Economic Thoughts

[mountain man]

In the cheap prices will get you nowhere forum there have been several discussions about economics, the election, etc. What are the different views of people and how are you positioning your company to handle them.

 

[JimLewis]

Economics? Politics?? OH, don't get me started. ;-) <p>Well, I haven't read that threat but I doubt it will change my opinion any. <p>The economy is obviously very robust at this point with no apparent end in the near future. Things are going so well that Greenspan has to actually RAISE interest rates to slow things down a bit. I for one, plan to hang on to this wave as long as it sticks around. I plan to get my business as big as possible and then if a recession hits and I lose 1/2 half of my customers, I will still have more than enough work for myself. <p>I also plan to build up capital when I get a chance as well. If I've learned one thing from history and recessions, it's this - in a recession or depression people start selling stuff for way less than it's worth. It is the guy who has the capital who get killer deals. Then when the recession is over you have a lot of great equity and are ready to do some damage. <p>As for politics, you'd be surprised how little a role the executive branch plays in that. Personally, I'll be happy as long as Greenspan is in office. That guy is amazing. And so is his staff. <p>But the growth of our economy lately is not even as much as result of the Fed as it is our current dominance in some industries like high tech, software, and such. We still rock in these areas and that will only get better for the forseeable (sp?) future. <p>How do I position my company to handle economic changes? Hmmm. Well, I guess I already said it above. I just plan to get as big as possible while the economy is strong and then if we hit the wall, I will work hard to keep as many of our customers as possible. The main goal being to always have more work than I can handle on my own. I'd hate to have to ever lay people off but I watch my own back first and foremost. If it came down to it, I'd just keep my best guy or two and we'd work through it until the economy picked up again. <p>----------<br>Jim Lewis - Lewis Landscape Services<br>http://www.lewislandscape.com

 

[Nilsson Associates]

jimlewis just about said it all .. and I agree that it looks like the economy will last for awhile. Look at the upside, look at the downside, but ... if you're looking at the downside ... the one best thing you can do is to &quot;stash&quot; away some money for a rainy day. Like he said, having cash is &quot;king&quot; during a downturn. Money that you'll need to get through it. In other words, at the beginning of an upswing it's okay to take on debt ... before the end of an upswing, get your bills paid off, put money aside. I have seen several recessions ... and like he said ... if you have cash available you can take advantage of bargains, strengthen your business position, absorb a reduction in pricing, &quot;buy out&quot; other companies &quot;cheap&quot;, and survive while other companies drop like flies. Money is power. It takes money to make money. Whoever has money during a recession will be in a position to capitalize on the bad times, same holds true for investing during the good times. <p>The one thing that has the biggest impact on green industry business is in the ability for customers to continue to afford the services. Maintenance markets stay pretty firm, but you get hammered with lower prices. So you need extra money set aside to take up the slack with less profit to live on.<p>Phil Nilsson<br>

 

[paul]

Well I guess I'am a oldtimer, I remember the bad times! I have moved my company to more recession proof markets.<p>Public works jobs help limit the number of contractor that do the type of work that I do (ie: payment bonds and perfomance bonds, large insurance requirments, ect.) <br>Most of my contracts are for installation but we are moving towards a maintance division.<p>Parks are looking to contractors for this work. Their cost are not going down as towns expand and new parks are built they have a choice of hiring more people,training them and purchasing more equipment. The problem for them, Their pay scale is much higher than most contractors plus the extra benifits that come from working for the goverment. <p>For the contractor he will have to spend extra time training his people on safety and more goverment reg. but the return on investment is much faster and as a taxing body park districts always pay their bills fast.<p><p>----------<br>paul<p>

 

[jeffclc]

It has been said in other threads here that you should save your money till a downturn, and then you can buy up equipment, business, accounts, ect when no one else has the capibility to do so.<p>I have found this to be true even in monir slow times. Many deals can be had in the winter months, and during droughts when other contractors don't have the funds to do so.<p>The economic thought that keeps sticking in my head is that is is only grass that we are dealing with. IT is not essential. Having it maintained to perfection is even less essential. <p>Many of us have never seen bad economic times. Many of us have been through them, and survived. They can be bittersweet. In the short term, they can hurt profits, sales, customer retention, ect. The other side of the coin is that once they are over, the economy is usually pretty good. Many contractors will have hung up their hat, and the boom starts over again. <p>I presonally have not experienced any major bad economic times. I am bracing myself for when (not if) it happens. HOpefully others here will be prepared. Hopefully my local competition wont.