After much research and deep discussion with contractors everywhere I have developed a more nuanced economic projection for you.
Two key factors will drive the economy.
The first is based on how this virus plays out. To gain a better understanding of the pandemic, I researched the “source” information that all experts are looking to for guidance: the past pandemics.
The great influenza of 1918 was literally the worst the world has ever seen with deaths from 20M to 50M, at a fatality rate of 4% to 10%.
However that influenza, called the Spanish Flu, affected mostly people in their prime!! While Covid-9 preys on older and unhealthy people. Strange.
This leads me to the recognition that perhaps we have two parallel pandemics going on.
- The one preying on the older retired people. (with 2% passing away, and probably much higher),
- And another preying on the working class (with under a 1/2% passing, and probably much lower.)
Based on my research I do believe that we will have subsequent waves and the next one could be worse. We don’t know, but with any luck it won’t be that bad for the healthy working class, as long as we protect the less healthy and elderly.
This bodes well for our economy pulling through this, especially if the experts wrestle with and come to terms with this conundrum (over protect everyone vs save those in need). That’s my hope anyway.
The second factor is how the economy is playing out now.
Even though we are technically in a recession, some parts of the country are still booming.
Others hope to keep even compared with last year, or at worst down 10%. A few other parts of the country will be down even more compared with last year, especially those who are still shut down.
Based on this patchwork and current info. I predict the recovery will also be patchwork. For some there could be no dip or a slight dip. For others, it could be a V recovery, and others a short or long U recovery. (Things keep changing so keep an eye on the second half of the year.)
Even the type of client niche you focus on (residential vs commercial) does not guarantee you protection from the ups and downs. In some parts of the economy commercial is up while in other parts of the economy commercial is weaker. Same goes with residential niches.
My conclusion based on current info, the economy and its recovery will be localized. Every locality and niche will experience it differently.
I remain optimistic overall based on the reality of this pandemic, and the huge monetary response.
The TRUE KEY for your success, as in all economies, will be the confidence and gung-ho spirit of entrepreneurs and how you positively impact your team and community. We can’t afford to freeze with fear, otherwise it will become a self fulfilling prophesy.
- Get closer to your clients and markets than ever before! Spend more time with them. Understand their changing needs and desires. For example, if they depend on real estate rents, then get a very good understanding how they are being impacted.
- Find out what’s selling and sell more of it.
- Support your real salespeople. This is no time for amateurs.
- Improve your marketing, off and online, as if your business life depends on it.
- Learn to read your clients mind (for more info how to do this, listen to my latest podcast with industry leader Bob Grover, CEO of Pacific Landscape Management, here.)
- Continue to build up a nest egg, in case later this year or next year we have another economic hiccup. Too late now to start? It’s never too late. Including, ignore your accountant’s advice to reduce taxes at all costs.
- Improve your profit and cash flow strategies now. Push yourself to innovate now even if you are the lucky ones that are booming. Radical efficiency and bottom line growth trumps low margin sales.
- Keep safety forefront, as you keep pushing forward.