If you’ve been doom-scrolling economic news for the past few years, you may have noticed something – there’s not as much “doom” as there used to be. While the economy has had its rocky moments, we’ve reached a point of relative stability. The good news is that there are no significant signs of recession. The not-so-good news is that there’s also no prediction for rapid growth, though there has been a surprise boom in manufacturing advancement in the US (more on that later).
In this economic climate, businesses need to adapt their strategies to find growth opportunities. Within any economy, there are high and low-growth niches. Businesses must plan carefully to capitalize on opportunities as they emerge. Here are a few strategies to help your business do just that.
2024 Outlook
Economists are predicting a short, shallow recession as we head into 2024. Until now, the pause on student loan interest and utilization of revolving credit have bolstered consumer spending. Loan payments are scheduled to resume before the holidays, and many consumers are at the end of their credit limits. These are the primary two factors expected to influence a contraction in Q4 of this year and into Q1 of the next. Expect tension in the labor market throughout 2024 as some sectors draw and retain workers while others stretch their teams and rely on scheduling efficiency to ride the change. Additionally, it won’t be surprising if the Fed raises rates again before the end of 2023.
Identifying Long-Term Investment Opportunities
In a steady economy, the successful strategy is to plan for the long-term. It’s time to start thinking about putting capital into long-term assets like equipment, owner-occupied property, and investment property rather than short-term investing. Long-term loan products like commercial mortgages, equipment loans (not leases), and other CRE loans are easily accessible tools you can use to jump-start those investments. Because these loans have terms of 10 years or longer, interest rates are greatly reduced over products like term loans.
Focus on increasing efficiency, fulfilling demand, and managing your business expenses more effectively. Finding ways to improve your efficiency isn’t the same as cutting corners. It could be something as simple as redesigning your workspace so production flows better. Perhaps it’s training staff on ways to more effectively utilize the software your business already has. Make a thorough assessment to see where your business might be lagging and where you can tweak your process to address that lag.
The re-emergence of US manufacturing with an emphasis on smart factories, sustainability, and efficiencies driven by data has been a net positive in 2023, and with strong support from federal programs, it doesn’t look like that will change anytime soon. Now may be the perfect time to invest in upgrades or expansion in the area of manufacturing.
Importance of Market Analysis
On the topic of making assessments, don’t neglect the importance of market analysis. A detailed market analysis can reveal hidden growth opportunities and help you pinpoint strategies that aren’t working. A common place to start is with your customers, though it’s not the only place you should be focusing. Reach out to customers via email surveys, your business’s social media accounts, and even face-to-face to get their feedback on what you’re doing well and what you could be doing better. Maybe there’s one feature of your company that, if dropped, would send your customers elsewhere. Your customers’ perspectives are vital to the success of your business, so it makes sense to ask what they think.
Take a look at the competition. What are they doing that you aren’t, and is it working for them? What opportunities are they missing that you can capitalize on? While it’s valuable to see what your competition is up to, be careful not to get tunnel vision. Often, insights from similar businesses overseas can provide a fresh perspective. But don’t focus on your industry alone either. Developing an interdisciplinary viewpoint will help you draw inspiration and spark innovation. Many business operations function across industries, meaning you can adopt personnel policies, investment strategies, and workflow efficiency planning from any successful business.
Addressing Challenges and Risks
Even in a steady economy, there are challenges and risks that businesses need to navigate. Diversification, innovation, and cost optimization are three reliable ways to make your business more resistant to economic fluctuations. You shouldn’t necessarily pour all of your long-term investing into commercial real estate, for example. Seek opportunities to expand your portfolio beyond just one strategy. A good cost optimization plan will help you make informed budgeting decisions and invest for growth. Remember that optimization is a continuous process and not a one-and-done solution. You’ll need to measure, monitor, and repeat often.
A steady economy can be a great time for businesses to find growth. By focusing on long-term investments, increasing demand, increasing efficiency, and managing expenses, businesses can position themselves for success. Being proactive now to identify and pursue growth opportunities will stabilize and reinforce your outlook so that you can be ready for whatever comes next.
Are you looking for more ways to take advantage of a steady economy to get the most for your business and financing? Do you want a detailed financing plan catered to your specific business? Are you ready to take the next step in sourcing capital for long-term investments? Stabilization doesn’t have to mean stagnation. For a deeper look into how you can find growth opportunities, schedule a meeting or call with our team.
Utilizing a broker will save you a lot of time and effort. While most lenders try to sell you on their financial products, we aren’t obligated to any lender or financing type. Our approach starts with your business plan. We then we source the right financing for you to move forward. That’s why it’s so important to get a professional perspective on your unique position in the industry. Give us a call today.
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