Economic Outlook: Shoot For the Moon
Originally published: 11.01.10 by Terry Tanker
Moving on from a traumatic experience can be difficult, but if you haven’t already, now is the time to forget about the tortuous business climate of the past three years and plan for an expanding economy.
A few weeks ago, I had the opportunity to attend the Nexstar Network’s Super Meeting held in Austin, Texas. Economist Brian Beaulieu of the Institute for Trend Research gave an upbeat economic forecast and told attendees now is the time for investing in their businesses future — figuratively and literally.
“There is no double-dip downturn in our economy and our markets,” Beaulieu said. “The economy is going to continue to grow albeit at a relatively slow pace in 2011. We have indicators telling us today that the economy in 2012 is going to be appreciably stronger than 2011, and that growth will continue into the first half of 2013.
“If you want to contemplate no limits, think about your future knowing that the macro-economic winds are going to be filling your sails. You are going to be enjoying the fruits of an expanding economy. Congratulations, you made it! It gets better from here on out.”
Beaulieu presented data on industrial production, housing starts, credit default rates, consumer spending, and other economic indicators that show a bottomingout of the bad times and an upward rise the next few years. Additionally, he’s not concerned about the economic recovery faltering. What concerns him is that our industry won’t be prepared for how much growth it will experience, and that contractors will miss opportunities to increase their market share and profits by making critical business decisions as if the economy is still tanking.
His advice: Have no fear and make bold plans to take advantage of historically low interest rates, pent up demand, demographic trends, and the overall better mood that customers will be in. Don’t look at this recovery period as a time to simply sell more units; look at it as a time to become a more resilient company through goal setting and planning.
“Everything is fluid now,” he told the audience. “Everything is open for discussion.”
Specifically, borrow money, as interest rates are at rock-bottom lows right now and will certainly be rising.
“For those over 40, these are the lowest interest rates we will see in our business careers. I want you to go out and borrow money and invest in wealth-creating assets if you aren’t going to retire in the next 10 years. How much should you borrow? Borrow enough that it keeps you up at night.
“There is $2 trillion sitting on the sidelines waiting to be invested in businesses like ours. What’s not there is our willingness to borrow that money because we are looking too far into the past and not into the future.”
His other specific advice on what to do right now included:
- If applicable and possible, negotiate union contracts.
- Invest in training.
- Develop advertising and marketing programs.
- Enter or negotiate long-term leases.
- Look for additional vendors.
- Consider capital expenditures and acquisitions in light of market-by-market potential.
- Lead with a “can do” attitude to ease the lingering economic fears of employees.
Have you been on the fence about moving into Home Performance Contracting? Or finally investing in an ongoing training program for your staff? Or targeting that national retail chain that has been using your competitor forever? Or investing in a fleet redesign? According to Beaulieu, now is the time to just do it.
Expect some economic ups and downs along the way, Beaulieu said. The stock market, for example, will be somewhat volatile in the near term. And, there will be another recession in 2014, but it will be mild. Unemployment will continue to be high into 2014, and taxes and inflation will be going up. None of these factors, though, should stop you from enjoying the benefits of better times if you plan properly.
For more information on the Nexstar Network please visit www.nexstarnetwork.com For more information on Brian Beaulieu and the Institute for Trend Research visit www.itreconomics.com