The New Year is here! As the first Quarter kicks off, I thought I’d share the following “forecast” about what the upcoming year could hold.
Dear Small and Mid-Market Executive –
Every year holds its own share of challenges for companies of all sizes, but for those of you in the small and mid-market space challenges can be particularly impactful. From our experiences with our clients as well as from conversations with other CEO’s in 2017, many of you were:
- Finding lots of opportunity for growth but struggling to find the right people to fill critical positions,
- Launching new offerings and services and trying to take advantage of changes in technology to reach out to customers outside your normal sandboxes,
- Being more deliberate with whom you choose to do business with, and even saying “No” to opportunities that aren’t in your sweet spot,
- Dealing with an uncertain political climate that impacted major industries like Healthcare and Insurance causing many of those companies to crack down on investments in new capital projects, and
- Taking advantage of mobile technology’s ease of access for your employees, your customers and your suppliers.
And all of the above require the investment of time, money and resources to fully implement.
As we get into the 1st Quarter of 2018, the upcoming year’s forecast should definitely be top of mind. After all, what’s coming from an “atmospheric” standpoint is an essential component of a robust planning process.
So you may want to consider the recent advice of the Institute for Trend Research (ITR Economics), which prides itself on 94.7% accuracy over 60 years of economic forecasting.
The good news? We are heading into 2018 with the economy in good shape in most segments. Industrial, retail and service can anticipated a strong first half of 2018 with slowing growth in the second half of the year.
But there are some critical items that you might have missed with all of the information that’s so readily available to us now.
What are some of those key factors you may need to keep in mind in the coming year? Here’s a few from some of their recent posts although you can check out all of them at their blog :
- A pullback in the S&P 500 is certainly possible in 2018, especially given ITR’s GDP forecast for 2019 and the current struggle to get profits re-accelerated in their rising trend(s). Flatlining profits would pose another danger sign for the S&P 500 trend in 2018 in addition to the current relatively high P/E ratios.
- Retail and E-Commerce – Retail Sales are at a record-high $5.733 trillion. Amazon Sales have reached a record-high $161.2 billion, but despite the misconception that traditional retail is dead, that’s still just 2.8% of total Retail Sales. Total E-Commerce Retail Sales, which includes Amazon, are up to $432.8 billion, or 7.5% of all retail sales. Clearly brick and mortar stores, according to ITR, have a place in our society and our economy. However, that’s not to say that many retailers and distributors who do not adapt to Amazon’s convenience and benefits will be forced out of business. But the fiction is that all retailers and distributors are doomed. Retailers and distributors who have invested in knowledgeable workers, a web presence, superior service, quick response times, and clearly-defined competitive advantages (you have them, even if you don’t know what they are) can grow and be profitable as they change with the world around them.
- Rising costs for shipping – Many business owners and decision makers are not aware of the implementation of The Electronic Logging Device (ELD) rule for commercial trucks in December of last year. The rule was officially intended to help create a safer work environment for drivers and make it easier and faster to accurately track, manage, and share records of duty status (RODS) data. An ELD synchronizes with a vehicle engine to automatically record driving time for easier, more accurate hours of service (HOS) recording. However, according to the American Trucking Association, even though the rule is not slated for major enforcement until April of 2018, it could cause many independent truck owner/operators and some smaller fleet operators to go out of business. In an industry where capacity is already tight, this will certainly drive shipping prices higher. And, the resulting pressure on logistics prices will catch many enterprises off guard. As such, if you have not thought about the impact of this rule on your business, now would be a great time to do so.
- Exports driving economic growth – Exports will continue to be important to economic growth in the US. Exports of goods and services for the 12 months ending September 2017 were 11.8% of GDP (nominal dollars) — $2.295 trillion (US Census Bureau). Goods comprise 66.1% of the total. Most people seem to think the US is a minor exporter compared to China and other countries. The reality is that we are the second largest exporter of goods and services in the world measured in USD. Alan Beaulieu, the President of ITR, counsels, “Do not buy into the myth that the US cannot compete globally and we do not sell goods to other countries. It is simply not true. Instead, we encourage you to strategize on how to do business with the companies that make these exported products or become an exporter yourself.
Success, as every Enlightened Leader knows, requires dedicating time to plan, fierce commitment to staying on top of trends in the market and spot on execution. And the willingness to understand and take into account the Key Business factors that will move your business ahead.
FOOTNOTE: ITR Economics is my favorite prognosticator on all things economic and a highly respected economic research group. They’re not just considered one of the foremost authorities on predicting economic trends, but they’ve also developed tools to help companies manage those trends proactively.
And as I learned when we had them come to Philly a few years ago, they’re also great speakers – highly informative and entertaining. Check out their blog here.