I just read today’s headline about the jump in jobless claims and immediately started to contrast that story with all the good news I am hearing on the street from AV folks. For the past month I have heard almost exclusively about better than expected revenue and revenue forecasts. The mood is that good times are here again and revenue should be exceeding expectations. There have been pockets of lingering malaise – and there may be a reason for that. The other positive sign I am seeing is in the number of calls I receive from folks seeking high level employee candidates: sales managers, operations managers, and lead technicians all seem to be in demand. These are the kinds of positions that get passed on when the economy is sour. I will say that in the past eighteen months the call for good sales people has never waned. This tells me two things: 1. People still think they can sell their way out of a recession, and 2. AV Salespeople continue to underperform when it comes to developing new business.
But where does the news of a jobless jump fit in? If the economy is getting better why are people getting let go? The answer is pretty simple – it’s because the economy is getting better. When businesses see their competitors and markets improving but their results are stagnant or declining, then it is finally time for heads to roll. Shame on these companies for not making corrections sooner, but in a recession business is a zero-sum game. It is almost impossible to create new markets therefore new business comes by taking customers from the competition. The newly fired are probably the losers in the zero-sum battle.
This also speaks to a question I often hear, “Why haven’t there been more company failures in the AV Industry?” Again the answer is twofold: 1. Many companies made quick adjustments and managed to survive. One contributing factor in this is that most AV Dealers carry very little debt – giving them the flexibility to quickly downsize their expenses. 2. Most failures occur at the beginning and then the end of a recession. Now is when we will start to see whose efforts weren’t sustainable. I expect we will start to hear about a few failures and some “mergers” that are really financing solutions for debt-ridden enterprises. And we can expect a few owners to “retire” rather than face another uphill climb.
So my read on the employment jump is that it’s actually a good sign. We’re getting better – like a cough signaling the final days of a head cold. This end of the recession shakeout will help the market and signal the start of increasing margins. Fewer competitors, smarter sellers, and a renewed focus on profit will shift the tide from a buyer’s market to one that’s more balanced.