network and the psychological toll a recession takes on small business owners.
Main topics:
Create a pricing spread
Monitor your debt levels
Strengthen your team
Watch your mental health
Main takeaway: Preparing for a recession is more than just focusing on your business and fundamentals, it’s about building a support network and keeping track of your mental health.
Links:
Handling inflation:https://www.petsitterconfessional.com/episodes/292
Uncertainty: https://www.petsitterconfessional.com/episodes/266
NAPPS sign-up: https://petsitters.org/page/EventsTab
Recession in 12 months? https://www.bloomberg.com/news/articles/2022-10-17/forecast-for-us-recession-within-year-hits-100-in-blow-to-biden
25 year low mortgages: https://www.mortgagenewsdaily.com/news/10192022-mortgage-application-volume
Job losses on the horizon: https://www.beckershospitalreview.com/finance/economists-expect-recession-job-losses-by-2023.html
Recession and mental health: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4880023/?utm_source=fbia and https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4741013/
Pet Sitters Associates: use ‘Confessional’ at checkout
ProTrainings: For 10% off any of their courses, use CPR-petsitterconfessional
Give us a call! (636) 364-8260
Follow us on: Instagram, Facebook, Twitter
Subscribe on iTunes, Spotify, Google, Stitcher, & TuneIn
Email us at: feedback@petsitterconfessional.com
A VERY ROUGH TRANSCRIPT OF THE EPISODE
Provided by otter.ai
SUMMARY KEYWORDS
recession, pet sitter, clients, people, business, price, confessional, services, pay, community, pet sitters, turmoil, debt, continue, morale, episode, decisions, stay, feel, walk
SPEAKERS
Meghan, Collin
Meghan 00:10
Hello, I'm Meghan. I'm Collin. And this is Pet Sitter confessional and open and honest discussion about life as a pet sitter. Goodbye morning. Good afternoon. Good evening, wherever you are welcome to another episode of pet sitter confessional episode 328.
00:26
Good, generic time of day.
Meghan 00:29
Thank you to pet sitters associates and our amazing Patreon members for supporting today's show. And if you don't know what a Patreon is, because that's kind of a weird word. It's just somebody who financially supports the show every month, and sees the value in what we do and get something out of it. So if that sounds like you, and you would like to support the show, you can do so at petsitter confessional.com/support.
Collin Funkhouser 00:52
Also, in case you didn't know, Megan and I are actually going to be speakers at the 2023 in person naps conference in New Orleans. I'm just a little bit nervous about that. It's a two day event in March. And we'll be speaking about the life of a pet sitter tickets are on sale. Now there is a discount if you are a member, but you can become a member get that discount and sign up. And there'll be a link for that. In the show notes. We really are super excited to get connected with everybody see everybody in person, and learn from a lot of the other amazing speakers as well.
Meghan 01:28
And you can go even if you aren't a member, so keep that in mind as well, any literally anybody can go.
Collin Funkhouser 01:33
Speaking of 2023, the economic outlook right now is not looking really good at all. As a matter of fact, many current forecasts are saying that a recession will happen within the next 12 months. And some forecasts are even saying that there is a 100% chance of a recession happening within 12 months from now.
Meghan 01:54
And many of us may feel like we already are in one given everything going on.
Collin Funkhouser 01:58
Yeah, and we've already talked about how to handle uncertainty and how to handle inflation back on episodes to 66 and 292. And just as a quick side note, if you're not usually going to the show notes, or going over to the website to look at all of our links and resources that we are including, I really do encourage you to go and do that for this episode, because we'll be including news articles, and links to reports and things like that, that really talk about what the economy looks like globally over the next 12 months.
Meghan 02:26
And the shownotes are just below the episode in your podcast player or you can just go to petsitter confessional.com.
