Why contractors should pick a niche trade to diversify and survive a recession

During the last Great Recession in 2006-2009, the construction industry was one of the hardest-hit industries. More than 2.5 million construction workers lost their jobs and thousands of contractors went bankrupt.

A recession is a period of declining economic performance across an entire economy that lasts for several months.

The Depression dealt severe blows to both the construction industry and the homeowner. Between 1929 and 1933, construction of residential property fell 95 percent. Repair expenditures decreased from $50 million to $500,000. In 1932 between 250–275,000 people lost their homes to foreclosure.

During a recession, the economy struggles, people lose work, companies make fewer sales and the country’s overall economic output declines. The point where the economy officially falls into a recession depends on a variety of factors.

In the world of construction and skilled trades, standing out from the competition can be challenging. However, one effective strategy for contractors to thrive, especially during economic downturns, is to specialize in a niche trade.

A niche trade is a special kind of work that not many people do. It’s like being really good at one specific thing instead of trying to do everything. For contractors, this means focusing on a particular type of job or skill that others might not have.

By focusing on a specific area of expertise, contractors can improve their efficiency, command higher prices, and reduce competition.

This article will explore why contractors should pick a niche trade to diversify and survive a recession and highlight some great niche trades to consider.

Benefits of Specializing in a Niche Trade

1. Higher Efficiency and Expertise

Specializing in a niche trade allows contractors to develop a deep understanding and mastery of specific skills and techniques. This expertise leads to higher efficiency in completing projects, as contractors can streamline their processes and reduce errors.

For example, a contractor who specializes in cabinet refinishing will have the tools, knowledge, and experience to complete the job quickly and with high quality, compared to a general contractor who may not have the same level of expertise.

2. Ability to Charge Higher Prices

Niche trades often command higher prices due to the specialized skills and knowledge required.

Clients are willing to pay a premium for contractors who can deliver exceptional results in a specific area. For instance, elevator technicians, who possess specialized knowledge in installing and maintaining elevators, can charge significantly higher rates than general contractors.

This increased earning potential can help contractors maintain profitability even during economic downturns.

3. Reduced Competition

Focusing on a niche trade reduces competition, as fewer contractors possess the specialized skills and knowledge required.

This exclusivity can lead to a steady stream of work, as clients seek out contractors who are known for their expertise in a particular area.

For example, contractors who specialize in HVAC Test & Balance—a niche that ensures heating, ventilation, and air conditioning systems are working efficiently—often face less competition and have more job opportunities.

4. Enhanced Reputation and Client Trust

Specializing in a niche trade can help contractors build a strong reputation and gain the trust of clients. When clients know that a contractor is an expert in a specific area, they are more likely to hire them for related projects and recommend them to others.

This word-of-mouth marketing can be invaluable, especially during a recession when new business opportunities may be scarce.

How to Choose Your Niche Trade

Picking the right niche trade is important. Here are some tips to help you choose:

Look at Your Skills:

Think about what you’re already good at. Your niche should be something you enjoy and have some experience with.

Research the Market:

Find out if there’s a need for the niche trade in your area. Talk to other contractors and potential customers to see what services are in demand.

Consider the Investment:

Some niche trades might require special tools or training. Make sure you can afford to get started.

Think Long-Term:

Choose a niche that you think will still be needed in the future. Avoid trades that might become outdated quickly.

Start Small:

You don’t have to completely change your business overnight. Try offering your niche service alongside your regular work at first.

Conclusion

Specializing in a niche trade can provide contractors with numerous benefits, including higher efficiency, the ability to charge higher prices, reduced competition, and an enhanced reputation.

By focusing on a specific area of expertise, contractors can improve their chances of surviving and thriving during a recession.