Brighter side of recession?

[plainpainter 217]

So what does everyone think of this recession in terms of weeding out the 'weak' hands in our industry. I know when times get tough, newly laid off engineers pick up paint brushes and flood the market and the same happens with pressure washing. But I think this time around the recession is so deep, that all these lowballers and 'weak' hands are letting go - so when things turn around, hopefully it will leave the field wide open to more established companies with proper pricing. Any thoughts?

[Beth n Rod 1,279]

It won't weed out the cheap...people always hunt bargains. But for those who don't market or sell well, yes it will knock a few out. We have seen some close to us suffer this season, some of them really good. Others who are hacks are thriving based on price.

Beth

[Beth n Rod 1,279]

I think those with the money to spend will benefit the most. This happened back in the 70's when the country slipped into a recession and many companies either folded up their tents or were bought by competitors and absorbed the brand into their own.

I remember specifically that the downsizing consisted of "cutting out the middleman" and offering factory direct pricing etc. New businesses were developed out of that model and have evolved into what we see today.

Now, we have the internet and shipping companies making the larger growths in consumer spending which is a trend very much like that of the 70's "cutting the middleman" function to keep prices low and consumers buying.

That hits the obvious points but there is still a grey area developing as to what this country is going to do to fill the void in the job market. Commercial Real estate prices and property taxes need to level out and in some ways go down in order to bring production based businesses back and feasible.

I had a talk with Rick Petry and his belief is that the economy is changing forms from a production based one to technology and finance (correct me if I'm wrong on my recollection here Rick). Problems with that is that those jobs don't require as many people due to robotics and automation. NAFTA being the biggest gouge into the American way of doing business is going to have to be redefined in order to gain back some of the advantages we (America) once had.

Going back to my initial paragraph, Real Estate is going to drop into the toilet and allow for those with the cash to buy up properties and turn them into rental properties or redeveloped into condo's and apartments. We should begin seeing a trend of rent to own homes as well.

The rich will be in a position to benefit and those who did not see this comming and prepare for it are going to lose what they have and start all over again.

One encouraging thing I did read today was in The Washington Post about legislation being proposed to regulate credit card companies and their ability to increase rates. This has been running rampant and out of line along with the gas companies price gouging over the last 7 years. But that is another factor contributing to this economic distress that cast the stage for price increases across the board since there is very little that fuel prices do not have an immediate impact on. The few that do not have a direct relation to fuel pricing are the intangible services such as telephone and mobile device connection services, internet and satellite communications.

It is actually becoming more common place for many of our customers to 'tele-commute' now since fuel prices were at such rates that they would suffer financially just trying to get to work.

We are also seeing mass transportation booming as more people elect to take the bus or train to save money in this down economy.

We have a long way to go...

In direct response to your question Daniel, we may see an increase in blue collar efforts but I think they will not be as successful due to consumer spending being down. The likelihood of new businesses cropping up and surviving over those that are established and lasting very long are at long odds I'd say.

I think we will see more innovation as people look for other ways to launch careers based upon the internet and consulting approaches. Just my guess.

Rod!~

[Tegrey 121]

Great post Rod. I also believe that the fat of many companys will soon disapear. The hard working labor or those who want to sit around and collect pay from an business will go by by? We may have hired a person yesterday to do deliveries or clean our equipment. Today we do it ourselves. Many people who bought homes or started business without the proper funding will disapear also. A good business owner has a business plan. They were ready for this downturn. They knew that the money will not always be easy to get. Well, here we are. Now we must face the music. We will all have to cut back. We need to evaluate what we do and how we do it. I believe the times are not easy, but will benefit the smart business owner? I only wish I were 30 with a million to invest! LOL That is a good dream. Facing the music and looking at laid off employees hurts my feelings. I want our employees to be profitable all the time. I want them to share the good times. Now they must also face some bad times. Again, it will make them stronger. They will learn the basics of survival. When we start the turn and get to better times, they will be back enjoying the benefits again.

I also read the article about credit terms. We have been sucked dry by the vultures too often. The blood sucking vermits must now be delt with. I support the auto businesses, but believe they need to take a smaller bite also.

Dan,

Hope fully we will grow out of this situation quickly. If so many will survive. If it takes too long, many more will not exist later.

I believe the lowballers will always exist. There will be fewer and they will be smarter for it. They will live day to day, do what they must and charge enough to get by. This is where we as strong contractors take our knowledge and skills and show the people why they buy from us and why we charge more. Again, making us better for it.

One very important item we believe is we will not lower our standards or prices. We will continue to work on our business as needed and grow our business as possible. Making us the Cream of the crop? I hope many other contractors share their ideas here. The importance of a good idea may save a company? Thank you.

[anthony szabo 14]

Good reading guys,

We advertised our brochures first week in August, sent out about 6,000 pieces for these types of reasons. The schedule was already tough to keep up with, but the idea was to keep the schedule so full that we just would book jobs for spring of 2009. The worst thing is that our season got cut short with cold weather so now the spring list is well over 40 residential and commercial jobs to start with. This is not to mention the 10,000 brochures we will send out this spring 2009 to keep the schedule full.

Hope this helps,

Tony

I seen some Car Dealerships offering a two for one deal. Or buy one and get a second Truck for FREE!

Texas I think?

Edited December 15, 2008 by anthony szabo

[MMI Enterprises 289]

Yes Rod, smart thoughts and great post!...Most every point is exactly how I view it. The middleman idea is opportunity for many already established small business is way I been viewing it. Just other day on ***'s bailout thread I was spewing how Johnson Controls CEO addressing congress could be more of a middleman based agenda thing.(still unsure of how much product they actually make...but I know they rip service people of their potential profits)