The Core Question For Every Company

Ty Cobb Backer 0:00

Episode 356. What does a company do when the market changes? We have a kind of a belief system that either we're gonna push you up or gonna push you out. I don't want to be around five other people that aren't pushing themselves to succeed.

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Success isn't about taking, but giving value first. Compensation follows contribution always. This is true authenticity. It's the true every week. This is our story. We share with you our journey, we share with you our scars. Please welcome your host, Ty Cobb Backer.

Ty Cobb Backer 0:34

Welcome back, everybody, to Behind the Tool Belt. This is episode 356, and today I want to talk about a question every company eventually has to answer. And if you've been following us for any length of time or even caught last week's show, whether it be via YouTube, Facebook, Spotify, Apple Music, you can listen or stream pretty much on any of your favorite streaming outlets. But if you were following us, especially last week, this this week's topic kind of coincides with what we talked a lot about last week. I just thought maybe I could unpack this a little further. So it's a question I believe every company should eventually answer. And that's what does a company do when a market changes? Because the market will change. Customers' behaviors change, technology changes, products change, interest rates change, insurance rules change, material costs change, and even the way people research and choose a company changes. And I think we all know that today. Any of us that are in business or work for a business that knows anything about marketing or search engine optimizations or search engines alone know that people are looking for us differently today. So the question is not whether the market will move underneath us, the question is whether we will recognize it and respond before it moves without us. I believe companies usually make one of two mistakes when a market changes. The first mistake, and again, like I always mention, I'm speaking from experience here, and and I think the first mistake that we make as entrepreneurs is we go into what I call denial. Okay. We keep saying things like, this is temporary, things will get back to normal. We just need to wait it out. Okay. And then I think the second mistake is that we panic. We change our pricing, our marketing, people, products, the entire strategy all at once. And denial, I believe, waits too long. Panic moves entirely too fast. And leadership lives somewhere, somewhere in the middle, somewhere in between all of that. You know, and it means adapting without

Denial Versus Panic In Leadership

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abandon, abandoning who we are. And and that is what we are going to unpack today. So if you caught us last week and we talked a lot about brand and and referrals and repeat customers and reviews and all those things, that this one, if that hit him, I think today will too. Let's begin with what the market is telling us right now. Okay, and I did a little bit of research. For those of you that know me know I'm a part of the York Builders Association, which I am also a member of the National Home Builders Association of America. So I I have everybody has access to some of this information I'm going to talk about today. But as of October 15th, 2026, the average 30-year fixed mortgage rate was 7.14% compared with 6.27% one year earlier. So existing home sales increased slightly in September, but they were still below the previous year. So August and September were also the two slowest months for home sales so far in 2026. That matters to contract contractors because when fewer homes change hands, fewer projects are triggered by a buyer moving in or a seller preparing a house for the market. Okay, so consumer confidence also fell again in September. People are not necessarily saying they will not spend money. Many of them are actually saying, I need to be more careful before I spend, I need more information, I need to be certain that this is the right company, I need to understand the value, and that changes this sales conversation. And again, if you listen to us at all or followed us, you'll you'll some of this will make a lot of sense. And even what I'm talking about today will definitely make sense. But but here's the other side of the story. Like I'm not talking doom and gloom and and in the world and the economy is going to crash. That's not what I'm saying at all, whatsoever. Okay. So the latest remodeling outlook says growth in renovations and repair spending may slow one, let me see if I can remember this, one half of a percent by the second quarter of 2027. That that that is a real slowdown, but the total spending is still projected to be approximately $519 billion. Okay, that that's a boatload of money. So the National Association of Home Builders Remodeling Market Index was 62 in the third quarter, and anything above 50 means more remodelers describe the market conditions as good rather than poor. Okay, so this is not by no means a dead market. Okay. Is it is it slower, more cautious, more selective market? Yeah, sure. Probably. And and slower markets do not eliminate opportunities, okay? They actually eliminate the room for average. Okay. There is another reason not to panic for sure. Americans, the American housing

