Originally posted – Sept issue/2012
An Interview with Leading Economic Forecaster Alan Beaulieu
One of the country’s most informed economists, Alan Beaulieu is a principal at ITR Economics, where he serves as president. Since 1990, he has been consulting with companies throughout the United States, Europe and Asia on how to forecast, plan and increase their profits based on business cycle trend analysis. Mr. Beaulieu is also the senior economic advisor to NAW, contributing editor for Industry Week and the chief economist for HARDI.
He is co-author, along with his brother Brian, of the book, “Make Your Move,” and has written numerous articles on economic analysis. He makes up to 150 appearances each year, and his keynotes and seminars have helped thousands of business owners and executives capitalize on emerging trends. Prior to joining ITR Economics, Beaulieu was a principal in a steel fabrication company, as well as in a software development company.
How would you describe the state of the nation’s economy these days – and why?
The U.S. economy is experiencing slow growth. Employment, retail sales, construction and manufacturing are all heading higher. If that is not growth, what is?
How long will it take for the U.S. economy’s wounds to heal?
I am not sure what wounds you are referring to. We certainly have problems, like relatively high unemployment that will last through 2015, massive pending legislation – such as Dodd-Frank Wall Street Reform and health care reform – that will slow economic growth for years to come, and an amazing about of public debt. The legislative issues might never completely go away, but we will adjust. The debt levels will be talked about at every election cycle, but they aren’t likely to do anything substantive about it for at least 10 years. We are very good at kicking the can down the road, and the world’s investment community is enabling us to do so.
Heading into 2012, there were significant downside risks from the European financial crisis and U.S. fiscal tightening. Will the U.S. economy grow in 2012?
The U.S. economy will grow through 2013, but the first half of 2013 will definitely outshine the second half of the year. Europe’s problems are factored into that forecast.
How much of a drag are state and local budget issues having on economic growth and employment?
I don’t know the percentage, but the impact on social services and construction will be with us for years.
How strongly do the problems in Europe affect small business here in the U.S.?
The impact of problems in Europe will largely depend on the individual business. Exporters, and people who do business with EU-aimed exports, will be more impacted than the U.S. distributor of consumer goods. The exchange rate changes and lending impact are likely to be minimally interruptive for these businesses through the next three quarters anyway.
You co-authored, along with your brother Brian, the book, “Make Your Move.” What can coin laundry owners learn from this book?
Coin laundry operators can see how they fit into the U.S. economy, through the process outlined in the book. We now call that a Trendcast process. The end result is that business leaders can plan effectively for changes in the economic environment by seeing those changes, and the relative impact on their company, up to a year in advance.
What are some of the emerging trends – both positive and negative – that today’s self-service laundry owners should be preparing for?
Taxes are going up, borrowing costs will be going up, health care costs will be going up dramatically, and the population is aging. Positively, there will be a lot of renters for years to come.
How can laundry owner put themselves in the best position to leverage these coming events?
Owners should invest in their businesses now in a way that maximizes efficiencies, reduces labor and reaches out to the expressed desires of the potential user community. This requires an investment of money to determine what will make the potential client a happy customer. The process is quite scientific, yet few firms bother with the effort and expense required.
What are some of the leading indicators that you study to accurately predict business cycles?
ITR Leading Indicator, U.S. Leading Indicator, Purchasing Managers Index, bond prices, the Fed’s Activity Index, rate-of-change activity in retail sales and non-defense capital goods new orders.
Why do you focus on these specific indicators?
They are accurate and they are varied in their approach.
What business cycle are we currently in, and what are its implications for the coin laundry business?
We are in Phase C of the business cycle, slower growth. The implication is positive. People still have money to rent, as opposed to live at home. They also have money to spend.
What’s the best advice you would give a laundromat operator looking to grow his or her business within the next 12 months?
A laundromat operator needs to aggressively sell people on the affordability of their service and the benefits of their service. Is it safe? Is it cost effective? Perhaps laundry owners can survey their customers to find out what they like and don’t like about the coin laundry – and then work to overcome the aspects they dislike.
With regard to the economy, what common mistakes do you see small-business owners making?
Too many small-business owners do not plan effectively for the next two to three years, largely because they erroneously believe the economy does not impact them. We know that the general economic environment will have a direct impact on most businesses. In fact, one informal study we conducted showed that 90 percent of small to medium-sized businesses are impacted by the economy.
What one thing would you most like self-service laundry owners reading this interview to take away from it?
The next eight years have great potential for businesses that are prepared for the macro changes presented above. The owner will need to be aggressive and entrepreneurial. Risk-aversion will lead to tepid results and an eventual dissolution in the next major downturn. Free cash flow will be more restricted in the coming years, so drive efficiencies now while the cash is available. Lastly, learn who your customers are, and how to attract new ones. This may require a whole new paradigm or service segment to the current business model.
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