Every January I attend a local economic seminar presented by a nationally recognized international business strategist. This is his 12th year doing this presentation. He starts by reviewing what he predicted the year before and grading himself on his performance (how many economists are willing to do that in public?).
He titled his presentation “A Time For Action,” and throughout the 90-minute seminar, he built a strong case that it is now time for both businesses and households to take financial action. He believes that the economy is in fact back on a growth path, that it is now “resilient,” although not yet great.
Most investors – whether you are a business owner investing in tangible assets for your business or a household looking to purchase a home or auto – want to wait until all signs of a good, strong economy exist before making a financial move.
According to his studies, most businesses and individuals will keep about 3 percent of their assets in cash reserves. At this point in our recovery, he believes that number is closer to 12 percent. Basically, people and businesses have been hoarding cash over the last several years, waiting for economic recovery. Because of this phenomenon, household and corporate debt his dropped dramatically since 2008.
He believes now is the time to put some cash to work. Prices – for both tangible assets and housing – are still on the lower end, but these prices are starting to move upward. The low end is over. Prices will gain momentum to drive the economy up over the next three to four years.
So what does that mean to us?
First of all, if this is in fact the case, we should see some of our client and prospect companies looking to start spending again on assets – new exhibit properties. Those clients that have used their same properties for the last five years, when they should have been rebranding, may now be ready to look at improving their corporate image on the show floor.
If the volume of work that has passed through our shop in the last six months is any sort of indicator – and I’m not suggesting it is, economic growth is returning. The number of RFIs and RFQs we have been involved with has increased since last summer, and the number of existing clients wanting to change their look also has grown.
Secondly, as we look at our own companies and think about what we will need to do to prepare for a return to growth in the next several years, now very well may be the time to start investing in the assets we will need – whether that is new equipment, additional equipment and staff or a larger facility.
One point this speaker was very adamant about was companies that are well poised for growth – those that are now preparing for the next four years of gradual growth – will outperform those that are waiting for a full return to what was traditionally considered a strong economy.
We all remember the financial devastation that was 2008, 2009 and 2010. We all know of companies in our industry that are no longer around; that didn’t survive the worst recession since the Great Depression. When in survival mode, it is natural to pull back, regroup and spend very conservatively.
The biggest challenge after an economic storm of this magnitude is gauging exactly when it is safe to come out of the storm shelter and get back to growing a business. At least for one international economist, that time is now. I’m thinking it is for one exhibit house owner as well.
See you on the show floor.
Jim Obermeyer has been in the tradeshow industry 30 years, both as a corporate tradeshow manager and exhibit house executive. He is a partner in the tradeshow and event marketing firm Reveal. He can be reached at jobermeyer@revealexhibits.com.
