War, Oil Prices, and Your Pool Route

0:00This episode is brought to you by Hasa. Liquid is clearly better. Liquid chlorine is the highest purity, works immediately, has no added signaric acid or calcium, and it will leave your pool safe, clean, and clear. And by the bottom feeder professional grade battery-powered vacuum system, it sucks to clean pools, so cleaning pools sucks less. Get $100 off with code DVB100. This episode is brought to you by Schimmer, the number one pool service software in North America. With Schimmer, you can streamline your schedule, grow your revenue, and keep your customers coming back with five-star service. Whether you're a one-person operation or an established team, Schimmer is your partner in success. Visit getschimmer.com slash pool guy to try Schimmer for free for 30 days. I welcome to the pool guy podcast show. In this episode, I'm going to talk to you about what happens

1:08when you're in a slow economy and you have a pool service business, and it looks like the current global situation currently that we're facing is going to of course cause some problems with the U.S. economy going forward. Are you a pool service pro looking to take your business to the next level? Join the pool guy coaching program. Get expert advice, business tips, exclusive content, and get direct support from me. I'm a 35-year veteran in the industry. Whether you're starting out or scaling up, I've got the tools to help you succeed. Learn more at sumipoollearning.com. And it really could be anything that affects the economy, causing a slowdown. It could be a war like we're currently facing here. It could be the housing market. All these things affect the economy. There's been a number of recessions over the years. Probably the worst recession was during the COVID-19 pandemic, but the government infused economy with a ton of money. Everyone got these stimulus checks in the mail. It really helped out during that period of time. In 2008,

2:14there was another pretty major recession with all the bad mortgages because the housing market did pretty much collapse in on itself. The federal government also bailed everyone out by buying the mortgage back securities. Actually, they turned a really good profit on this when the housing market went up. They're able to resell those mortgages and of course get them off the books at a profit. And there's all different things that will affect your service besides the economy being slow. But a slow economy does affect your pool service in a few different ways. And it's not going to be anything, I don't think, traumatic. There's always pretty much the same effects during a downturn in the economy. Customers are going to put off some maybe some remodeling work or some install of new equipment until things settle down. Their job may be affected, of course, depending on their industry. But I think on the flip side, the thing that really affects the pool service industry is inflation. We really saw this happen during the COVID-19

3:18pandemic when, of course, the government was giving everyone stimulus money, which caused people to go out and buy a lot of stuff that they didn't need and spend that money, which caused, of course, inflation and disinflation. There was stuff in short supplies where the prices went up, it has caused inflation all across the board. But the thing that's going to affect us the most, during this crisis is the price of oil and the fact that everything relies on deliveries and fuel is one element in that delivery process. You can't really expect prices to stay unchanged in the pool industry as far as chemical costs go because your supplier or the person that supplies the chemicals and the equipment and all the parts that your supplier sells is going to have to charge a higher price for that eventually for to offset the higher fuel costs. One thing you have to understand in any economy is that the consumer is the one that pays for anything or everything

4:21during an inflationary period of time. Since you are the customer of the wholesaler buying the chemicals, then your customers are the ones you're selling everything to or maintaining their pool. Really what's going to happen is that you're going to pay a higher cost for your chemicals and you get the past that costs on to the customers on your route. There really is no way around it and it's one of those things where it's kind of a snowballing effect since you're paying more since your supplier. I should back up since the distributor is buying products at a higher price because the suppliers are charging more because they're paying more for fuel which means you're going to go and pay more to the distributor for your chemicals and your equipment and supplies and your customers are going to have to have a rate increase to cover that because you can't absorb the extra costs just like your distributor can't absorb the extra cost they pay from the suppliers and just like the suppliers can't absorb the cost of the higher fuel.