What The Housing Data Signals

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stock, okay, and this is this is a gold nugget right here, and I doubt anybody's really even talking about any of this right now. America's housing stock is the oldest it has ever been. The median age reached 44 years old in 2023. That means the average home right now is 44 years old. And for those of us that are in the remodeling space, that's a big deal. Okay. As homes age, spending naturally shifts towards maintenance and replacement projects. Things like roofing, siding, insulation, heating and cooling systems. A homeowner may postpone their dream kitchen. They may delay building a new deck, but a leaking roof does not care about customers' confidence. Demand is still there. It's still here. The demand is still here. But customers may take longer to compare more companies. Okay. They might ask more questions and need more proof before making making a decision. How do we distinguish a temporary slowdown from a permanent shift? Okay. And that's a great question. I've asked myself this question many times over the years. I've been through several different types of economies. And I'll be honest with you, I would say the past six or seven years may have been some of the toughest. You know, think think about it here. We had a great economy, you know, 2016, 17, 18, 19, then 2020 hit. COVID hit. Okay. And I think a lot of people, and I think more so emotionally tough. Okay. Emotionally tough in terms of, you know, COVID, we didn't know how to react. We didn't know how to respond. A lot of people peeled back on their marketing budgets. They didn't know what to do. They were staying home. They were hiding out. They were trying to stay safe and keep their family safe and all that stuff. Well, what happened? People were home. So they wanted to remodel. So we had we had this huge boom. Everybody was getting their roofs done. Everybody wanted windows. Everybody wanted kitchens, bathrooms, all these things. But then what happened was we we ran into a supply and demand issue. And what I mean by that is, is we were short on materials. Manufacturers weren't producing shingles fast enough because labor was short. Siding manufacturers were running short on materials. So we ran into when there's not enough product on the shelves to stay stocked for consumers, what happens then is the price of those products start to go up. So what happened was is we saw a huge increase, not only in labor, but also in the cost of materials. So then there was that fluctuation we had to deal with. So those are some of the things that I'm talking about over the past six or seven years of probably some of the toughest economic decision making for most entrepreneurs, whether they knew it or not. So if anybody knew that was getting in business during COVID thought, wow, this is great. But right now, I guarantee it that they're feeling it right now based upon poor decision making that they made during the time that it was feast. Those were probably some of the more challenging times to stay out in front of, you know, we we know that this is gonna slow down. We don't know when it's gonna slow down. We don't know if labor is gonna come back into the labor market, we don't know when the the price of materials are gonna come down. There were there was a lot of things and nobody knew exactly when to push down or double down. Anyhow, here we are. So that was one of many economic challenges and decision-making times, at least in in my career. So think about the difference between like a lot of like we're getting ready to come into a different season right now. So the difference between like weather and climate. Okay, so a week of rain would be weather. A long-term change in a season is is climate. One slow week is not necessarily a strategy problem. Okay, one bad month does not mean the market has permanently changed. Hey, Kim, good to see you. But when the same pattern continues across multiple months, multiple teams, multiple measurements, multiple locations, we need to stop calling it bad luck. Okay, we need to look beneath the headline. You know, at TC Backer, that means watching things like lead volume, appointment set rate, appointments ran, close rate, average ticket, the number of days from the first lead to the final decision, financing usage. I talk about that a lot. How how we're selling more financing now than we ever have. It used to be cash check financing. Now it's more like financing credit card or cash. So we have to pay attention to those things, right? If you don't, if you're not selling financing, you better learn how to sell financing. Also pay attention to cancellations, gross margins, and and and performance by by or from lead sources. And here, this this is why this matters so much. If lead volume is down but our close rates remain steady, we may have a demand or marketing problem. If lead volume is steady, but our close rate is falling, we may have a sales volume or value, sales value or a trust problem. Okay, if sales are holding up, but our gross margins are shrinking, we may have a pricing, a material cost takeoff, or a production problem. Okay, if one location is struggling while another remains stable, it may be a local market or leadership issue. Okay, but if the same pattern appears across every location, every channel, every competitor, then the market itself may be changing. Okay, so these are indicators to look out for, whether it be short-term or long-term changes. Okay, and here's a simple way to think about it: a temporary slowdown usually changes timing. A permanent shift