Collin Funkhouser 02:32
Basically, there are three things that are still true at the economy at the global scale. There are tight financial conditions, there's persistent inflation, and Federal Reserve's and reserve banks around the globe are continuing to increase their interest rates, so we get higher and higher rates. Just another quick snapshot, new mortgage applications and applications for refinances are down something about 80% that we haven't seen these levels since the 1980s. Also reports
Meghan 02:58
are expecting that net job losses are going to continue in the next 12 months. So what do we do with all of this uncertainty? And not fun times ahead of us? How do we retain as much market share, which is really current clients? How do we retain as many clients as possible? And how do we grow through that
Collin Funkhouser 03:19
going up market isn't always possible. This could be because of the demographics of where you live, there just aren't enough people who can pay a higher rate, it may also very realistically hear go against the goals or values that somebody has for their business. I know many pet sitters desire their business to service as many piece of people as possible, which really means that they have to keep their prices as reasonable as possible so that everybody can have access to them. So the answer isn't always getting more expensive, because either way can work. There are two different approaches here. I kind of like to think of it as the apple way or the Toyota way. Apple basically produces or at least did for a very, very long time. Exactly one phone, if you wanted a different or a cheaper phone, you had to wait several years for that old technology to trickle down so they could sell you a two year old phone at a cheaper rate. And so they just kept waiting for the older technology to come down. But there was one phone that was a super high price. And even today, even though they have a few more models, it's still basically brand new tech and several years old tech, and that's how they get at that price range. And then there's the Toyota way, there's a Corolla, right? There's one single Corolla that you can start at $16,000 and dress up all the way to $30,000 or more depending on how you want it customized. And it's really two different approaches going how are we going to get market share, Apple is able to charge these really, really high prices for their phones because they understand that people value their phone. The phone really is the modern personal computer. And so this is societal impacts and needs for having a phone is really great. People need to have them in where there is a great need and demand, prices can
Meghan 05:08
follow. And so it is a very interesting concept when you try to compare the two and think about your own business. And we can think about our business of which model, are we right now? Where we something in the past? Are we something right now? And then is that what we want to be going forward? Or do we want to change models,
Collin Funkhouser 05:26
depending on the economic outlook and forecast exactly in what the pressures are on our clients, there's a very real way of going, I'm going to offer one price is going to be very expensive. And I'm going to stick to that. And I'm going to naturally find my way into the people who can pay that. There's also the other way that I don't think it's talked enough about have that kind of Toyota model of developing this good better and best strategy.
Meghan 05:53
So for instance, the good could be your $20 base price walk, that's just in order for me to come over and walk your dog, it's $20, for instance, then you have a $25 price for a 30 minute walk, which is basically the same thing, but maybe they get chilled water on the walk or some other kind of perk or amenity that you choose. And then you can go up from there of maybe your best is $30 for a walk. And maybe afterwards, you add on like a quick five minute massage or some little fufu thing that makes it you know, the best thing that you can offer for a walk.
Collin Funkhouser 06:30
Yeah, and you could even just start with what are my current prices for a walk, and all of a sudden, that's going to become my cheap option. So if you're at $25, for a 30 minute walk, or if you're at $30, for a 30 minute walk, let's make some more tiers above that, so that you can get the good better and best model and it's we're not sacrificing any quality of care, we're not being more lackadaisical, we're still bringing that professionalism. But what we're doing is we're creating a price option for our clients, where we can inherently go, this is how I can serve you here are my three different ways. You know, I kind of liked this idea of of 20, for 20 $20, for 20 minute walk, so it's just a little bit shorter. So it makes it a little bit more worth your time to go out and do that. And somebody who just needs a walk. That's what they can do. If they want it to be a little bit longer with some added extras, they can pay for these other things, but you are not making that choice. For the client. That's what this option does for you is that you don't have to go, I need one price, one service. to nail the needs of my clients, I can create several options in tiers that allow my clients to pick from them and get to me. And you really need to make sure that all of them are obviously worth your time and money and you are still making a living off of them. You're not offering something for way too cheap. But you can again, start with where you currently are and go, What if I added two tiers above this, what if I create a little bit of pricing spread so that people could compare and see what's going to work best for them?
Meghan 07:56
Well, and that was going to be my comment for the good is start, if you're gonna do a good better best strategy. Start you're good with where you are right now, don't discount, because if you already have, you know, 100 clients or 50 clients paying at your current price, there's no reason for you to, to decrease your prices and give them a discount, just start with where you're at and go up from there.
Collin Funkhouser 08:17
And this will really show a lot of the pricing power that you have as a company and will tell you a lot about the value that you bring to your clients is that if you go, I'm going to always offer my current pricing right now. And but I'm going to create these tiers above it, you'll very quickly be able to see how many people start self selecting these higher end services. And this could even tell you a little bit about where you could move in the future and how you can raise rates or what you can do to change your services or how your clients are experiencing difficulty as the recession lengthens. Or it gets more severe. If you have somebody who jumps way up to that higher tier, and then they gradually move back to the lower tier, you know that they may be struggling a bit financially or they might not find the value there to go way up high end. So you can play around with what you want to add what you want to look like and how you're going to best serve your clients. And I feel like it's a lot easier to do that if we have a couple different options. We're not going full restaurant, and then you hear just with gobs and gobs of options there. But what we're doing is we're just creating a little bit of space and seeing where our clients are going to fall out and see how we can then adapt with that.