5:26It's a trickle-down effect to where someone has to pay for it and this is why prices go up everywhere when we're in an inflationary period of time. There's nothing really that you can do to prevent this. There's no protection you can do. Maybe you can go buy all your chemicals right now and stock up for the summer because I think if this goes on for an extended period of time and the price of oil stays elevated the price of fuel goes up everywhere. You're going to see a pretty dramatic increase in prices this summer now things kind of calm down and you know write themselves quickly then you don't have to worry about too much it'll be a blip and prices will go up but then they'll come back down once the fuel prices come down again who knows what you can't predict who knows what's going to happen or you know how extended this is going to be but you're going to have to do things to protect yourself now if you were

6:28planning on not raising prices this season maybe you raised your customers prices last season and you're going to skip this year I would say that you may have to reevaluate that and you really can't skip raising the prices at this point because there's a lot of uncertainty out there in the market and I would say that people expected at this point because everything else is going to go up of course and I would suggest maybe a small increase to cover any kind of increases that may happen this summer you don't want to do two increases in one year so you have to kind of think of this strategically and logically but if you wanted to go up 10 or 15 dollars per customer when you know you have to do it like right now I would say you don't know clearly you have to do it but I would say that if it's off the table put it back on the table and then at the beginning of you know summer you may want to increase the prices depending on how extended the increased cost

7:30of fuel is at this point and it's one of those things where maybe the government's going to step in and help out and you know ease the price of fuel maybe they won't and maybe this won't have much of an effect because I find that once the cost of gas goes up especially in California it takes a very very long time for it to go back down it like goes up instantly like you know 10 20 cents on one day and then over the course of two weeks this is dropping a couple cents every day and I've been doing this long enough to have gone through many recessions and downturns in the economy and what what you have to do invariably is understand that you can't absorb the higher costs in your business and survive no one really does that if you have a business in your absorbing all these extra costs you're going to go out of business because that extra cost is going to eat into the profit and this is hard for people to understand when you talk to someone about you know the price

8:32is going up especially in the food service industry restaurants and fast food restaurants the cost of labor has gone up with the increase of minimum wage in my air in California the food cost goes if the fuel goes up for extended period of time you know flour goes up in price everything meat goes up in price and they have to raise the price to their of course their burger and fry special and pass it on to you and there is a tipping point by the way where people are like well I'm not going to go out to eat you know today because it's just too expensive to go to Tom's burger number 10 or whatever and I'm going to just you know make myself a sandwich and that of course affects the business because now they've lost the customer that day and if that is going across you know 50 customers that they don't get that day they lose money and eventually you know they're going to have to do other things kind of employees and you can see how this is a snowball effect now of things going everything costing more than having the raise their prices and they lose customers

9:38and they have to lay off employees and maybe close a location I mean it could go to that point that happened definitely happened in 2008 where a lot of businesses were not a business but for pool service the nice thing about it and I know I just scared of a one right there the nice thing about pool service is that you are a service industry so the service sector does have an advantage over retail and food and that is people need your services and they can't necessarily cancel pool service and do the pool themselves I mentioned the higher price of chemicals of the customer that wants to try to do with themselves is going to go to the store and they're going to be in for a sticker shock for the price of chemicals and maintain their pool also there is time necessary there's an element of time that they have to have to take care of the pool and there's also a skill level especially in a summertime that they need to maintain their own pool a lot of people don't have time they don't have the skill if they don't want to go to the

10:38pool store and so those just keep paying for the pool service and not really think too much about canceling or changing services because the change service as well to someone less expensive takes time and effort as well and what I'm saying is that the pool service industry is pretty insulated from any kind of economic recession that happens out there we have kind of this built in protection by being a service driven industry and the pool-gay podcast show has teamed up with UPA to bring you affordable reliable liability insurance starting at just $64 a month get up to $2 million in coverage and the members of my coaching group get an even lower rate protect your business and your piece of mind sign up with UPA today by clicking the link in the podcast description

11:40that's not to say you won't be affected and you won't be affected down the line by kind of the ripple effects let me explain you may lose a percentage of your customers that they're affected to the point where they can't afford service and you're going to have to get alternatives like doing it themselves that's very common that does happen I would say that during the worst ever recession I can think of in 2008, 2009 and 10 there was a drop of about 10 to 20 percent in service business over the course of those two or three years people canceling it wasn't immediately it wasn't everyone that same at the same time so it was kind of a gradual drop-off of customers and it was hard to find new customers of course because people weren't looking for new service and so that is one of the main effects you're going to have is that getting new customers growing your pool route is going to be a harder process during a recessionary time holding onto existing customers won't be a big issue but if you're trying to build up your route or build out

