13 Feb A Mandatory Tool for your Business Tool Kit
Over the last 10 years, we have found the track record of Alan Beaulieu, a national economist with the Institute for Trend Research (ITR) to be incredibly accurate (94.7%). For 25 years, he has provided insight to thousands of business owners and executives. His January 31, 2018 talk was powerful and full of insight for what lies ahead – 2018 and beyond.
Beaulieu’s prediction is that the United States economy will continue to see growth. However in the third quarter of 2018 we will see a minor downturn that will last until the first half of 2019. While this slight downturn will technically be called a recession, it will merely be a very small bump in the road. His recommendation for business leaders is to take advantage of the slowdown because it will be followed by 10 years of extremely high growth.
He is encouraging business leaders to use the downturn as an opportunity to find and hire key employees, add needed office space, and his most important comment is DO NOT hesitate. Focus on growth and prepare your business for “The Roaring 20’s.”
The 2020’s will be high expansive years where businesses must increase pricing for products and services. He also commented that development of real estate related businesses would be extremely positive resulting in incredible profits.
Alan reminded us that no matter what the talking heads say, the U.S. economy is the largest economy in the world and is expanding at a faster rate than our nearest contender (China). In fact, 59.8% of all U.S. exports are manufactured products. The U.S. manufacturing economy is expanding and is competing globally.
Another observation is that brick and mortar retail sales are at an all-time high. Despite what the talking heads may say, Amazon is NOT seen as affecting traditional retail sales.
However, there is a dark cloud on the horizon – 2030. Alan cautions that the demographics, spending and policies of Japan, China and Europe will lead the world into a “Great Depression.” We should be prepared for the downturn and structure your personal and business investments in expectation of the 2030’s.
What This Means For Our Clients
In 2018, the construction industry will continue to grow requiring more people than are trained for the industry. The result, higher wages and prices for goods and services. Design, engineering and construction firms must increase prices in anticipation of the future goods and wage increase or suffer profit losses.
With banking regulations being eased, more capital is available for investment. Taking on additional leverage at “fixed rates” is advisable. Inflation will enable repayment with cheaper money. However, the caution to all business owners is to be out of personal and business debt by 2029. Plan now to make that happen.
Another observation is to improve and streamline your business. Over the next 12 years rising prices will hide inefficiencies and when the downturn comes, those inefficiencies will put the firm out of business.
In summary, now is the time to take action. Twelve years is not a long time to prepare. For example, it takes a business track record of 3-5 years to sell a business or commercial real estate asset. In addition, when selling a business there is often a 3 year earn out. The economic clock is ticking.