An Interview with Alan Beaulieu
By Jack Lyons
President, Lyons Solutions LLC
Accurate Economic Forecasts Can Help Determine the Best Time to Sell Your Business
I had the opportunity to talk with one of the country’s most informed economists, Alan Beaulieu, principal of the Institute for Trend Research where he serves as President. Since 1990, he has been consulting with companies throughout the U.S., Europe, and Japan on how to forecast, plan and increase their profits based on business cycle trend analysis. Alan is also the Senior Economic Advisor to National Association of Wholesaler-Distributors (NAW) and the Chief Economist for Heating Airconditioning & Refrigeration Distributors International (HARDI).
Questions & Answers
Jack: How strong do you see the current economy as being?
Alan: The economy is fragile, but a recovery is still underway. This is evidenced by the fact that:
- Non-defense capital goods new orders are up 12.9% from last year
- Business are buying machine tools globally
- Job creation in the U.S. in October was steeper than usual with 354,000 private jobs created
- September’s retail sales showed the second best increase from August in 11 years.
Our analysis of extant leading indicators suggest that the slow recovery will last into next year, with 2012 being slightly better than 2011. Supporting these indicators is the fact that retail sales are behaving in a normal manner.
Jack: What economic and other headwinds need to be overcome in order for the economy to grow more quickly?
Alan: Businesses need to have a clear view of the upcoming regulatory environment. No one knows how bad the regulatory environment will get because we have an activist administration and Agency powers have been beefed-up. Current areas of concern are healthcare reform, Dodd-Frank, excessive government spending, OSHA’s aggressiveness and the Department of Labor’s recent decision on the validity of Boeing’s South Carolina assembly plant. Uncertainty is the enemy of decision-making and we are surrounded by uncertainties. Leaders will have to understand that they will not have perfect knowledge, but they can have a clear understanding of how they can better plan for the future by knowing what to look at within their company, their industry and in the economy. That’s where ITR comes in.
Jack: What dangers do you see to the economy at this time and in the future and how will this impact middle-market business profitability?
Alan: That’s a big question that would take a book to answer. Briefly, Europe is the immediate chief concern because of the EURO, Sovereign debt and the liquidity of the European banking system. If a Lehman-style financial panic happens in Europe, the U.S. economy would not be immune. But we believe the U.S. is positioned to withstand a growth slowdown and potential housing bubble in China, as well as a mild recession in Europe. A surge in oil prices would be very painful and harmful to economic growth, but thankfully we don’t see that happening any time soon. This assumes Israel will not attack Iran’s nuclear program.
Jack: What is your economic and employment outlook for 2012?
Alan: The economy will be expanding through 2012 and we will continue to add jobs to the U.S. economy. Readers should check out our website and look for our blog. As noted above, the October job figures were much better than reported by mainstream media. The picture is actually encouraging. We don’t see anything that will impact 2012 negatively in any significant way and whatever comes out of the Super Committee for a debt reduction deal will have an impact after 2012.
Jack: What is your economic outlook for the years 2013 and 2014?
Alan: In 2013 and 2014, the economy will experience strong headwinds that will negatively impact it in the U.S. and in Europe. The primary headwind will likely be reduced government spending in the U.S. and Europe. As a result, we believe the economy will weaken during 2013 and 2014.
Jack: What advice would you give to business owners who are thinking of selling their business within the next three years?
Alan: The advice depends on where you are in relation to timing a sale. If you’ve put off selling or are seriously looking to sell-out sometime in the next couple of years, now may be the best time to start the process due both to the recovery that is happening now and the weakening of the economy that is forecast to occur in 2013 and 2014. If you’re not in any hurry to sell and are willing to hold off for several years, you might be better off waiting for a better market, say 2017. I know that seems like a long time to wait, but for most businesses, the intervening years will not be the optimum time to consider a sale.
Jack: Do you have any other advice for business owners?
Alan: Maximizing your advantage and potential is all you can do at this point. Business leaders should be thinking about how to spend some of that money they have saved. Several key areas come to mind:
- Invest in the business by investing in your workforce. That means training, hiring key folks, adding sales professionals.
- Invest in systems and processes to increase efficiency.
- Pull the trigger on those capital expenditures you have been mulling over. They are not going to get any cheaper.
- Invest in developing/promoting your competitive advantages. This takes time and money, but it is a great investment as it will lead to an increased market share and the ability to raise prices.
- Start missionary efforts into new markets with either new products/service or into a geographic region where competitors are weak.
The above being said, if business owners plan to sell in the next couple of years, they should consult with a merger & acquisition professional as to how the above spending/investment plans will impact their company’s valuation and net sale proceeds.
Last: Pay attention to solid economic indicators and stay away from mainstream media. Too many people make decisions based on headlines, which they assume are both factual and unchanging. This is a huge mistake. Look for six to eight solid economic trends that will tell you what the future holds for your industry and your company. Call ITR, we’ll help you get started.
About Institute for Trend Research® and Alan Beaulieu
Since 1948, Institute for Trend Research (ITR) has given business leaders the economic information, insight, analysis and proactive strategies they need to take advantage of opportunities, maximize profits, and avoid risks. ITR is the oldest, privately held, continuously operating economic research and consulting firm in the United States. With a knowledge base covering six decades, we have a unique institutional memory giving us an uncommon understanding of long-term economic trends and how to react to critical changes in market conditions. Our reputation for excellent, independent and objective analysis is indisputable. Our record for accurate forecasts and proven action plans that can boost your bottom line is unmatched.
Alan Beaulieu is co-author, along with his brother Brian, of the book MAKE YOUR MOVE, and has written numerous articles on economic analysis. He makes up to 150 appearances each year, and his keynotes and seminars have helped thousands of business owners and executives capitalize on emerging trends. Prior to joining the Institute, Alan was a principal in a steel fabrication company and also in a software development company.
President and Principal, ITR
If you have any questions regarding this article or would like to discuss selling your business, please call Jack Lyons at (941) 497-4700.
© Copyright 2011 Jack Lyons. All Rights Reserved.