12:43during a recession it's much harder it's just like anything you know the car salesman during a recession is going to have a hard time selling cars they discount everything because no one's looking to spend money everyone's kind of circling the wagons at that point and it's the same in the service industry to some extent where the customers you may lose some customers they can't necessarily afford service anymore because their job has been affected by the recession that's very common is something to be expected but the majority of customers won't be affected by the downturn because most of the people that have pool service is a luxury thing of course to have the service and they can afford it and their jobs usually aren't affected but there may be a segment that are affected directly what's going to happen is that you're going to maybe not have the same time table that you had previously for equipment upgrades and installs or if you do report remodeling or a builder a lot of times you're going to not get a lot of leads at this point people stop

13:44they're thinking about putting a pool in or remodeling the pool and put it on hold that doesn't necessarily affect the pool service industry immediately but down the road is going to definitely affect the industry because if people stop building pools remodeling their pools that means that the number of service accounts will decline for a period of time and again this happened very dramatically in 2008 2009 where a lot of builders just went out of business because it were overextended there was one in my area here I'm not going to name the company but it had about 20 projects going at the same time to where he just ran out of money people weren't the next payment he was doing everything on leverage himself and he couldn't pay his subcontractors and everyone just stopped working and there was about 20 bills that were just in different stages he stopped and it was not just him it was other pool companies that also were overextended and they went out of business at that point I'm not saying that will happen now that was one of the worst times

14:50for builders I can think of but there's going to be of course any kind of recession means people kind of tighten their purse strings and they may not get the pool built this year they may wait till next year or they may not remodel the pool this year and wait for a year or two which means that those accounts that would have entered the revenue stream for a pool service have not entered the entered the market so to speak when they're supposed to enter the market and there's not to be delay maybe or it may never even get built or done which will affect us in the future so this is not something that affects us immediately but if you have less remodels and builds that year or this year you're going to have less potential service accounts in the future and this will definitely affect us because then you have less accounts and you have more service providers and it's going to cause a lot more competition now that's the worst case scenario that's if building slows down dramatically and people pull back dramatically but who knows what's

15:53going to happen you can't really predict that I'm just giving you the worst case scenario you're definitely going to have less customers wanting to have installs and spending a lot of money on things and that's a given in the recession that's what causes a recession and that kind of is what exacerbates the situation people don't spend money when people need to spend money to get the economy stimulated and that's where the government sent all that money back in COVID to get you to spend money and get the economy going again that's not going to happen I don't think this time and so what happens is that people big ticket items aren't purchased you know things that they need to get done are get get done but things that don't need to be done don't get done during this time so just be aware of those factors be aware that you're going to have increased costs of supplies because of the increased fuel cost during this period and instead of causing you to have to raise your rates under your customer more than likely you're going to have to increase the prices at some point I think we should let this month play out and see what happens but if it looks like your suppliers

16:57are raising prices you have no choice because as you know once the supplier raises prices they rarely if ever go back down the other way once the last time in california and your memory that the gas prices under four dollars and it's one of those things where once the gas prices go up to certain point they rarely go back down to a low point again so prices always go up and rarely come down and you have to account for that in your business I wouldn't do sleep over it worry too much about it but you have to really prepare for a slowdown in the economy if it goes on for extended period time and you have to be proactive in your business so that you can protect your profit margin if you're looking for other podcasts you can find them by going to my website swingprolearning.com the banner you can click on the podcast icon and it'll be a drop to many of over 1800 podcasts for you there and if you're interested in the coaching program you can learn more at pull guy coaching.com

17:57thanks for listening to this podcast I guess you're weak and God bless this episode is brought to you by Hasa providing products that deliver clean healthy water for every aspect of every day life the bottom feeder battery powered vacuum system portable powerful and only weighs 12 pounds and skimmer get skimmer america's number one pool service software podcast listeners can try skimmer for free at get skimmer.com backslash pool guy