Meghan 09:24
So other than pricing structure, what else can we do to handle the recession if indeed one is coming, the first thing is to make sure that you are not over leveraged. So if you have any debt, whether it's a mortgage car or student loan debt, pay it down as fast as possible, because the more debt you have, the more cash you need to pay it off and to survive. You know, it's hard because leading up to a recession, money gets tight and many people and businesses use more debt to pay their bills. So it can be hard but it's very important that you are not over leveraged,
Collin Funkhouser 09:57
and that's actually some of the reports coming out what they're saying Is that credit card spending has actually started to increase quite considerably, as inflation has continued to rise, and people have been using credit to kind of help to make ends meet. And the pickle that people find themselves in is then the market drops out, the bottom drops out, they're left with all of this debt and this need for a high cash flow to pay off that remaining debt. And it's just not there, because there's no economy. And so you look at how you are spread out right now. And whether that's business debt, because you bought a bunch of equipment or you bought a vehicle for your business, or it's the personal end where you, you have this credit card debt, look at where you are right now and try and make sure that you are not over leveraged, so that you don't need as much money coming in, so that when the recession hits, you don't have to panic as much about the drop into business. Whether that's 50% or 30%. in lost revenue, you have a little bit more leeway in your in your budget every month because you don't have that need to pay off that debt.
Meghan 11:01
We'd like to take a moment to tell you about our friends at pet sitters associates. As pet care professionals, your clients trust you to care for their furry family members. At pet sitters associates, they are here to help for over 20 years they have provided 1000s of members with quality pet care insurance. Because you work in the pet care industry, you can take your career to the next level with flexible coverage options, client connections and complete freedom in running your business. Learn why pet sitters Associates is the perfect fit for you and get a free quote today, at pets@llc.com. You can get a discount when joining by clicking membership petsitter confessional and using the discount code confessional at checkout to get $10 off, check out the benefits of membership and insurance once again at petsfit llc.com. If you have a team decentralize that decision making process as much as possible because it actually leads to better moves. So if you, you know, if you are trying to make a decision, if you need to switch software, maybe you could go to your staff and say, Hey, I know that there are things that we don't like about the current one that we're doing. And we need to switch over to a different one. What things do you guys like now that we are doing or what things would you want to change so that I can see if the new software is going to have all those features? Yeah, I
Collin Funkhouser 12:08
think we have this idea in our head of in times of turmoil, a central leader figure rises above the rest to guide and steer everybody forward. But actually, there has been some pretty good research through the past 2030, almost 40 years that has shown that in times of turmoil, when we get this decentralized decision making process put into place where we get more diversity of outputs and input into our company, we actually the company itself makes better decisions is able to more nimbly move and adapt.
Meghan 12:39
Well, that makes sense. Because if you are kind of laser focused on one thing, you may not, you may be blindsided by other things. And you may not see all of the possible options. Whereas if there's more people more input more, you know, eyes on something, they can kind of point out with different things of what needs to be tweaked a little bit. Yeah, we
Collin Funkhouser 12:59
see this in biological communities who are more resilient to disturbances such as forest earthquakes, flooding, other natural disasters is the more diversity of organisms that we have in a particular ecosystem. And in a community, the more functions that are being served, the more resilient the whole thing is, and being able to bounce, they're able to bounce back faster from those disasters. So same thing with our companies we can get, we have a lot of moving pieces, there are a lot of organisms that do different functions, you know, team member of staff members, virtual assistants, we've got CPAs, we've got actual boots on the ground field work that's going on. And managers if we do, they can all contribute something and help us be better. If you don't have a team, though, find a group of people to get connected to and start building that to help building that support with you. So that you get input from different people. I'll also add that if you have a team, managing their morale and expectations through over session is incredibly important. You need to make sure that you have open lines of communication and are letting them know how things are going. And again, that's what is really wonderful about this process of decentralizing that decision making. Because it helps them be involved helps them feel like they're contributing instead of being feel like they're left out to dry and not having any say or idea of what's going on, which can be really demoralizing as somebody when things are just happening to you, and you don't feel like you can contribute in any way.