Temporary Slowdown Or Real Shift

Ty Cobb Backer 13:05

changes behaviors. Okay, and we talked about buyers' behaviors before. Are customers saying no, or are they saying not yet? Are they buying less or are they buying differently? I don't know. Great, you got it, these are questions you have to ask your sales team or your sales managers, right? We got to pay close attention to it. Are they choosing another contractor or or are they postponing the the the project in in its entirety? Okay. Are they still responding to the same messages? Are the leads actually gone or have the leads moved somewhere else? Okay, those questions tell us much more than somebody saying, business just feels slow. Okay, feelings matter. Don't get me wrong. I've led a lot of decisions based upon intuition. So feelings do matter, okay, but feelings are not a dashboard, it is not data. Okay. So the next question would be what should remain unchanged when the market changes? What should remain unchanged when the market changes? Okay, and we talked about this a little bit last week. Your identity should remain unchanged. Our mission should not change every time the the economy changes. Our core value should should not be good market values that disappear when business gets hard. Okay. And that's big, that's huge. We do not start cutting corners just because things get hard. Okay. At TC, doing what is right, fulfilling our commitments, leaving no one behind, achieving together and surpassing expectations cannot depend on how full the pipeline is. We may change the playbook, but we do not change the standard. We may adjust our marketing channels, but we do not become dishonest in our advertising. We never do manipulation marketing. We but we may change up our product mix, okay? But we do not lower the quality of our installations. We may tighten up expenses, but we do not compromise safety. Sometimes we even may have to rethink roles and responsibilities, but we do not stop treating people with dignity. Pressure tempts companies to discount more, promise more, rush more, inspect less, train less, and communicate less. But but the the exact moment when customers become more cautious in the moment when trust becomes more valuable, do not discount your identity just to protect your volume. Okay. Adapt your strategy, not your standards. And when you need to cut, cut waste before you cut muscle. Protect the things that produce trust, your people, your training, your follow-up, your workmanship, your communication, and your reputation. Move quickly on facts. Okay. And then move carefully on conclusions. And move decisively once the evidence is clear. Not every decision carries the same level of risk. That's something I've learned along the along the years here. Okay. Reversible decisions can be made fast. Okay. So you got to know the difference between how fast I can reverse this decision once I make the decision. And then this is what's cool too. We can test new sales scripts. We can adjust an advertising budget. We can change our follow-up cadence or policies or process. We can improve the way we discuss financing. I touched on that a little bit earlier. Learn how to sell financing. We can test a new offer. We do that all the time. I love doing things like that and seeing what works, especially offers that provide more value. Okay. We can change how quickly we contact a new lead. That you should be working on that every day, anyhow. We we can do those things without betting the entire company. Those are small little changes and small little shifts that don't take long to test, especially new products or a new process in which, you know, or a new script. Those those are those are quick, easy decisions that you can make and very easily reversible. So expensive or difficult to reverse decisions deserve more thought. Like closing a location, an abandon uh abandoning uh a service line, taking on major debt, changing the brand. I've done that already. I freaking rebranded the entire company, okay, or removing a key leader. Okay, those decisions should not be emotional reactions to one difficult month. Okay, a good rule is this be fast with experiments and deliberate with commitments. Every experiment should have an owner, a measurement, and an end date. That's something I've most recently learned. Okay. What are we testing? What result would

Protect Standards While You Adapt

Ty Cobb Backer 18:25

tell us that it is working? How much are we willing to invest? When will we decide whether to scale it, change it, or stop it? Testing is good, drifting is not. What is dangerous about chasing every trend? I wanted to bring this up because I've done this. I talked a little bit about this last week too. The danger is that activity can feel like progress. Okay? A new platform appears, so we jump on it. A competitor adds a service, so we add that too. Somebody says AI will change everything. So we purchase three new tools before identifying one problem they are supposed to fix. A new marketing channel becomes popular, so we shift money into it without understanding our customer acquisition cost or whether those customers are even profitable. Novelty is not a strategy. Strategy is choosing what matters and choosing what does not. Before chasing a new trend, ask yourself this does this solve a real customer problem? Does it fit who we are? Can we deliver it at our standard? Can it be profitable? Can it be repeatable? Then ask the question companies often skip. What are we willing to stop doing so our team has the capacity to do this well? That's a tough question. And sometimes those are hard decisions to make. Every new incentive has a cost, even when the software itself is free. It costs attention, training, meeting, it costs follow-up, it cost leadership energy. A company does not become adaptable by saying yes to everything. I've been there, I did it. It becomes adaptable by learning faster and choosing better from time and experience. Now, let me bring this home. At TC, we have had plenty of times. We've had to rethink things more than once. Okay. Back in 2011, 2012, a lot of you heard me talk about how the insurance rules and the market changed. Okay. It forced us to think differently about where our work would come from and how we would build the company. All right. We could we could have spent all of our energy wishing the old conditions would come back. Or we could build a strong retail muscle, strengthen our brand, improve our systems, deepen our relationships. These are all things that we did when we had to pivot and became less dependent on one source of work. We've put instead of having one iron in the fire, we have several irons in the fire that can easily adapt to whatever the economic climate might be. We have also lived through supply shortages and material changes. I talked about that earlier. Okay, those periods taught us that selling a project is not the same as successfully completing it. Takeoffs matter, ordering matters, supplier relationships matter. Shit, communication matters. And when a product becomes difficult to get, customer, the customer should not have to discover the problem after we do. Okay. We also have to operate in markets that do that that that do not have the exact same thing. Okay. Your York, I would say, is is more retail heavily. Okay. Delaware is not. Delaware is more new construction retail mix. Okay. But it's the same company. Okay. It should have the same values and the same standards. And it does. But it cannot always use the exact same playbook. Our approach to getting work and keeping everybody busy is a little bit different. Okay. That is an important lesson for leaders. Okay. Consistency does not mean sameness. Consistency means the customer receives the same level of care, even when the strategy requires to reach and serve that customer a little bit differently. Okay. The large lesson for us has been diversification without delusion, right? I talk about things being watered down and diluted. Okay. We

