when is the economy going to turn around

[randyt]

I've been hanging on since 2007 which was one of my better years. Every year things get a little worse. My retirement is nearly gone, it was used to keep the business doors open. I'm down to two employees and I think I my lay them off soon. The phone is very quiet, I call the shop sometimes just to make sure it's not broken. Any thoughts?

[Ken]

Yep. Get ready for a depression if Obamacare actually goes into effect.

My business is steady, but accounts receivable are climbing. Clients that paid 100% up front are now on payment plans. That includes business clients that always had cash readily available.

Lot's of people and businesses that appear financially solid to the world are operating week-to-week.

I live in a bedroom community with little industrial or commercial development. We always had comparatively low unemployment rates. Today, it's near 10%. The small city next to us reports an unemployment rate of over 15%. In reality, their rate is over 25%.

State and local taxes are skyrocketing. Just the local property taxes alone are up some 30+% over two years ago.

I know some of you will disagree, but I don't see anything good happening for at least 4 years, depending on who we elect to go to Washington.

[randyt]

I've been saying that in 25 years these times we're going through are going to be called the second great depression. I operate in a bedroom community too. It went from 1000 residents to 650. Most of my business is service, with a smattering of commercial and residential new construction. There are lots of lakes around and the weekenders are part of our business as well. We have a 18 percent unemployment rate. I can do ok working alone, maybe even make more money. I'm getting older and crawling around under houses and through attics just doesn't seem as fun as it once did.

My lawyer tells me accounts receivables are climbing as well.

[rezmut]

I live in what amounts to a third world country surrounded by the good old USofA- unemployment is at just under 90%-ya that's not a typo-90%.

[Rick]

Randy - It's entirely within your call. Not every area is that way. Indiana is booming. Jobs abound and building is going full scale again. Everything from apartments to residences to business to civil engineering projects. I don't know of anyone in trades that is sitting on the board unless they want to. If you wish to stay put then that's a decision I fully understand but it sounds like your geographic location is still struggling. If your chose to move your business then you'll absorb the cost of relocation and name recognition. Ohio, Kentucky and Michigan are doing pretty well just looking at the numbers.

Another option is to look at your core business and try to determine if that is the correct business for you. Have you done a lot of specialization within your trade/profession? Is specialization something that would benefit you? I have a very close friend that owns a machine shop and does nothing but show fabrication. He does work for the area MOSI, business and theater. Whatever show they are putting on his team builds the displays. He did the entire Titanic exhibit for example. Perhaps there is some niche within your trade that you can create.

If I were you I'd sit down with pen and paper and write down all of the possible specialties my business could engage without a significant investment. Then I'd look at each one and determine it's Strengths, Weaknesses, Opportunities and Threats. Google SWOT and you'll get tons of hits.

Is the bulk of your business repeat or new clients? A mix of both? How successful have past marketing/advertising efforts been? What kind of vehicle traffic passes your shop? You should be able to google your states traffic counts for your address and see how many vehicles pass your place each day. Then look at other locations and see if they are better or worse. As they say, location, location, location.

I don't know your specific line of work but those are some generic ideas from large to small that you can think about. Good luck!!

[Solar Geek]

Rick those are excellent suggestions for anyone whose business is in a slump.

We live in both rural WI and downtown Chicago. NEITHER is doing well, no matter what they tell you. Can't wait to be done with Chicago and must be a visitor (to my kids who will be staying). Glad we rent there now as taxes will have to double for the pension mess, the public school mess and on.

What scares me more, is how many small "mall businesses" are closed. As we drive north, or visit relatives in Madison, Milwaukee and suburbs, I am simply astounded as the many many shuttered offices, shops and businesses. Even gas stations are closed down. On main streets in busy areas.

Since we still have not felt the true extent of Obamacare hitting as mentioned, and since the commercial mortgage crisis has been delayed (don't know why but many are hanging on by a thread), I think we go down before any upswing.

[randyt]

thanks for the comments and advise. I have delved into water treatment, indoor air quality and geothermal and expanded into west michigan, Petoskey area mainly. It has been slow there though. I have picked up a small builder as a account in that area, with that said no account is for sure. There has been more estimating this spring than in the recent past. Part of the problem is I can no longer afford an office. The cost of my office employee is just about the amount I fall short on. It's not that the office doesn't do a good job but in these times there is only a few calls a day and some minor paperwork. It's a tough decision.

[cowgirlup]

Randyt, Do you do any type of advertising? Have you shopped your competition to see how their business is doing? Are there any areas you could cut costs? Better insurance rates, smaller cheaper office etc??

We can't complain here. Things were bad in 2008, worse in 2009,2010 wasn't great but the last few years have only gotten better for both of our businesses.

DH is a general contractor. I guess since the housing market is so crappy people are fixing up and adding on to their homes instead of selling them. He doesn't advertise. Most of his customers are repeat or word of mouth. That being said he does most of his business in MA. The regulations are tighter and it works to his advantage. In NH any Joe handyman will say he can do a remodel or repair for a dirt cheap price.

