Ready for 18 years of a growing economy?

What changes would you make in your business if you knew the economy was going to keep growing for the next 18 years?

You would have more confidence to invest and grow your business. Now before you think this is fanciful thinking let’s look at some of the trends over the last 100 years. We have had three double-dip recessions (Great Depression of ‘29/’32, the oil crisis in the ‘70s and the financial crisis of 2007) and two will go down in history as Great Depressions.Furthermore in each case this resulted in flat stock markets overall (with gigantic swings and volatility) for 12 years, which was then followed by a booming economy for 18 years. If you look at recent history we had a great run up after the second World War 1949-1967 (18 years) the oil crisis and a flat markets from 1967-1981 (14 years) and then a tremendous run up to 1999 (18 years) and more recently flat markets from 1999 – 2013 (14 years), so where do you think we are going from here?

Now for the purists out there, I acknowledge that there were growth spurts in the flat periods and major blips in the growth periods, remember Black Monday in October of ‘87 which triggered an 18 month pull back, but the overall trend continued upwards. The point I am making here is to show overall trends that indicate very strongly that we started to embark on an 18 year upturn (with pullbacks of course) in the markets in 2013.

Normally the economy trails the overall markets, so the economy should be in for a good run up as well. As a business owner you have successfully managed your way thought the worst recession we have ever seen (and yes I have statistics to prove that it was greater than the great Depression of the ‘29/’32). Therefore you should be proud of what you have achieved but understandably you are still nervous that this is a short term uplift and what with the elections etc. we will slide back. Why do a lot of you feel that way? Well do the numbers and think back to 1999 when we started this flat period. All of the Millennials will have never worked in an boom economy and many of the Gen X generation in their early 40s now will have seen the economy tank when in their late 20s they were just starting to get some traction in their careers.

To back these trends up some current facts: California unemployment 7.4%, down from 12.2% in 2010 and frankly much lower locally when looking for skilled labor. US GDP in 3rd Quarter up 5%, last time it did this 2003. Oil prices dropping from $107 in June to $55 a barrel by Dec 22. Another trend we will point to this year is the pace of innovation in this country and this is a good example of that. We are now the world’s largest oil producer and a lot has to do with our ability to leverage fracking technology for oil exploration. University of Michigan’s consumer sentiment index was 93.6 in December that highest it has been since Jan 2007.

These are some factual examples but I truly understand how hurt most of us where by this last recession. Almost everyone took a hit and therefore it is very tempting to hunker down and put some cash away to replenish the coffers. But for those businesses looking to leverage this upturn remember that it normally takes a minimum of 12-18 months for an investment to pay off and so if you wait for the economy to firm up then you will have missed half of the upturn. Those who have the confidence to be bold take some risk and invest now the returns could be great.

Not everyone will want to scale their business, they see it more as a lifestyle and that is a choice they made. For business owners looking to sell let’s put a coat of paint on the business clean things up and invest in ways to increase revenue quickly such as adding a salesperson, reallocating more of your of your marketing dollars to on-line and undergoing a functional review of your business to insure you have the right people doing the rights jobs (The skills and areas of focus in a recession are completely different to now).

In our business we are no different and are already investing in the future as we move from being a house of brands to a branded house. That means in the U.S. a rebranding talking about how businesses can “Grow, Fund and Sell.” 2015 is a year of preparing your business. What choices will you make?

Nigel Hartley is a Business Coach with Shirlaws Coaching and Director of Shirlaws USA part of the Shirlaws Group, www.shirlawsgroup.com. You can contact Nigel on 707-573 7154 or by email at nhartley@shirlawscoaching.com. Gil Roberts, a Partner with Assay Advisory, was most recently the CEO for an international consumer products company in the Bay Area. Call him at 415-906-6070, X255 or email: groberts@assayadvisory.com

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