As most of us are developing our business plan for 2010, the biggest question we are facing is how to project revenue for the year. This is probably the most frequently asked question that I have fielded in the last 60 days. Most economists agree that the U.S. economy is transitioning from the deepest and longest post World War II recession to an economy that will be characterized by subdued but positive growth in 2010. HOW WILL THIS IMPACT YOU NEXT YEAR?
There are a lot of negative trends, percentages, etc. But you CAN grow revenue next year. Fully understanding the economy, YOUR market, and how you ATTACK will make all the difference for you. Here is a bullet point review of what has happened over the last 18 months that will help you get a macro perspective on what you think your company is capable of doing in 2010, based on your target market, geographic focus and product line:
- The economists predicted that the 2009 U.S. economy would contract by 2.4 percent and they were right.
- Employers shed 7.3 million jobs since December 2007. The official jobless rate last month jumped to 10.2 percent , a 26 ½ year high.
- Even with the bear market rally in equities and the recovering housing in 2009, household net worth has contracted nearly 20% or $12 trillion in lost net worth – a degree of trauma that we have never before seen.
- The birth in baby’s after World War II (baby boomers) has driven the U.S. economy for the last 5 decades. There are currently 78 million baby boomers over the age of 53. This mass of people realizes that they will live another 20 or 30 years and will never fully recoup their net worth loss in the 2008 – 2009 recession.
- People under 55 years of age are finding it difficult to get employment. Those that are unemployed and under-employed is closer to 17%, this U-6 number is the highest since the statistic was developed in 1994. There is a youth unemployment crisis in the United States of epic proportions and there are a record number of Americans that have been out of work for longer than six months who cannot find employment.
- Indiana has been hit harder than the rest of the nation in terms of jobs lost, percentage-wise, since manufacturing makes up a great number of jobs in the state.
- Credit availability for small businesses contracted dramatically in 2008 and 2009. Small businesses that depend on access to credit account for more than half of all new jobs created nationally.
- The personal saving rate hit a high of over 12% in the early 1970s through early 1980’s and dropped for 30 years to 1.5% in early 2008 and reversed in the second quarter of 2008 and jumped to nearly 5% by the second quarter of 2009. The largest reversal in the shortest period of time since 1952.
How the experts expect 2010 to stack up:
- The Financial Forecast Center predicts that the gross domestic product for the first quarter of 2010 will be flat, increasing ½% in the second quarter and steadily improve in the third and fourth quarters.
- Consumers will be cautious in their spending and will continue to save.
- Credit availability for small business will be hampered. Most businesses are going to find it more difficult than normal to finance investments and expand their business.
- Prime rate is projected to remain at 3.25% through the first half of the year with a slight change of an upward move toward year end.
- The unemployment rate will drop to 9.6% by year end, small businesses will start adding new jobs. It will take another 3 to 5 years to reach full employment.
- Inflation will remain low due to cautious consumer spending and continued high unemployment.
- The housing market will show some growth; but, like the overall economy, it will be muted. Home prices are expected to rise slowly in most markets. Nonresidential construction will be weighted down by excess supply and tight credit for firms seeking to buy or lease space.
- The only part of the population actually seeing any job growth in this recession is the people over the age of 55. This age group that recently retired is finding they must go back to work to satisfy their retirement lifestyle.
You can probably spots some trends in the data that will have a positive impact on what you’re offering to your customers. If not, then perhaps you need us to help you figure it out.
Have you put together a specific plan? Have you prepared a detailed financial forecast for 2010 with revenue, margins, overhead expenses and profit? Will you have enough cash to operate successfully in 2010? Is your banker fully confident in your ability to improve your performance in 2010? Will you sleep better in 2010 than you did in 2009?
Don’t have a success plan for profit, expenses, revenue and cash flow for 2010? Contact me before December 22 and I will give you a 100% guarantee that if you use our program to develop your strategy in 2010, you will be miles ahead of your competition and you will sleep better at night.
My record in 2009: 70% of my clients had between a 15% and 40% reduction in revenue between 2008 and 2009. 82% of them are projected to beat their profit budget for 2009, 27% will make more money in 2009 than the in 2008, 100% of them have adequate financing in place, and only 8% are not performing up to budget levels. Let me help you.
Zig Ziglar said it best “Every choice you make has an end result.”
nice post. thanks.