Welcome to my annual review, update, and predictions for the upcoming year in the disaster restoration industry. Every year, I look into my crystal ball and identify the top issues that restorers may encounter in the next year that may impact the industry and your business. I scan the general business environment as well as key issues from the restoration industry. I then use my 35 years of restoration experience to determine the key issues restorers should consider when creating their strategic plans for the year.
Before jumping into my thoughts for this year, which you will find in the next article in this issue, I’d like to offer several salient points that were learned from this past year.
The artificial interference from government regulations has many unintended consequences that will impact businesses. As a business owner, you are not able to influence macro decisions or even the consequences, but you are in control of your business activities.
Finding employees will not be as big of a challenge as in the past, but you still need to focus on the issues that will create a great work environment.
Know your costs and take care of your business – this will allow you to adjust your business plan and practices as your business reality changes.
One trillion dollars is a lot of money and is a number that is hard to comprehend. Over $15 trillion in debt has been created in the last ten years, which is starting to cause massive disruptions.
Spend time focusing on the items you can control. If you attempt to change items you cannot influence, you will become very frustrated.
Most people thrive on social interactions, and connecting in our communities and workplaces has been very enjoyable through industry and community events.
Technology adaptation is traditionally slower than planned in the short term and faster than expected in the long term. Technological advances will fundamentally change the way we live and work in the next decade and are hard to imagine today.
Per my usual practice, I will now critique and grade my predictions from last year before making my predictions for 2023. This is a necessary practice to establish credibility for my thoughts for the coming year. When I think about the critical issues that impacted restoration last year, I think I still have some credibility, but you can be the judge of that.
Prediction #1: Labor Shortages
Original prediction: The first trend to explore revolves around labor. The factors impacting this issue are many, but the biggest are competition for labor, COVID fears, and government interference with the free market. These factors will continue to cause challenges in finding employees to fill vacant positions. Many companies have had to make changes to their growth plans and capacity due to limited available staff. Many have been able to locate great managers and staff for senior positions in their businesses – but it does require deliberate activity to find great people.
Grade commentary: This was an obvious and easy prediction in many ways. My expectation and statement were that this would continue through the year but start to ease for management positions. Undoubtedly, this was one of the biggest issues for most restoration companies last year. Many of my recommendations were correct and confirmed by the survey and book Why Workers Quit by KnowHow.
Prediction #2: Inflation and Material Availability
Original prediction: Supply chain issues combined with rising prices will continue to be a challenge. I expect this to moderate through the year, but it will impact our ability to complete jobs and the price we pay for everything from 2x4s to insurance. These issues are being driven by reopening a shuttered economy, COVID workplace issues, a reduction in domestic energy production, massive government stimulus, and incentives for people not to work. These issues all combine to influence everyday business.
Grade commentary: The only miss on this projection was the statement that this would moderate by the end of the year. I was not expecting our government to double down on the policies that lead to rising prices in the first place.
Prediction #3: Mergers and Acquisitions
Original prediction: The competitive landscape of restoration changed dramatically in the past year due to mergers and acquisitions. I expect this trend to continue over the next several years. I also expect to see at least two of the equity companies roll over their equity and either sell to new players or roll their portfolio into another equity-backed industry player.
Grade commentary: The influences driving this trend did not change; however, the level of acquisitions was less than expected. Several issues impacted the pace of acquisitions. Due to expected changes in tax law (that never materialized), many sellers accelerated their transactions which closed in 2021. One of the equity companies did roll their portfolio, but another sale did not materialize. It will happen but has been delayed. Many of the buyers had expected a much higher level of acquisitions that did not materialize. There are many reasons for the lower level of transactions, but the reality is that the volume was lower than predicted and expected. The trend is still intact but was slower than expected.
Prediction #4: The Rapid Development and Deployment of Technology
Original prediction: This process will take years to become fully integrated, but the first steps in radical change are starting now. This will include many activities, from project management to job site tracking, and will make a radical difference in operations.
Grade commentary: While I attempt to make my predictions relevant for the near future, this one was clearly stated to be a longer-term trend. This will definitely occur in the foreseeable future. Understand that technology nearly always moves slower than expected in the short term and faster than expected in the long term. I think that I am right on for the big picture trends and that the world of flying cars, robots, and artificial intelligence will impact everyday life sooner than most can imagine.
One trend that may not materialize is the integration of technology. My hope has been that A.P.I. will create a decoder ring that allows the software to communicate and transfer information from one platform to another. Still, I am starting to understand that this is more complex than anticipated and may never materialize.
Since this prediction is incomplete, I am going to make a few tech-related recommendations:
- Be deliberate and strategic. There will be a lot of technology failures throughout this process, so do your homework and choose wisely.
- The technology revolution is real and coming fast. Do your homework, create a nimble company, and look to leverage this technology.
- Have a cyber plan and protect your business from the many controllable cyber risks.
- Read books, listen to podcasts, study blogs and be prepared.
- Realize that time and technology will need several years to be sorted out. At the same time, realize that the world will be radically different in 2030 than today.
Making predictions in a very unpredictable world is a risky proposition. My hope is that I identified the key trends that impacted the industry as a whole and, more importantly, can help individual companies define an action plan that prepares them to be ahead of the curve and proactively address relevant changes.
My self-assessment of the key issues reflects that I could identify and address the key issues facing restoration professionals. If you feel similarly, I hope I have earned your confidence in my thoughts for the upcoming year.
Keep reading in this issue to see what I predict for 2023 – and beyond!