Editor's Note: Here's an excerpt of a post by Alan Beaulieu of ITR Economics about 3 steps dealers can take to prepare for the near-term economy. Read the full analysis here and listen to a Rural Lifestyle Dealer podcast with Alex Chausovsky of ITR Economics in which we discuss the longer-term economy.
Our early-turning indicator suggests a general increase in the US economy in the second half of 2020. Our leading indicator decline until January 2019 also means cyclical decline will characterize the overall economy into next year.
Seeing around the corner must be followed by planning now for what you will need to make happen once we get through the upcoming low.
- Cash management is never far from the top of the list. While capital expenditures are often a must, this is an opportune time to see where cash savings can be had. A friend of mine just told me that his business cut their outside advertising firm, brought the work in-house, and saved almost $4 million a year. He is also achieving better results. Now can be a great time to bring some expertise in-house and see improved output. Obviously, this cannot be done with all consulting and outside services, and we would be quick to add that it is never a good idea to drop your economic consulting firm!
- Now is also the time to prepare for the accelerating rise projected for Industrial Production in the latter stages of 2020 and in 2021. Order that machine that will enhance your operation, be it some form of automation or simply a newer or faster production machine that will render higher quality output. Lead times for capital equipment will vary, but lead time for delivery, installation, and training can easily consume the next three quarters. It may be a CRM or ERP system that needs to be purchased and implemented. Either can consume at least several quarters of your time, which is tough enough, and it becomes unbearable if you are in Phase B, Accelerating Growth. Pull the trigger on the investment now and be ready for increased activity around the corner.
- Have your marketing team (newly in-house perhaps?) get started on a market analysis of what your clients are going to want and need as the economy picks up speed next year. What product is offered by your competitors that you have not taken the time to develop or have been ignoring because you were too busy with today? Determine how your clients will want to receive your product or service and start building it now.