Fix-it Entrepreneurs See Increased Business
The neighborhood plumber is one entrepreneur that's not hurting during the recession, finds a recent study. In fact, most fix-it entrepreneurs are benefiting from the consumer trend of repairing necessary items rather than buying new.
New data from Raleigh, North Carolina-based financial analysis provider Sageworks, shows consumers have cut back on all but the bare necessities. Big purchases are down sharply: Car dealership sales are down 9.7 percent over the last 12 months and home builders have seen sales slide 5 percent.
The good news is that instead of buying new, consumers are turning to car mechanics and repairmen to stretch the life span of their possessions. Business is up 2.4 percent at auto repair shops and 4.6 percent for building equipment contractors like electricians and plumbers.
"People are economizing—they're not buying new things, they're just fixing what they have," says Sageworks CEO Brian Hamilton.
He's finding businesses that provide items or services people consider non-discretionary are insulated from the worst of the downturn. Other strong sectors include accounting (10.2 percent), dentistry (6.9 percent), and personal care services such as haircuts (4.5 percent).
"The categories doing well are selling stuff people need," he says. "These are stable industries that tend to stay the same regardless of cycles."
To appeal to budget-conscious consumers, small businesses that can are shifting their offerings. Hamilton points to entrepreneurs like independent builders and electricians moving to repair work as an explanation for their stability.
"That's why I think these sectors are more stable—they're finding way's to maintain sales and profit margins, because for them, less earnings means less income."