Informed Vigilance
Are dark clouds gathering on the economic horizon? Many people think so, and are feeling that way with growing frequency and deepening levels of concern. As Eric Herman points out, based on past experience in periods of looming financial strife, this is the time to plan for a changing business landscape.
By Eric Herman
I’ll admit it, I’m a worrier. It’s a lifelong characteristic that has both a downside and an upside. On one hand, concern for the future has always prompted me to plan ahead; to realize that things change and chances of success in shifting economic, business and personal circumstances increase by way of preparation. The bummer is that worrying much of the time is, well, a bummer.
I’ve felt both ways lately looking at rapidly shifting conditions in the housing market. Soaring interest rates are stunting real estate transactions across the country, residential and commercial. The cost of borrowing is keeping would-be buyers on the sidelines, while prices are falling, draining equity from the market and refinance applications are plummeting.
I’m no economist, but the reporting to this effect is widespread and hard to miss for anyone paying attention. Here’s but one example.
None of this is good news for the watershaping market. Most of us are old enough to remember the last housing crisis that triggered the Great Recession, and the devastating impact it had on the industry, and the entire economy. Although today’s economic gurus consistently say that the situation today is very different than in 2008, there is no question that a contracting real estate market inevitably stymies both new home construction and home improvements, as well as commercial real estate development. All of these are markets upon which all iterations of the watershaping profession vastly depend.
The pandemic-driven wave of buying, which has been the defining feature of the industry over the past two-plus years, may well be wanning as more builders report fewer new contracts and increasing cancellations of existing backlog. It’s possible that because the industry became so overextended with project starts pushed back six months to a year or longer, the work in the pipeline may delay the impact of changing economic conditions. That, of course, remains entirely uncertain.
On top of all that is the pressure of inflation, lingering supply-chain issues, the volatile stock market, and broader societal uncertainty and division at home and abroad. Put it all together, shake vigorously, and we are all in a churning morass of troubling and potentially disastrous circumstances. This does worry me.
Clearly, this is a time when we should be anticipating a different market than the one our industry has experienced since spring of 2020. With dark clouds gathering on the horizon, I believe it only makes sense to consider the course ahead.
Looking back, many watershaping companies fought through the Great Recession by shifting their focus to renovations, minor and major. Some companies I know took to planning comprehensive projects, but only building part of them at first with the idea the homeowner will later move forward with other phases.
Others found tangential business activities and new revenue streams to survive and even thrive. During the recession I once interviewed a service and repair company that started installing holiday lights and decorations as a sideline, and found great success. Closer to the business of watershaping, energy auditing and efficiency upgrades, replacing landscape lighting with new LED systems, focusing on outdoor dining, fixing leaks, installing safety covers and other related specialties have proved viable for some, if not many.
Perhaps more than any other strategy, a great many watershapers trained their business focus entirely on the high-end of the market, where wealthy consumers are far less impacted by economic tides than are people in the middleclass.
While the many ways that economic pressure play out for individuals and their companies are vast and varied, there is one thing that does seem to be unifying and consistent. Those who are not prepared to respond are those at the greatest risk of demise.
Should we be worried? That’s probably not the right word or way to look at it, but one can certainly make an argument for informed vigilance.