How long can this expansion run upwards in 2020? After over 120 months of growth, are we seeing any signs of running out of steam? If you are looking for financing or trying to turn your business around, a downturn can be very problematic. So, how is going? And will expansion keep up in 2020?
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2020 Expansion: Long-Term, but Weak
Janet Yellen, the former Fed Chairman, has been quoted saying, “I don’t think expansions die of old age”. She knows a lot more than I do. But even so, this expansion period has been historically weak. As the chart below from The Economist suggests. This expansion rate prior to 2020 has been about 2.3% per year. Significantly lower than the historical averages show below. It wouldn’t take much to put a dent in the low level of growth.
Small Business Optimism is Still Strong, but Dipped
The Wells Fargo/Gallup Small Business index fell by 10 points from the 4th quarter. While this may sound more dire than it is, I want to note that 4th quarter optimism was at a peak. The current index is closer to the 2nd and 3rd Quarter of 2019. That said, in the 2nd Quarter of 2019, there was also some concern over the health of the current expansion.
The latest decline is fueled mainly by owners’ reports of a lower hiring rate and a decreased anticipation of hiring more employees in 2020. Most other measures of financial health measured by the index remain stable and quite positive.
A table on expansion in 2020 from Wells Fargo/Gallup
So Far, So Good?
These indicators suggest that the expansion appears healthy and likely to continue. So, what if you’re business is struggling despite these economic conditions?
In the Gallup poll and based on personal experience with our clients, the top challenge continues to be attracting and retaining new customers. How do you do that?
Reaching New Customers
- Identifying your core market and market segments
- Clearly identifying the key target(s) of each of the chosen segments.
- Researching your target(s) to understand their needs and what motivates them.
- Crafting a statement called a benefit that explains how your product or service uniquely meets that/those needs.
- Determining how to reach your targets in the most economical way.
Following this formula should help improve your success.
Retaining Prior Customers
The first step in retaining customers is getting honest feedback about what you are doing right and what you could be doing better. Obtaining customer feedback is a great way to do just that. Nowadays, customers are hitting feedback fatigue. Everyone bombards you with a survey. To cut through the clutter and get results, we recommend that you offer some incentive for feedback. Expansion is key in 2020. It may cost you a little but provide you with a richer, completer, and more accurate picture. By doing more of what you are doing well and improving on where you can do better will increase customer satisfaction and retention. Plus, it also increases your chances of having positive online reviews.
2020 Expansion: In Summary…
Hoping or expansion in 2020 might not be a fool’s errand, but you will learn more about yourself and your customer base in the meantime. Reach the people you can and hold onto the people you have. You’ll thank us later.
At ProStrategix, we know you have concerns. We’re designed to help give you the business support you need so you can focus on doing what you love. If you would like to learn about how we might be able to help you, please contact us.