A recession doesn’t necessarily have to be a disastrous experience provided you and your company are preparing for it. Most recessions last less than a year but some, like the 2008 housing crash, take years to recover.
That was 15 years ago and soon of the survivors have still not completely recovered.
Even if this is a mild and short-lived recession coming our way, the after-effects can go on for a lot longer. It’s not the actual recession that can hurt your business, it’s your lack of understanding of the changes fundamental things of your business will go through afterward.
Reduced Sales and Profits
As economic growth stalls, builders and their customers along with developers and investors become wary when it comes to spending. This means your business might find it more difficult to generate its usual sales, and you’ll need to cut costs accordingly. Businesses are less likely to invest in new products, employees might be made redundant, and overheads are slashed to account for a reduction in profit.
Credit Lines Shrink
Lenders begin to tighten their belts, which makes it more difficult for businesses to access their usual lines of credit. Interest rates might increase, and lending requirements are stricter.
Positive Cash Flow Dries Up
With lower sales volumes, it may delay your payments to suppliers and lenders. Most vendors that survived the 2008 housing crash have put new systems into place to alert them if an offsite construction company is beginning to miss payments.
Where does offsite and modular manufacturing stand amid a recession, and what impact does a recession have on our industry?
Trying to weather this alone is tough and that’s why Daniel Small and Gary Fleisher, the Modcoach, are hosting a Da Vinci Offsite Construction Roundtable entitled Preparing for a Recession starting Feb 9th.
Quality Drops
As manufacturing slows down and bills go unpaid, companies look at new ways to cut costs and improve the bottom line. This might lead to a temporary reduction in service or product quality when you can’t afford to adhere to your usual standards.
Recessions Can Actually Help
Recessions also give businesses the chance to reinvent themselves by looking at innovative ways to cut costs. You might decide to try a new business model with lower associated costs to protect your interests. Competition may also be cut, as some businesses are unable to remain open.
If you are not preparing for the 2023 recession most experts are saying is coming soon, you just may be one of those competitors that won’t be around when the sun starts shining again and it will, it always does!
Gary Fleisher is the Editor in Chief of Modular Home Source and Offsite Builder magazine. Email at [email protected]
Gary Fleisher, the Modcoach
To learn more about the Offsite Construction Industry, sign up for your free monthly issue of Offsite Builder, the Construction Magazine for Builders and Developers
