It’s a Whole New World Out There

by Geoffrey Butler, AIA

This is a whole new world from what we knew just 12 months ago. What worked then just won’t work now. It is not just in our profession and business; it has also changed all of our client’s business models – big time. The source of funding, availability of funding, security and equity required, and the cost of money has changed. This affects the way our clients will approach their business and the need for any professional services.

Furthermore, our client’s customers, whether they are the broad based population or even a small niche market, have changed their buying habits. Everyone is going to be more conscious of what they spend their money on, how much they pay for everything, what they really need to spend on discretionary items, the level of debt they are assuming and thinking much more about the “what if” scenarios.

For every sector of the business world, this means a longer, slow climb out. The market will shakeout and many competitors will be a shell of their former self if they survive at all. There will be lots of smaller and leaner organizations. There will be more one person businesses digging for scraps. Some will exist as people lose their jobs and go ahead and try an entrepreneurial effort they might have been considering but afraid to give up the security of a steady job to do so.

The bigger businesses that are able to survive this epic downturn will be smaller but they will have less competition as many of their competitors will be gone or no longer competitive. Many businesses will be much slower to add staff and overhead, preferring to be more selective on how they grow.

In the manufacturing sector, we will find that many companies will close down inefficient facilities as the demand falls. They will shift production to the efficient facilities, sell down inventory and basically set themselves up to be profitable with less business. However, that means that the demand for materials will apply significant pressure to the supply chain and we will see shortages of materials quickly and prices might spike – inflation will be a very real issue. This will affect the overall stability of many markets and we might see a period of instability lasting a while longer even when the economy is climbing back.

It is time for all of us, at least those of us who want to be vital and successful on the other side of this abyss is to figure out the following.

  • What our market is going to be in the near term (get the crystal ball out and figure out what we can do that we are experienced in, capable of and have the capacity to do)
  • What will be the next market after the world assumes a level of stability
  • What we need to look like in order to get that business.

It is fairly obvious that we will not be able to just go back to what we were doing before and be successful. We will have to reinvent ourselves and be the shining example of the “new enterprise.” We have to be fresh and be relevant. If we can’t do that, we will have to be blown away by the new, young pups who do figure it out.

I remember a cartoon. One was the two vultures sitting on the power lines looking down and one says to the other: “Patience my ass. I am gonna kill something.” Sitting around and hoping things come back to the good old days is not going to cut it.