After the US economy survived the Y2K scare and we all woke up on January 1, 2000 to find our lights still on and our water still running, it suffered for the next ten years. Through the 2000s, America experienced its weakest economic growth, leading forecasters to predict a long American decline.
What happened instead in 2010 was the US coming back as an economic and financial superpower. The stock market soared 200 percent, and today, seven of the world’s 10 largest companies by stock market value are American.
History tells us it won’t stay that way. This isn’t to tell a doom and gloom story, but to encourage small businesses: your day is coming.
Swapping Globalization for Localization
With this predicted economic change comes the opportunity for small companies to grow. Where formerly only big companies had the revenue to gain traction on retail shelves, the internet has opened the door for small businesses to sell direct to customers online and increase their followers through “free” advertising in the form of customer reviews, social media, and videos.
Even though predictions are for only modest 2.5 percent growth in the US economy in 2020, consumer spending still represents two-thirds of the US economy. B2C companies are still going strong. Online sales are predicted to grow 14 percent, making a solid case for 2020 to be a strong year for consumerism. Still, it’s smart to prepare for a potential recession by being both aggressive and prudent, planning and taking advantage of the good economy now to be ready when the wind shifts.
3 Things to Watch in the 2020 Decade
Manufacturers and distributors could be feeling the pressure of a slowing global economy, volatile trade agreements, and labor shortages. Despite these issues, it will still be possible to grow when one considers the US’s stable overall economic growth and maintains a focus on driving value. Keeping an eye on these three things will help manufacturers tread that thin line between uncertainty and opportunity in the new decade.
- Digital Transformation: Even though there are multiple advantages to technology, there are manufacturers who are hesitant to change course. Despite the resistance to change, according to the RSM US Digital Transformation Survey, still 80 percent of manufacturers list digital transformation as becoming a higher strategic priority in the last three to five years. Data is critical to running a business, and key trends—such as shorter product life-cycles, mass customization, and IoT—are now driving companies to rethink their digital strategy and look at how technology can solve their challenges.
- The Workforce of the Future: There’s no doubt that technological innovation is driving profound change on the factory floor. More processes are managed now by robotics and sensors than ever before, and manufacturers are taking advantage of analytics to help streamline operations and save money. This changes the makeup of the workforce on your payroll. Having a strong tech set also helps you stay relevant among bigger players in the industry.
- Tariff Uncertainties: While trade negotiations were recently reached with China, others will likely crop up over the next few years, creating cost pressures on US manufacturers and distributors. Connect with a professional who can help you find the most effective ways to deal with tariffs on parts and products you may need for your business without new tariff costs driving up prices to the extreme for either you or your customers. Smaller businesses may need to consider moving products on a one-off as-needed basis, which will avoid the tariff threshold that a full container of parts might incur.
Overall, manufacturers of every size share these common foci going into 2020 and beyond: improving production processes, strengthening customer relationships, and finding talented people.
Smaller manufacturers are also paying close attention to improving both productivity and their ability to meet customization demands. There is also a drive for enhanced internal visibility, which contributes to improved agility to respond to market demands. This will be especially important as the economy shifts differently in the coming decade.
Move Into the Future With ASI
While the prospect of an economic downturn might make you nervous, with the right preparation, it should be no cause for alarm. With smaller businesses slated to make a comeback even in a suffering economy, now is the time to get your systems on board and prepare technology and data so you are armed for whatever the future holds.
No matter how big, small, or complex your manufacturing and distribution business is, Accounting Services, Inc. can help you move into the future with the right software to support you. Whether you’re looking to keep a few manual processes or move to total automation in your data, our experts can create the right software package for you so you can move forward confidently into the next decade. Contact us today for your free consultation.