Trend Chasing And Smart Experiments

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do not need to be everything to everybody. Okay. But we should be careful about depending too heavily on one lead source or one customer type. We should be careful about depending on one source for where our leads come from. Okay. Or one customer type, one insurance carrier, one builder, one product, one salesperson, or one particular market condition. Okay. And that's why I said we had multiple irons in the fire. Okay. So when the market tightens, okay, the basics become more important, not less. And we talked a lot about basics before. Again, if you followed us, you'll know that sometimes if you stick to the basics, you don't ever have to go back to them. So when a market tightens, the basics become more important and not less, especially when things start to get tightened, right? So, like we talked about last week, repeat customers, referrals, reviews. That trifecta matters because a cautious customer wants proof. Okay. They want to know who who used desk before. Okay. They want to see whether we did what we said we were going to do. They want to know what happens if something goes wrong. They want communication. They want options. They want confidence. In a hot market, a company, a company may win because it answered the phone. Okay. In a cautious market, it has to earn the decision. We cannot respond by simply shouting louder or spending more money. We need to get closer to the customer. We need to figure out what they're worried about. What is slowing down their decisions? Is it price? Is it payment? Is it timing, trust, confusion, or lack of urgency? We talk a lot about confusion and lack of urgency. Okay. Have we made the proposal simple? Is it easy to read? Is it does it have the colors on it? Does it have the products that we're going to use? Does it have the warranty information? Is it has it been reviewed thoroughly? And is it easy to understand? Have we followed up professionally? Have we clearly explained the cost of waiting? Have we shown the difference between the cheapest option and the best long-term value? The market will often tell us what needs to change. If our ego is quiet enough for us to just listen to it, when the market changes, what is your first instinct? Adapt quickly, wait and watch, double down, which is my favorite, or ask for advice. And again, there's no wrong answers. When the market changes, what is your first instinct? Is it adapt quickly, wait and watch, double down, or ask for advice? Every answer has value. So there's no wrong answer. Okay. And every and every answer, quite frankly, has dangers too. Adapting quickly can create momentum, but it can also become panic. Waiting and watching can create wisdom, but it can also become denial. Okay. Doubling down can show conviction, but it can also become stubbornness. Whew, know that all too well. Asking for advice can provide can provide perspective, but it can also become a way of avoiding responsibility for the first the final decision.

Diversification Plus The Trust Basics

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Okay. So my answer would be this ask for advice, verify it with your own data. Okay. Double down on the values, on your values, core values, and our standards. Okay. So double down on them. Who are we? Double down on that. Then adapt the strategy with urgency and discipline. Do not outsource the decision. Okay. Follow your data. So here are the first, here are the five questions every leadership team should ask when the market starts changing. Okay. What exactly has changed? What evidence tells us whether this is temporary or structural? What must remain unchanged? Our values. What is the smallest useful experiment we can run right now? And what do we need to stop doing? Those questions can keep a company from freezing and they can keep it from flailing. The hardest part, I think, of adapting is that the thing the market asks us okay, let me see. The hardest the hardest part of adapting is that the the thing the market asks us to change may be the same thing that helped us win in the past. Past success creates emotional attachment. We want to say, but this is how we built the company. And again, I'm speaking from experience. So please, anybody that's listening to this, know I put us through the ringer. That might be true, okay? That this is how we built the company. That might be true, but the process that got us here is not automatically the process that gets us there. Okay. A strong, a strong leader can honor what built the company without worshiping it. Because I can get stuck in that. A strong company protects this identity

Five Leadership Questions And The Close

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while challenging its habits. The market does not ask permission before it changes. It's just going to change. We have to learn how to adapt to it. Okay. It does not care how long we have used a system. It is relentless and ruthless. And it does not care how much money we invested in an idea. It sure as hell does not care that a strategy worked five years ago. The market responds to value. It responds to relevance. It responds to trust and it rewards companies that are willing to learn. So here's today's closing question. What part of your business would be hardest to change if the market demanded it? Would it be your pricing, your product, your people, your process, your marketing, your role as a leader? Or would it be the story you have been telling yourself about how business is supposed to work? Be honest with that question. Because the part that feels hardest to change may be the place where your biggest blind spot is hiding. Markets will keep changing. Our job is not to predict every turn. And that's something I had to learn the hard way. Our job is to build a company that recognizes reality, learns quickly, makes disciplined decisions, and keeps its character while the ground moves underneath it. That is how we protect what matters. Change what is necessary, abandon what no longer serves the mission. Thank you for joining me for episode 356 of Behind the Tool Belt. Jump in the comments, answer today's poll, and tell me what change in your market has forced your company to become better. Share this episode with a leader who is trying to decide whether to stay the course or change direction. Until next time, keep building people, keep building culture, and keep building something different by design. We will see you next week on Behind a Tool Belt.