For June, “12 Seasons” addresses the question: Is now the time to start hiring again, to start acquiring, to start serious expansion? The answer, as you might surmise, is: it really depends!
The economy is expanding in general versus last year, but it’s still way below 2007-2008 levels; certain sectors are growing nicely, others still dropping, and many are still stagnant. Prices of many commodities and other products/services are skyrocketing, while housing continues downward significantly again. Geographically, things are sporadic as well. While the outlook ahead is “up” — it’s very mixed and probably very challenging for individual businesses. Finally, while loosening slightly, bank lending is still very slow to spotty to non-existent. Rising costs portend rising interest rates which in turn point to banks having to lend more to maintain their earnings levels. But the inflation-push, interest-rate-growth, bank-lending equation could take quite some time and be highly selective by industry.
So, expansion for your business depends on what your specific industry looks like now and over the next two-three years, what your locale looks like, what your raw materials (including labor) look like, plus what happens in November 2012. A real mixed bag!
We do see acquisitions picking up, selective hiring improving, and silo-ed growth happening. Indeed, it is time to expand for some businesses, albeit carefully! This means considerably more due diligence and backup cash/credit for acquisitions, for organic expansion, and for any other form of growth you might contemplate. Safety margin and caution are the keywords.
Some tools for assessing your outlook are at www.ceotools.com in the form of the Valuation Tool, Interview and Retention Tools, plus 5-Charts and Forecaster Tools. Other tools are at www.usdebtclock.org and www.itreconomics.com for assessing the emerging economic scenario.
If this helps your decision on whether and when to expand and how, we’ve succeeded here. We welcome feedback on improving these tools and tips.
Very best regards,
Kraig Kramers