The economic slowdown is tough, but it won't be long-lasting, according to Alan Beaulieu of ITR Economics. And the U.S. is in a good position to take advantage of the upturn that is expected in the second quarter of 2016.
Consumer debt is way down and the American people are saving more, Beaulieu told attendees of the 2015 Power Transmission Distributors Association Industry Summit in Chicago last week. "People have more money, and as people have for money, they spend it," he said.
But distributors who want to take full advantage of the upswing need to start preparing now, Beaulieu said.
Here are six tips for preparing for 2016:
- Know where you are in the business cycle. Most distribution businesses are cyclical, and if you don't know where you are in the business cycle, you won't know what to expect.
- Implement growth strategies. If you're not planning for growth, any growth you have will be accidental.
- Invest in marketing. Hire a CMO. Make sure you’re investing in telling your customers and your potential customers about yourself.
- Spend money on people and process. Right now is a great time to be spending money, Beaulieu said. Interest rates are still low, so borrow money to invest in growing and improving your business. But act quickly, because rates won't stay low for much longer, he said.
- Plan for higher wages. Regardless of what you hear on television, wages are going up, Beaulieu said. And in manufacturing, they're significantly higher. As a result, to get the talent you want, you'll have to be willing to pay for the talent you want.
- Plan for higher energy costs. Oil prices are going to go up in 2016. As a result, energy costs for businesses will go up, as well. Plan now for that increase. But don't assume that will increase business to oilfields, Beaulieu said. Efficiencies that have been introduced will likely keep investment in new rigs down, but it will bring idled ones back on line.