Time to play defense against inflation

Illustration: Cemile Bingol/DigitalVision Vectors/Getty Images

For those who listen to the weekly PMP Industry Insiders podcast I host with Donnie Shelton of Triangle Home Services and Coalmarch — and even for those who don’t — our June 2 episode featured a conversation with Tony Massey, president and CEO of Massey Services. Massey is a second-generation pest management professional (PMP), the son of PMP Hall of Famer Harvey Massey (Class of 2008), who is currently chairman of the board for the Orlando, Fla.-based firm. We talked about company culture and the economy, including inflation and the potential for a recession.

The economic discussion starts around the 31-minute mark, and can be accessed online at PMPIndustryInsider.com/post/episode-83.

Tony Massey

When asked about the economy and how our industry will fare in the tough times ahead, Massey said, “A lot of people talk about our industry as recession-proof. 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.”

Next, 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 that the business is profitable,” he said.

Massey offered the following advice for running a pest management firm during tough times:

• Remember, cash is king. “People stringing you out 90 or 120 days two years ago didn’t matter, because [then] the dollar today was as good 90 days from now. It was still worth a dollar,” he explained. “But now, with inflation kicking in, if you’re getting paid in 120 days, you’re working on 94 to 95 cents on the dollar.”
• Don’t discount. “When times are good and sales are coming in, 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 said. “Now, we’re drawing the line and saying no. Termite renewals are 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.”
• Identify your competitive edge. “You have got 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 whether they’re going to keep this service or keep that service or put food on the table, we know where it’s going,” he said. “This is where you get to really sit back and analyze yourself, start honing it and getting right down to every little edge as to how you want to compete.”

Although Massey is forecasting a recession, he said it’s not all “doom and gloom.” In fact, he said he believes a difficult economy is an opportunity to strengthen your company. “When times are good, people look good and they look smart,” he said. “When times are bad, that’s when it gives you time to [ask], what is my competitive advantage, and how do we go about [strengthening] it?”

I agree with Massey completely. Those who prepare for the economic challenges ahead by raising prices and focusing on cash management will weather the storm. And those who also view this as a period of reset and a time to get their house in order will fare best.