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Warning signs or not, the indicators help you guide your business.
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Michael Carden's Editorial Archives
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I've been in the construction business since I was born; my father was a framing subcontractor. It took living through the interest rates of the early '80s, however, to get me into the remodeling business full time.
I was vice president of a custom home builder during this time. To get a construction draw on a speculative home, all you had to do was tell your banker you needed a draw. I had one house that was 85 percent drawn, but all I had accomplished was the foundation. The interest rates in our area quickly climbed from 10 percent to 21.68 percent. Eventually sales stopped, and the banks figured out what was going on and foreclosed on eight houses we had under construction. During this time, I had started a subsidiary company specifically for remodeling. Eventually, that company became mine when I left the builder's employment.
This article is not intended to sound like Chicken Little. I merely wish to share a thought about our current economic situation. Understand, I am not an economics expert--I took only one economics course I can remember--but not since 1980 have I seen as many warning signs showing that we could be headed toward major trouble.
It takes more than one or two situations coming together at one time to have an effect on an industry. In my opinion, ours could be just around the corner. When have you ever heard so much about "no growth?" The attitude of the general public appears to be headed in a negative direction. "I have my home and neighborhood, you don't deserve one," seems to be the battle cry of the environmentalists and politicians. Housing starts have been a leading economic indicator since the end of World War II. Home ownership and the right to own property is the American Dream. That dream is under attack.
My intent is to get you to think, "What if he's right?" Lack of knowledge should be our only fear. If I can get you to consider the potential consequences to your business and life should a hard economic downturn occur, then I will have been successful. By considering where you business would end up should an adjustment occur, maybe you could plan for a slightly tougher market.
When economic adjustments happen, the weakest are the first to suffer. When economic adjustments happen, the strong survive and find a way to protect their investments, business and life. The really strong adjust quickly, take a gamble, and walk off with the lion's share of the spin-off monetary benefit. Knowledge is where this process begins.
For most of us, our heart is in the industry. Insightful knowledge can serve to bridge the gap between your heart and your mind. Consider wisely, what do you have to lose? If the economy continues to climb as it has for the last 11 years, then the worst that could happen is you will be sharper than you were, therefore stronger and more financially secure.
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