Thursday, January 31, 2008

Is Commercial Construction Signalling 7 Lean Years?

Losses May Be Shared Across the Industry Like the Flu Bug!

A very valuable friend who is a contractor and banker once commented to me that if a developer or builder can borrow the money, they will build the project regardless of the market conditions.

I think he was correct because we are seeing the effects of a lot of that from the last few years.

I have also heard from a lot of contractors who are spread from around the country tell me that their business has slowed or stalled in the last few months

The problem is this.

Right now we have a bad business outlook. Housing sales are losing ground, inventory is at an all time 4.7 year high and too many contractors think this will turn around in a year or so. Some have even used their line of credit or personal funds to try and keep themselves afloat, hoping things will turn around soon.

With just the inventory figure alone and the rising foreclosure rate, anyone thinking that this market will get better in less than 4 years is in for a financial shock.

Grant you, some are doing well in some parts of the country but the national average is not so good. And, the backlog of work may be drying up and no one is paying attention to the facts.

But then again, what about the commercial arena?

The commercial market is always the Johnny-come-lately. Developers build on the anticipation of the need. What we are seeing rolling out the door are projects that were in-the-works. Money has been secured or those with the deep pockets anticipating a rushing need for the completed work.

In a short time, we may see more “For Lease or Rent” signs on commercial properties then there are leasers, renters or buyers, if we are not already seeing that in some parts of the country.

The small hinge that swings this big door is credit. And credit is in a major incubation stage of an influenza epidemic.

Banks have already stated that they expect the big foreclosure rate to hit sometime next year. The sub-primes have already fallen and don’t expect too much for from Uncle Sam bailing the mortgage people out without you footing the bill (the question is … can you afford it?).

Actually, the prudent thing for the lawmakers would have been not to allow the lenders to offer such dangerous loan vehicles to so many who couldn’t afford it to begin with. Again, why do we elect these politicians to office?

Anyways …

Even if Uncle Sam does try to help by reducing the prime (to what, I have no clue?) I doubt it will make a big difference. The dollar just isn’t worth the paper it is printed on. Maybe it is time to go back to silver and gold currency with hopes the Feds will leave money alone.

Anyways rate cuts are temporary help, long-term I doubt it. The problem is bigger than that.

Right now we are in a major colon cleansing of the weak from the strong. I think conservative forward-thinking, tightening the old money belt and the mastering of better business skills is the most prudent course of action for any business owner to take. This is exactly what makes the difference in the existing survival situation we have now. Knowledge is power, ego isn’t.

Otherwise … maybe seven lean years await us.

Monday, January 21, 2008

Success Loves Action

I've written a lot about the importance of acting sooner rather than later, without waiting to figure out everything in advance. Nothing says this more succinctly than this aphorism: Money loves action.

When I mentioned this in a recent seminar, one of the attendees asked if I could be more specific. He wanted to know why money loves action. First off, let me say that this is not just true about money. Success - in all areas of life - loves action.

  • If you want to buy tickets from a scalper for a big game that's sold out, get there first. Tickets love action.
  • If you want a job that you just found out about, get there first. Jobs love action.
  • If you want to get the guy or gal who has your heart pounding, get there first. Romance loves action.
  • If you want to get the investment property that just came on the market, get there first. Investment properties love action.
  • If you want to turn your business around, get help and get started. Success loves action.

And so on. I don't recall ever succeeding at something because I got there last.

So, why does success love action? The answer is to be found in the dictionary. Action is defined as "the causation of change." Whatever result you want, it's a change from what you now have. By definition, then, a change has to take place for you to get from your present status to that result.

Following are some of the more important reasons why I believe action begets results.

1. When you do too much planning, there's a tendency to think of one reason after another why what you're contemplating won't work.

Many of the reasons you come up with may be correct. But the important thing is that it doesn't matter. Why? Because, as you move forward, circumstances continually change - and those changes often render irrelevant many of the concerns you may have before taking action. As I often tell my members, forward action … doing something is far better than doing nothing.

In other words, don't try to figure out steps two, three, and four before taking step one. The legendary Joe Sugarman that me that he ran his first ad before he even began to understand what copywriting was all about! In fact, he told me that the ad he wrote didn’t perform well but he learned from it and went on to become a multi-millionaire. Talk about going against conventional wisdom...

2. When you procrastinate, you tend to lose your enthusiasm.

That, in turn, causes homeostasis to set in. Homeostasis is the tendency to live with existing conditions and avoid change. You get comfortable with the way things are and allow your great idea to fade into the comfort zone of oblivion.

But when you take action, your creative "juices" flow faster, your resourcefulness kicks into high gear, and the things, people, and circumstances you need to accomplish your objectives are drawn to you almost like magic. This is not hocus-pocus. I've done it enough times to be able to assure you that it really works.

3. Even though changing circumstances often negate many initial concerns you may have had, they can also place new obstacles in your path.

As a result, if you wait too long before taking action, the opportunity may become less and less appealing as those obstacles start to make their appearance.

I sincerely feel this coincides with the auspices of the Fiddle Theory, which states: "The longer you fiddle around with a deal, the greater the odds that it will never close."

Time is your ally when you take action. But time is a two-sided coin. If you hesitate or procrastinate, time becomes your worst enemy. As a general rule, I assume that if I take action, perceived problems will tend to disappear - and that the more I hesitate, the more time I give new obstacles to come on the scene.

4. Perhaps the most important reason of all for taking action now is that time is finite.

No matter how proficient you are, you can only accomplish so much in a lifetime. Every second that's wasted reduces the totality of what you can accomplish by one second.

Some people maintain that a constant feeling of urgency to accomplish more is stressful, but I find the opposite to be true. I feel more stress when I procrastinate - when I'm not doing what I know I should be doing. There's not a worse feeling in the world than to be conscious of the fact that your finite supply of time is ticking away while you're straightening your desk drawer.

Of course, nothing in life is perfect. There will be times when moving too fast can end up hurting you. Based on my own experience, what I gain from moving fast far outweighs any losses that result from too little planning.

That being the case, when you fall - and you will fall - simply pick yourself up, dust yourself off, and take more action. Success could care less about mistakes. Success loves action. Think seriously about making this your mantra for 2008. �