Obviously I’m not talking about a real hurricane, but we are in the midst of an economic hurricane that has been spinning around for years now.
Every hurricane, like every recession, has three phases. In phase one, it wreaks havoc with high winds, rains and coastal flooding. If you’re still in business, you’ve survived phase one of this recession,
but it was a bruising battle to be sure. A 40-60% drop in demand is about as bad as it gets and we haven’t exactly seen a whole lot of improvement since then.
Phase two is the eye of the storm, which is where we are now. In the eye there is an uneasy calm, emphasis on the uneasy part. As a result, business owners have a tendency to freeze up because things aren’t getting any worse, but they sure don’t seem to be getting any better either. Right now we’re just sort of hanging in the balance, which makes it a hard time to take decisive action.
Surprisingly enough, though, the most damage done by a hurricane – both meteorologically and economically speaking – is in the third phase. In a storm, it’s when the trailing end leaves behind massive flooding and property damage that often dwarfs the phase one damage.
In phase three of a recession, which is where the construction economy is headed now, companies have pulled back on the reins and cut spending, personnel, and more. That’s normal, but the danger comes when companies pull back too far with no plans to start the rebuilding process. There has to be anticipation of a recovery and plans to adapt to the new business landscape in order to capitalize on it.
Positioning your company for future growth, particularly in an economy unlike anything any of us have faced in our lifetimes, is not easy. Timing it just right, and determining when, where and how much to invest will not be simple or painless.
On the backside of this recession, competition will be greater; customers will demand new products, higher value and more quality; and you’ll need good people to succeed. You will need to be prepared to identify and meet new needs, cater to a new era of customers, and find (or be found) by new customers. In part two, we’ll address these issues and look at where the industry is headed.