May 2012 – What Goes Around Comes Around


If you ask a table full of businesspeople “How’s business been so far this year?” chances are 9 out of 10 will tell you that business is better this year than last.  We are emerging from the deepest recession of our lifetime, and it has been a long haul.  The signs of health are returning: housing inventory, at just over five month’s supply, is historically low, and unemployment is at the best levels since 2007.  The National Association of Home Builder’s (NAHB) Builder Confidence Index is actually double what it was just one year ago.  Unfortunately, so far, banker confidence is not, so tell your banker friends to cheer up!  Eighty percent of housing in the US is priced below $300,000 and that is wonderful news for home buyers. Interest rates remain lower than they have been in over 50 years and somehow banks have figured out how to be profitable without doing a lot of lending.  Please make sure you don’t follow the Federal Government’s budgeting and spending model, in your business, but please do spend what you can to rebuild your infrastructure. Our economy needs it.

2012 is a great time to train, equip, and re-tool. Those who don’t clean up their loose ends this year, will likely find themselves too busy to do so next year and beyond. If recessions give us anything, they give us pause. They create a time for forced self-reflection, and set the stage for action and improvement. Economic downturns have historically been the cradles of innovation.  People are forced out of their comfort zone in bad economic times and then begin to adapt and invent. Necessity (and hardship) is the mother of invention.

What have you learned about your business during the past four years? With all the reinvention you’ve been forced to achieve, will you keep it, harness it, and work it?  Or will you slowly slip back to the comfortable pre-recession numbness that a good economy seems to encourage?  I’m not suggesting you become a price-slashing low-bid meister, I am talking about having the vision to stick to a solid business model that puts the lessons you’ve learned to work and pulls your business forward.

As a supplier, we get an interesting look into several thousand customer businesses and their models. The one common theme we see with those who succeed best is: teamwork – trained and well communicated. Successful builders surround themselves with a team of subs and suppliers. They communicate their workflow so all the players perform smoothly together, and this helps to control and minimize mistakes as well as keep administrative overhead down.  Price-shopping builders, who jump from sub to sub, typically don’t succeed, and when the economy comes back, everyone remembers who ground them down to the bone. If you are not comfortable partnering with your current subs and suppliers, maybe you should be finding ones who you are comfortable with. Who makes up your team?

Our hope is for a gradual, smooth economic recovery. We need one that doesn’t swing from famine to feast, one that doesn’t stress the supply of materials, labor and field expertise.  We need to re-acclimate to regular business, not get greedy, but get better. We don’t need a boom; we just need a rising tide. How about a manageable climb instead of a sprint followed by a tumble?

Don’t build your success on a good economy; build it strong enough to work in a bad one.  Build your business on solid principals and sturdy foundations. Iron out the details while you have the time to do so, and set your course for success. You have survived some of the toughest times on record. We’ve all learned plenty of lessons in what felt like the hard way.  Let’s put those hard earned lessons to work!

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