Transcript The 20 – Teens: Business Challenges and Opportunities in

The 20 – Teens
What Business Leaders Should Do
TODAY
to Prepare for the Next Decade
Dr. Bill Conerly
for
Book Manufacturers Institute
November 8, 2010
Federal Surplus/Deficit
150
100
50
$ billions
0
-50
-100
-150
-200
-250
-300
-350
1989
1991
1993
1995
1997
1999
Nasdaq
4000
Index
3000
2000
1000
0
1996
1997
1998
1999
Y2K
Issues for the 20-Teens
• Economic environment
• Business Credit
• Baby Boom Retires
• Information Technology
• Sharing Information
World Economic Growth
annual percent change
10
8
6
Emerging
4
2
Advanced
0
-2
source: IMF
-4
2000
2002
2004
2006
2008
2010
Gross Domestic Product
adjusted for inflation
15
% change
10
5
0
-5
-10
1950
1960
1970
1980
1990
2000
GDP Fluctuations
20-quarter rolling standard deviation
Standard deviation of % change
7
6
5
4
3
2
1
0
1950
1960
1970
1980
1990
2000
What Would You Do Differently
In a More Cyclical Economy?
• Monitoring sales, industry trends, economy?
• Plan for smaller runs & shipments?
• Leaner inventories?
• Equipment suitable for large runs and small?
• Less leverage?
• Strategic move to more stable sectors?
Economic Environment
in the 20 – Teens
• Average growth rates a little slower
• Faster growth in emerging countries
• More cycles than last 25 years
Issues for the 20-Teens
• Economic environment
• Business Credit
• Baby Boom Retires
• Information Technology
• Sharing Information
Banking Challenges in the 2010s
• Too much real estate concentration
• Regulators worried about risk
• Regulators worried about capital
• Investors think the industry stinks
• Less flexibility to innovate
Real Estate Loan Concentration
by banks
% gross loans & leases
70%
60%
50%
40%
30%
20%
10%
0%
1935 1945 1955 1965 1975 1985 1995 2005
Bank Failures
350
300
banks
250
thru
10/22
200
150
100
50
0
1950
1960
1970
1980
1990
2000
2010
Bank Capital Ratios
15%
percent
14%
Total RiskBased
13%
12%
11%
2003 2004 2005 2006 2007 2008 2009 2010
Stock Prices: Financials vs Overall
1800
40
1600
35
S&P 500
1400
30
25
1000
20
800
15
600
400
Financial
Services
200
0
2005
10
5
0
2006
2007
2008
2009
2010
index
index
1200
Business Finance
in the 20 – Teens
• Credit cheap when available
• Credit available w/ top quality financials
• Credit scarce with poor financials
• Asset-based lenders also tight
Issues for the 20-Teens
• Economic environment
• Business Credit
• Baby Boom Retires
• Information Technology
• Sharing Information
What Happens When the
Boomers Retire?
• Investment Issues
• Labor force issues
Working Age Population Growth
20
millions
15
10
5
0
1980-90
1990-2000
2000-2010
2010-2020
Entitlement Deficits
1
% of GDP
0
-1
-2
-3
-4
-5
2008
Medicare
Social Security
2020
2032
2044
2056
2068
2080
Budget Surplus/Deficit
5%
0%
percent
-5%
-10%
-15%
-20%
-25%
-30%
1940 1950 1960 1970 1980 1990 2000 2010
Savings Rates
35
percent of GDP
Emerging
30
25
20
Advanced
15
1980
1985
1990
1995
2000
2005
Impacts of Higher Tax Rates
• Personal: Look at nest-egg net of
taxes
• Business: Employee retention
challenge for those who don’t
HAVE to work
(seniors, spouses, teens)
Strategies for Tight Labor Market
• Good recruitment
Quality hires
Look for untapped pools of talent
• Retention
Poor managers lose employees
How to retain seniors?
Issues for the 20-Teens
• Economic environment
• Business Credit
• Baby Boom Retires
• Information Technology
• Sharing Information
Cost Trends
110
Labor
index
100
90
Info
Tech
80
70
60
50
2006
2007
2008
2009
Who’s Your Good Customer?
Lila
Low volume
Price sensitive
Costly to serve
Bill
High volume
Not price sensitive
Electronic transactions
feedback
Technology in the 20 - Teens
• Know your costs and revenue
By customer
By product
• Feedback:
Prompt
Accurate
Specific
Issues for the 20-Teens
• Economic environment
• Business Credit
• Baby Boom Retires
• Information Technology
• Sharing Information
External wikis for customers
Internal wikis for employees,
vendors, franchises
Social Networking for Business
Examples:
Twitter
LinkedIn
Who Do You Need to Connect?
Employees, Franchisees,
Vendors, Customers
Tools:
Social Networking Sites
Free Conference Calls
List-serves
What to Do Today
To Prepare for the Next Decade
• Re-Optimize for more cyclical economy
• Evaluate your financials: good or poor?
• Explore many credit options
• Experiment with keeping seniors on the job
• Know your numbers: costs and revenues
• Set up feedback systems everywhere
• Identify knowledge to be shared
• Set up networks for people to share expertise
Questions?
Bill @ ConerlyConsulting.com