Industry Voices: The New Economy
When I look back at past economic projections made by some of our top economists, it seems that no one ever gets it right. The problem with trying to predict what will happen tomorrow is that it has to be based on what is taking place today. However, more often than not, some unexpected event changes the outcome and sends us back to our crystal ball to rework all of our assumptions. That being said, there are two things I’m fairly confident predicting: the housing market will improve and it will not be business as usual.
If you’ve been in business for any length of time, you’ve seen downturns before (albeit not as severe as the current one) and the market always recovers. Population growth alone will drastically affect the need for affordable housing. Currently the U.S. population (a fundamental driver of housing needs) is somewhere above 300 million. The U.S. Census Bureau projects we’ll pass the 400 million mark sometime around 2039, though even that forecast may be far from accurate.
In 1933 Herbert Hoover’s Committee on Social Trends forecast that “... we shall probably attain a population of between 145 and 150 million during the present century.” This prediction was off by more than 130 million! Whether there are an extra 100 or 300 million people, they all have to live somewhere.
WHEN WILL THINGS IMPROVE?
As for when things will improve, that’s a little harder to say. Some markets have already begun to show signs of life but the drop in business levels during this recession have been extreme, and no one knows what kind of improvement we can expect. In hindsight, it’s clear the boom couldn’t continue forever but we all wanted to believe that this time it was different, and ignore the obvious. As the economy comes back to life, the severity of what happened is going to affect business decisions for years to come. No one wants to see this economic collapse repeat itself and businesses will be much more cautious about growth going forward.
While it’s a devastating experience for those who go out of business, there is a positive side for those left standing. Less competition creates opportunities to expand market areas; to pick up new product lines; or to hire top people who became available when their employer folded. However, this alone won’t be enough to help everyone. Some won’t make it because the recession has gone on too long and has cut too deep. But there are some who will fail even though opportunities are all around them. Their business will falter because they won’t adapt to the new economy.
Business will improve but will you be in the same business? What will the market look like when it does come back? Will you be the same old company you were before, with the same products and conducting business the same way? Are you prepared for the new market place where lower volumes may be the new reality?
You need to prepare now for the new building environment of tomorrow. In other words, you need a plan. Companies have worked hard to get lean over the last couple of years and to survive in the “new economy” they will have to stay lean. For some of you, this will mean embracing new technology.
No one in business today can afford to be without Internet access. If you are just now getting a Web site set up and learning to use e-mail, you’re already 10 years behind. I’ve had business owners tell me, “I’ve worked with the same customers for 20 years and we still operate with a pencil and paper.” Well, some of those companies may not be around much longer. People retire and management changes. What worked in the past will not work in the future. Phone books are obsolete. If someone can’t find you on the Web, you simply don’t exist. If you’re smart, you’ll start to consider ways to take orders online, as well.
Technology cannot only make you more efficient but there are cost savings to be had also. Document imaging technology is going to replace paper filing, saving companies money and improving service by having easy access to documents and freeing up employee time that might normally be spent filing and later retrieving these same items.
While many of us are struggling to stay in the game while constantly crunching numbers to see if we are going to cover our overhead this month, a few are excited about the future and preparing for things to improve. Opportunities are all around us. It’s time to get creative and think outside your comfort zone or be left behind. Some owners are ready for tomorrow and are excited about the good times ahead. Take a long hard look at what you can do now to prepare yourself for a new, leaner, more efficient business environment.
I’ll leave you with another quote from Yogi Berra: “If you don’t know where you’re going, you might wind up someplace else.” Now is the time to figure out where you are going and how you’re going to get there. W&C