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December 2017
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Time to move ahead
Garry Bartecki
Garry Bartecki

It is still a little crazy out there, but also the time to get past the craziness and produce a plan for 2015 and beyond.

As I have mentioned in the past if you are not looking to update and change all your systems and procedures to become more efficient and profitable, I can assure you a good chunk of your competitors are doing just that.

I have to believe that if you read business oriented publications and listen to the wide array of business related video programming available, you have to come across comment after comment how businesses are changing the way they do business. New technology. Updated systems. Current training. Ways to do more with less to become more competitive in the market.

If these examples of change are real then I have to ask “What’s in your wallet?” and what are you doing to join the crowd to increase shareholder value.

So what’s in store for 2015?

Good question, and I probably could have made some predictions that would be in the right church, but after these latest events regarding the dollar and oil we may have some monkey wrenches added to mix.

Before this latest fiasco I would have envisioned moderate interest rates which make the financing of equipment purchases more likely. I guess this scenario stays put for 2015, but could change because of the oil and dollar situation in terms of a shift in demand for equipment because “higher” US prices for international sales could slow demand for equipment. Slowdowns in the energy fields could also lead to a reduction in demand for equipment.

I would also have said we can expect changes in the tax code starting in 2015 which hopefully reduce the tax bite most small business owners experience. I expect dealers will lose both business and personal deductions but pay at a lower rate. All I know is that small biz owners using flow-through entities should not pay at rates higher than those paid by corporations. If large corporations are paying at 24% your business income taxed on your personal return should be taxed at the same rate. Lets’ hope we achieve this goal.

I believe rental competition will increase in the next few years as equipment dealers are encouraged to get into the rental business. Material handling dealers are already in the rental business, but construction equipment dealers as well as rental companies are looking for additional markets for rental and are sure to investigate lift trucks as one niche market to explore. What this means is the non-national accounts which you count on could become targets for new competition.

We can also expect additional consolidation which means shareholders better have a handle on what their company is worth to a strategic buyer. Current interest rates make the consolidation process more desirable. Shareholders, however, do not want to assume they will be selling “soon” and completely stop investing in the business thinking it is not worth it. I can’t tell you the numbers of dealers who have given me that speech only to still be in business fifteen years later, and now way behind the curve.

If there ever is a time to invest in new technology now is the time. New systems, smart phones and tablets and telematics will change how you do business to keep customers satisfied. Many dealers are doing more with less using these tools. Not only will these tools improve dealer results, but also customer operating results. Aggressive customers will use telematics to develop data for their owned equipment and then demand that their rental equipment vendors supply that same data for the rental units. In any event, an aggressive policy to develop and use technology will be a win-win for both parties to the transactions.

Oil prices could have both a positive and negative impact on 2015. The obvious outcome is lower oil prices will reduce operating costs. Not only will they reduce current costs they make the US more competitive in the world order of things to the point where manufacturing costs in the US are now more competitive than or at least on a par with China. On the other hand lower oil prices could slow our economic recovery to the point where business slows down and reduces overall lift truck demand.

So when we get down to it, 2015 could be a tough year to plan for because so many important variables are moving in dramatic fashion.

To sum up I would be cautious about 2015, expect more competition and price differentials for units coming in from overseas, a changing tax landscape, more inroads for national accounts but also an opportunity to improve efficiency and profits by embracing technology. In short, don’t overleverage your company and only invest in projects that help you make money and keep updating the plan.

Garry Bartecki is a CPA MBA with GB Financial Services LLC. E-mail to contact Garry.