Meghan 14:28
Well, and if they're field staff, obviously, if there's a decrease in the number of bookings that happen, they're obviously going to notice that and feel that. So how do you have a positive uplifting conversation when you know like during COVID times of like, there is no business? So how do you keep that morale going when it's like, you know, things will get better? But we don't know when that kind of
Collin Funkhouser 14:50
talk? Well, I don't think you can and I think that kind of gets into some people's idea of oh, I have to always be positive I have to project optimism and I have to project uplifting things, when really how that can come across is just sugarcoating the obvious because like you said, field staff are going to know, oh, I used to be doing 12 visits in a day. Now I'm doing three. But my boss keeps saying that things are great, we're going to be fine. We're doing this stuff. Be forward and honest with your staff about how things are going right now, then tell them about what you're doing about it. And then ask for their feedback, ask for their input and start having a conversation with them. But don't be afraid to have those honest conversations about what could actually happen. What are some very real end points that could occur, less hours, potential layoffs, anything in between are and how you're going to address adjust services or service areas, or job titles and job duties and what you're going to start having them do make sure that they stay informed about that, especially since we all have very tight knit teams, again, if you have staff, but having that very open conversation will help them be engaged, and will help actually strengthen you and your team. Which other keep on saying research has shown. But research has shown that companies who don't lay off as much are actually able to rebound a lot faster once the recession is over. Why? Why is this anybody who's hired knows how expensive and costly it is to bring on somebody new. And when people bail ship, when you let them go, it's actually a lot more costly on the other end, and you end up trying to play catch up, to get ahead and get back in line with where you were previously to the recession. So trying to retain staff as much as possible through the tough times. Yeah, it includes trying to pay them what you can keep them busy with what you can. It also includes, again, a building that morale in that community around a common goal.
Meghan 16:52
I feel like that's a whole episode in of itself.
16:56
We'll write that down. Yeah.
Meghan 16:58
But also with a recession potentially coming up, it's also important to stay in touch with your clients. And we went through this with COVID, as well, of, you know, we they weren't using us as much we weren't in touch as much. And so whether it's emails or text messages, social media, pigeons, carrier pigeons, whatever you do, to stay in touch with your clients, it's important to do that.
Collin Funkhouser 17:23
And these messages are that you're still they're still talking about the services, still talking about what ways you're contributing to the community, it's not please use us and begging them and anything like that. It's just having those touch points so that when things come back, they know to reach back out to you. And they don't forget about you. Because let's be very honest, when things get tight, people are going to tighten their purse strings, and they're going to cut out things that they don't feel like they need anymore. And then they might not know or be comfortable knowing when it's okay to start getting back into the services are going to start spending a certain way again. But by having these gentle, comforting, helpful touch points of useful information, staying top of mind being genuinely helpful to them, that will help them come back a lot faster. COVID was definitely a little, it's tough to say this. And it's hard to hear. But kind of like a micro recession, for many of us was the first time we ever experienced in anything like that, in our businesses. Since you know, to the early 2000s 2007 2009 financial crisis, we got COVID. And we had this artificial recession, because everything was shut down and locked down around us. So a lot of those things that we learned from there are actually very, very applicable to any recession that we have that occurs in the more natural forms of economics, so that staying in touch with people paying it down your debt, investing in technology, working on a team, all of that are things that we did during COVID. We can't forget that, because now those muscles still need to work can be applied to this, what's coming next.
Meghan 18:56
And one of the major things that we learned from all of that was the mental and psychological toll that it can take. And so we didn't know how long COVID was going to last. And so we had to kind of mentally prepare for X amount of time and kind of the same thing with a recession. They're saying it's not going to quite be as bad as their, you know, mid 2000s 2008 recession. But we still, you know, there's no way to determine how long it's going to be. So working working on handling that stress is going to be very crucial,
Collin Funkhouser 19:24
especially because as small business owners, we're already pretty stressed out and on the verge of burnout to begin with, and then this will just be yet another thing on top of our plate. So things that increase through recessions are things like anxiety, depression, and suicide rates all increased during economic downturn, and it's even worse for small business owners. Because the weight of all the decisions, sole responsibility lies on our shoulders. And so all of that stress gets much more magnified on us and intensified by our perceptions of what's going on. On, especially because a lot of these important decisions are stripped away from us. And we kind of feel powerless by all these external factors that are going on around us. And we end up feeling like we have no little to no control over our businesses during economic term turmoil, things like our motivation to continue to work our self esteem and worth as a business owner, or even our confidence all get eroded and make us less capable of coping with the existing economic climate,
Meghan 20:28
