Business Growth & Strategy

New Year, New Opportunities

For most entrepreneurs, it has actually been a  pretty good year. One wouldn’t know it based on reading the papers.

Housing and construction remain depressed. But an objective view reveals a surging Dow, low interest rates, stable energy prices and inflation that is in check.  While GNP growth is modest, most businesses grew last year, and should grow again this year.

Many entrepreneurs I talk to want someone with a silver bullet to tell them which direction the economy is headed.  Are we up or are we down? The constant analysis of minuscule shifts in U.S. demand is dizzying. My view is that the directional momentum of the economy is irrelevant for most businesses. It is a variable beyond our control. With no evidence to the contrary, one could assume that 2012 will be much of the same.

Entrepreneurs should be focused on revenue growth and where it will come from. Will revenue gains be with new clients, new products or services, new customers, or new geographies? What are the strategic priorities of your customers?  What new service bundles will your competitors present?  Every entrepreneur should remember, that the ROI within one’s existing core business typically yields a return of several times that earned in any new market.

Here are some things to look for in 2012:

Capital Investment: Of 781 companies surveyed by the National Federation of Independent Business, 24% planned capital outlays in the next 6 months (the highest proportion in the last 40 months).[i] While still relatively sluggish, expansion of U.S. manufacturing capacity should continue as entire industries (such as automobiles) shift production back to the U.S. as a result of the strengthening of the U.S. dollar.

Retail: The convergence of mobile devices and real time data has completely changed the face of retailing. Retailers will be moving towards solutions that morph the in-store and online retail experience.  Consumer spending this Christmas season was high (up 6% through Q3 and with similar strength in Q4) even though joblessness remains relatively high (9.1%) and there is virtually no rise in household incomes.[ii]

Hiring: U.S. companies who have cut staff for 3 years are starting to hire again. Economist Carl Riccadonna said “We’re getting to the stage where employers can’t squeeze more water from the stone”. Remarkably, the talent war persists as many employers can not find skilled workers.

The worst is over with bankruptcies: Over one million consumers filed for personal bankruptcy in 2011, down sharply from 2010.

Credit Markets: If there is a cog in the wheel we should be worried about it is the state of major U.S. banks.  Those with significant mortgage holdings (especially in home equity line of credits) of troubled assets on their books (some have even suggested at least one major U.S. bank is insolvent).  29% of homes in the U.S. are currently under water. The difference between 2012 and past cycles is that foreclosed  property has virtually no value in depressed communities such as Buffalo and Cleveland. A major U.S. bank failure could reverse a year of positive projection in our confidence.

Construction: If there is an industry that has been beaten down it is construction (especially general contractors).  Every project is won or lost by RFQ (request for quote). The few who are still profitable are niche players or those with a unique selling proposition or penetration in unique markets (such as those that do environmental work or projects for municipalities and state governments).  While housing starts are seeing a very modest turn around, pricing will remain brutal for the foreseeable future.

Government: Presidential politics will dominate the debate, with entitlement spending and Obama care in the balance. In 2012, 30% of Medicare’s burden will shift to states[iii]. “Draconian” cuts in government spending at the Federal, State and Local level (with more than 200,000 expected lay offs in local government) will impact businesses reliant on government spending. It’s time to diversify if that is you. Outsourcing for government is an opportunity.

By now, every company should have revisited their strategic plan, set 3-5 year goals and set their budget for calendar 2012. Here is a useful New Years Proposition for you: invest your energy on building the infrastructure to support future growth, and focus on only those markets where you can dominate and remain profitable. For most businesses, this is a time to expect steady modest growth, and not to be making wild bets.

[i] A Brighter Future – Maybe by Angus Loten WSJ December 29, 2011

[ii] Oliver Wyman Market Intelligence Report by Experian

[iii] The Kiplinger Letter December 9th, 2011

Category: Business Growth & Strategy

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Marc Emmer About the Author: Marc Emmer

Marc Emmer is President of Optimize Inc., a management consulting firm specializing in strategic planning. Emmer is a sixteen-year Vistage member and a Vistage speaker. The release of his second book, “Momentum, Ho…

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  1. This is a positive way of looking at things especially in the field of business. A new year is a good way of setting personal and business goals that can help in proper management and even self discipline. This is good news worth reading.

  2. Rdkranz

    April 5, 2012 at 2:07 pm

    Marc, your fourth paragraph says it all. What is the sales forecast? Where will the revenue from? How much from who, what and when. Revenue is not something to wait and see what comes in. Make the projection, pursue the cleintele, adjust, and a tenacity of never giving up.

    Ron Kranz

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