[randyt]

thanks for the comments. We've shopped about everything that we can think of. Our building is huge so we leased the back out to the school for their automotive class. The rent pays the mortgage but we fall short on paying the property taxes. I'm working on refinancing and having the taxes as part of the mortgage.

We do advertise and I've even went door to door on commercial accounts. Been going to participate in home shows and such but still waiting for something to show up. Been thinking about putting up a kiosk at a nearby local home improvement store.

our biggest competition is unlicensed and uninsured contractors. We have regulations but it's still tough enforcement. We are the only plumbing and heating contractor for 15 miles but in a rural area that don't mean much.

The other contractors are about as slow as we are. For us it boils down to a numbers game. It takes a certain number of jobs to break even and the time frame between jobs is the what hurts us. We can do a profitable job but if it's a week or more before the next job, our operating costs have used it and more all up.

Just think at one time years back I was the largest plumbing permit puller north of saginaw mi.

[Wildthang]

Well randy, if summer ever gets here you should have a surge in AC units that doesn't work. Not a permanant fix but may get you busy for a while!

[Cast-Iron]

I think these are all good suggestions, but ultimately the decision is yours. No argument from me on the location issue for retail businesses (I fought the location battle for 8 years and it was only a matter of two blocks too far west for me...hey I never said I was fast). However in a community of several hundred, word of mouth and reputation are perhaps just as important as your physical location. If your business requires you to perform on-site services at your customer's location, than your office's whereabouts may not even be relevant. Perhaps an answering service or call forwarding to a mobile phone number until things pick up again.

Have you ever quantified your potential market? It could be that your area cannot support the number businesses/professionals there to meet present demand. Can you expand your service area or product lines to increase the potential for new business and hopefully improve your bottom line? We have had retail businesses in our community for some 30 years now. My DW started in women's clothing. When Walmart came to town she couldn't compete on price points so she fell back on her sewing experience and moved more into fabrics, notions, sewing lessons, and custom beddings. Someplace Walmart couldn't or wouldn't compete with her. As conditions warranted, she expanded into other lines including some higher-end clothing lines you won't find at a typical Walmart. When the economy tanked in 2008, her sales fell off considerably. It was obvious to her that traffic count was down and people were excercising a lot more discretion in their spending habits. Once again she transitioned and started offering some higher quality resale clothing. Many repeat customers are now frequenting the store weekly to just find the "bargains" in this area of the store.

My point is, as you likely already know, business and economies are dynamic. It requires management to constantly tweak and innovate to keep their products and services relevant and balanced with the cyclical demands of their customers. It's still tough here like many other areas across the country, but we're holding our own and paying a little closer attention to the bottom line. If the day came and we felt compelled to move, and with the current economic situation in mind, I would look for an area with ties to long term energy production (read shale oil & gas). It is an industry that can't be exported so it would likely offer greater economic stability for the duration of that particular play. These plays are scattered across the country, but not all of them are created equal. Marcellus, Balken, and Eagle Ford are a few of the more prominent plays that come to mind. It is likely other plays will become public knowledge once the underlying mineral rights have been secured by the majors and those too are brought into production.

I feel for you brother. It's a challenging environment for small businesses right now. Hang in there and keep giving it your best. Without the struggle we wouldn't appreciate the successes when we find them. Good Luck and God Bless!

[Rick]

Can you move into heating/cooling for watercraft? The larger ones have electric and propane heating and cooling. It looks like you have 2 or 3 decent sized marinas and more across the bay. Marinas all the way down into Traverse City. If you could pick up some watercraft work in the summer it might help between jobs. (?) Perhaps work some kind of deal with the marinas? How about ice fishing heaters and/or shanties? I have to imagine that Little Traverse Bay, Burt Lake and Lake Charlevoix as well as the many smaller ones are all ice fishing havens in the winter.

LOT'S of state owned land. Have you bid on state contracts?

All rhetorical questions. Just trying to offer up some ideas that might supplement or add to your existing jobs inventory.

On the accounts receivables, I didn't touch on those before but keeping that in check is an important aspect of your financial well being. You can't work for free. So some friendly reminders might be in order. If your ARs have some aged accounts then something a bit stronger might be in order as long as you've sent reminders for payment. If you haven't then start doing so. That way if they aren't going to you you'll have a paper trail in place if you have to secure a lien on them.

[Cast-Iron]

Your post #9 wasn't up when I started my lengthy response. Here are a couple more questions/ideas for you. If you're renting space to the school district you might be eligible for some property tax relief. I'm no expert mind you, especially on MI tax code, but it might be worth an inquiry at your local appraisal district. Especially if they're paying below the appraised "fair market value" for the space. Do you have more office/shop space that you could lease to offset your property taxes?

A possible business opportunity I could see is working with an area lender to finance projects where customers upgrade to more efficient heating/cooling systems. If you can cleary demonstrate to clients how the savings on energy costs alone could pay for the project, those savings should make the sale for you. Don't forget to include any tax incentives that might be available in your area for energy efficient upgrades. If you've got a banker/investor on board for the financing, and there are savings to be created for your customers, you would likely find yourself with a tremendous competitive advantage, one stop shopping. Accounts receivable could be escrowed until your contractual obligations had been met.