Editor’s Note: Items on My Watch List
authors Patrick O'Toole | February 10, 2021
It’s true that remodelers have been very fortunate over the last 12 months despite the disruption and tumult of the pandemic. Business is good and, just since the new year, forecasts for remodeling activity are being revised upward. But lingering risks could easily bite us this year. My watch list has nothing to do with Netflix. It’s about downside risks for remodeling.
The way I see it, there are two kinds of business forces coming our way this year. The first kind are those that are known to exist but are difficult to peg as determinative factors. These are factors that we can anticipate. They are out there to be counted. We can protect against their potential impact.
In no particular order, these include the ongoing pandemic, a skilled-labor shortage, supply-chain issues, the rising cost of qualified leads, and the business impact of a changing regulatory environment. There are others, but these are the big ones.
The second type of forces coming our way are unknown. These invariably emerge out of nowhere. As entrepreneurs, you have to be ready for the unknowns. The COVID-19 pandemic last spring is a perfect example.
The impact of an unknown is greater because we aren’t on guard. It could be a war in another part of the globe. Or it could be a terrorist attack. One or more of these can knock the economy off its rails or more likely impact the price of key building products. Like you, I am hoping for the best regarding these unknowns.
Among the known risks for 2021, supply-chain issues are of particular concern. Many of you are reporting dramatic product-sourcing issues. It’s happening across several product categories—from asphalt shingles and appliances to cabinets and hardware. Some are on backorder for months.
As a result, remodeling jobs are being deferred and delayed. How many deferred or delayed jobs does it take before your annual profit evaporates? Additionally, if these imbalances continue, prices for backordered products will certainly rise. My concern is that building product price-hikes could take the air out of remodeling demand.
The second known risk worth watching is the ongoing pandemic. Are we letting our guard down now that vaccines are available? Halfway through February we still have 200 million people to get vaccinated before anything close to normalcy returns.
At our company, we plan a return to business travel by late summer. I’m convinced that most people are champing at the bit to return to their pre-pandemic lives. I assume restaurants will be filled and all kids will be back in school by September. I also assume that paychecks will again flow to furloughed and laid-off workers. In all likelihood, that outlook is too rosy.
With new, possibly more dangerous variants of the virus cropping up, the pandemic could last into 2022. Just as 2020 challenged us, 2021 will do the same. What’s on your watch list? Email me at firstname.lastname@example.org. QR