it can be hard to keep that motivation up when the world is basically turning to chaos. And we certainly learned that from COVID. Some days you wake up, and it just doesn't seem worth it anymore. You feel like you're working hard, but it doesn't get you anywhere, or it gets you just a little bit closer to that goal that you have, no matter how hard you try. Sometimes it just feels like a lost cause. So it's important we talk about this all the time, get connected with a community get connected with somebody else, the people that you're helping the dogs you love, another pet sitter in your area, or maybe it's just as simple as your sister or your mom or your dad is something or someone that is going to help you get grounded again, in your why in your motivation for starting this business and continue to keep it going. In an economic downturn, it also can lower your self esteem, you know, failing at stuff sucks when clients choose not to use you anymore, that doesn't feel good. We feel like a failure when our business tanks, you know, but you have to remember that your value is not in your business, your value is not in how big it is, or how small it is, the size doesn't matter that your value is in you as a person, you are valuable. And when you wake up each day, that means that you are important, you were put here for a purpose. A lot of this plays out in our self confidence as business owners, which is why that is so huge. If we don't feel like we can do it, we often won't even try when our business isn't doing well. It can feel like a hit to our self confidence because we thought we were doing everything right. We thought we had the right pricing, we have the right clients, we have the right service area, we have the right website, whatever it is, we thought we were doing it correctly. But sometimes that just isn't enough in an economic downturn, we thought we had everything figured out. And then outside factors take that away. Clients don't book you as much or they book less frequently, we can start to question our own decisions. And we stopped taking risks. And we stopped trying new things which can affect our morale even more affect our self confidence and our self esteem. So again, that community, that group around you, or even just that one person is essential, focus on what you can do. And what you have done in the past you if you've gone through COVID, you, you are here, that is incredible. If you built your business out of COVID, you came into a crazy time. But you can get through this too, if that's what you choose to do, if that's what you want to do realize that we just can't control some things. And that sucks. But it is the reality, there are some things that we just cannot control. And it's not our fault. But at the end of the day, if you want to continue to provide pet care services to clients, go for it.
23:19
And so preparing for a recession really does look like what how, what are the structure of my business? What are my services? What
Collin 23:26
are my prices, homing needs of clients? Am I being as helpful to them as I possibly can be? Am I being valuable to them, both in their eyes and in my eyes? And then am I taking care of myself mentally, physically, emotionally, spiritually, we cannot forget the just severe emotional and psychological toll, the stress that takes place on us, when we go when recessions happen. And when we are trying to run a business through them. The mental fatigue and mental exhaustion are real. Those are very real impacts on us. And if we don't stay on top of those, if we aren't plugged into that community if we aren't proactively doing stuff to get ahead of that it really impacts us and drags us down with it.
Meghan 24:10
Well, and this can seem like a really Debbie Downer episode of like doom and gloom and the future is bleak. But really, we need to be preparing for this, that we can get through this. You know, we a lot of businesses got through the 2008 crisis. We and a bunch of other people got through COVID. And so now we're going to be able to get through this too. So this is not an insurmountable hurdle by any means. It's just kind of the ebbs and flows of Business and Economics that we're going to have to deal with now.
Collin Funkhouser 24:39
Yeah, again, it's not your fault that any of this stuff is happening, but it is happening and so we need to be aware of it and we can't shy away from having these tough these kind of no fun conversations. If we never had conversations like this if we never talked about the impacts, never talked about global economies and all that stuff. We would be caught off guard when things happened. And then we would just feel like things are just happening to me and I'm trying to get caught up. staying proactive, looking down the line, being plugged into these things will really help you navigate it best possible. And it's going to impact different states, different countries around the globe differently. With prolonged or shorter periods deeper or shorter. It's going to manifest itself uniquely for everybody. But that's why looking at large scale and small scale factors, and then going now, what does that mean for me? And what does that mean for the business that I want to run? And this the clients that I want to serve? None of those answers can be, can be at all right now because you listening, have to answer those for yourself. Now, you can still get reach out to community and get plugged in in those ways. But that's where this I'm a business owner, I need to start making decisions. I need to have the most information at hand so that I can be better equipped to handle these things as they come.
Meghan 25:57
And if you don't have a local community, or another pet sitter that you can reach out to we do have a Facebook group sitter confessionals, where you can join, there's a couple 1000 other pet sitters from across the globe there you can ask any kind of question that you want, and you'll be sure to get some feedback from people.
Collin Funkhouser 26:13
So how are you planning on handling the economic turmoil? Are you are you preparing for a recession? And what does that look like for you? And how do you think it's going to impact your business? We'd love to know share that out in the sort of confessional Facebook group, send us an email feedback at Pet Sitter confessional.com.
Meghan 26:32
Thank you very much for listening to this today. Hopefully you have gotten a little bit out of it. If you have it, feel free to share it with another pet sitter or dog walker that you know and we appreciate you. We'll talk with you next time.
26:45
Bye
