In 2022, we’re expanding our education opportunities: David Feherty will give the opening keynote, and Power Equipment Trade, Bob Clements International, and the Engine & Equipment Training Council will host a series of educational workshops.
Taking Advantage of Uncertain Times
By Bob Clements
As business owners, we are living in some interesting times. It reminds me of how Charles Dicken began his book A Tale of Two Cities: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness….”
As we move through the final quarter of 2022 and look toward 2023, we have to ask ourselves: How do we prepare for what we don’t know might happen next year? While none of us has a crystal ball to allow us to see what 2023 might bring, we do have some good history we can look back on that will give us insight into what might happen with an economy that has high inflation with lower consumer demands.
Over the last 30 years in the United States, we have had four recessions: the Gulf War Recession, the Dot-Com Recession, the Great Recession (Housing Bubble Crash), and the Covid-19 Recession.
As in all recessionary times, not everyone is impacted in the same way. The recessions associated with the Gulf War, the dot-com bubble burst, and the Covid-19 pandemic had little impact on the green industry, while the Great Recession (2007–2009) certainly did. One thing we do know about recessionary times is that they do end, and afterwards there is always a massive period of growth.
Most recessions last about 10 months in the United States, the Great Recession being the exception. So, we know that recessions will happen, and they will always end, and when they end, it always bring in a time of unprecedented growth.
The key to beating a recessionary period is to preserve cash. You need to rethink any work you do that has minimum margins and reset yourself and your team to focus on higher-profit, higher-margin jobs that require less staffing.
Again, the goal is to preserve cashflow so that at the end of the recession (remember, they always end) you are in a strong cashflow position that will give you the ability to take advantage of the growth opportunity that always follows.
Remember that recessions are simply a free-market system’s way of resetting an out-of-control economy. While the reset might be painful, it is necessary, and ultimately a great thing for businesses prepared to weather the storm.
During a recession, pricing normalizes. Think about the pricing that you have been dealing with for the last 18 months: A recession will force those swings to stabilize and, in many cases, reset to a lower point that becomes more affordable to everyone.
During a recession, the economy will slow, fewer products will be produced, and layoffs will happen. While no one wants to see people unemployed, right now the labor market is extremely unstable. Most owners can’t find people who want to work, and if you do find them, they want wages that are completely out of line with the skillset they bring to the job. While a recession resets the economy, it will also reset the workforce.
There will be a lot of good people who are laid off from work; these are people who wanted to work—those people will become available for you to bring on to your team at a rate that is reasonable based on their skills.
While no one wants to see a recessionary period take place, it’s important to understand that recessions are a normal part of a free market system—they don’t last forever, and when they are done it’s “game on” for those owners who preserved their cash, adjusted their staffing, and focused on high-profit, high-margin work.
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