- June 8, 2022
- Posted by: Marisa Palmieri Shugrue
- Category: Accounting Advice
It was April 2021 when Tony Massey says he had a hunch that inflation wasn’t going to be “transitory,” as some government officials and media outlets had speculated. Massey Services was having trouble getting its orders for new vehicles filled, and several auto manufacturers told the company not to expect the market for vehicles to improve until late 2023, says the president and CEO of Massey Services, an Orlando-based pest and lawn company with $318 million in 2021 revenue, according to the PCT Top 100.
On the June 2 episode of the PMP Industry Insiders podcast, Massey talked with co-hosts Donnie Shelton and our own Dan Gordon about inflation in the pest control industry and the potential for recession. (The economic discussion starts around the 31-minute mark.)
“A lot of people talk about our industry as recession proof,” he says. “No, I don’t think we are. I think we can all look at 2007 and 2008 and say we may have fared better than some companies, but we felt it. When the housing market stops, we feel it. When the middle class gets pinched, we feel it.”
With that in mind, Massey shared how his company is preparing for a potential downturn: “We have shifted everything to do a few items: working on our collections policies, analyzing each customer and making sure each customer is profitable to us, and making sure we follow our rate cards and the business is profitable,” he says.
Massey also shared the following advice for running a pest control company during tough times.
Remember that cash is everything
“People stringing you out 90 or 120 days two years ago didn’t matter because the dollar today was as good 90 days from now. It was still worth a dollar,” he says. “With inflation kicking in, if you’re getting paid in 120 days, you’re working on 94-95 cents on the dollar. Cash is king.”
Hold your rates
“When times are good and the sales are coming in and everything else, you have a tendency to let things slide. A customer will stay with you if you take $10 off or something to that effect,” Massey says. “(Now,) we’re drawing the line on it and saying, ‘No.’ Termite renewal is a great example. Let’s say it’s a $200 renewal and the customer says, ‘Would you do $180?’ And we would take the renewal in some cases (in the past). Now? Can’t do it.”
Focus on your competitive advantage
“You have to look at your customer base and say to yourself, ‘Where am I at risk?’ If inflation stays around for a little while, and I think it will, we’re going to start feeling it. When people have to make a decision if they’re going to keep this service or keep that service or put food on the table, we know where it’s going,” he says. “This is where you get to really sit back and analyze yourself and start honing it and getting right down to every little edge as to how you want to compete.”
Even though Massey is forecasting a recession, he says it’s not “doom and gloom.” In fact, he says he believes a difficult economy is an opportunity to strengthen your company.
“When times are good, people look good and they look smart,” Massey says. “When times are bad, that’s when it gives you time to say, ‘What is my competitive advantage and how do we go about it?’”