The electronic security industry is no different than other industries, simply stated the global and national economy has a big impact on our success. Regardless of how technically competent your company is, regardless of how great a sales and marketing team you have and regardless of how great a management team runs your day to day operations, the economy we operate in has a huge impact on your company’s success. In the boom days everyone seemed to succeed and prosper. In today’s slow growth economy only the strong survive and thrive.
A tough economy is especially difficult for security companies that do not have a predictable cash flow model and depend on new projects for profitability and sustainability. In the case of security companies that live from project to project, there is little to no room for mistakes in our current economy. The global and national economic outlook is not strong and security dealers need to adapt to this reality for the foreseeable future. I see no research that shows 2013 will be a banner year for growth and prosperity.
On the positive side, we may be stuck in first gear but this is certainly better than being in reverse! Inflation is under control (temporarily); U.S. business leaders now know what administration they will be dealing with, which will hopefully free up spending; the commercial lending environment is slowly improving; and as always we have American resiliency and ingenuity going for us.
A few statistics that may have an impact on your 2013 decisions:
- Constructions starts are projected to be up 4%-5%
- GDP growth for 2012 is estimated at 2.1%
- GDP estimates for 2013 are estimated at 2.2%
- Local, state and federal projects will slow down in 2013
- The first half of 2013 will be tough with the second half improving
- Commercial building starts will improve, projected to rise 11%
- Multifamily housing starts will improve, projected to rise 16%
- Single-family housing starts will rise the most, projected at 24%
Another positive is the healthy balance sheet positions many U.S. companies enjoy. Now that the elections are over we face the fiscal cliff deadline. As an optimistic American businessman, I believe the fiscal cliff disaster will be avoided thereby giving improved clarity to business leaders, who, in turn, will be more inclined to spend some of the cash they have accumulated.
The sky is not falling; it’s just a bit cloudy. Eventually, the clouds will clear and we will have bright sunshine. It’s just unlikely to be in 2013.
Bill Bozeman is President and CEO of Westminster, Colo.-based PSA Security Network.
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