Wondering how the economy might affect your business this year? If you were counting on a roaring revival to lift sales, think again.

An October gathering of economists sponsored by the NAHB suggests a “flattening” in new housing growth for 2005. NAHB chief economist David Seiders points out that the “phenomenal” housing market of recent years has “reached its limits” and is “topping out.”

In Seiders' scenario, housing starts will decline by 4% this year, and sales of single family homes will be down by 5%.

That's bad news for contractors. The more houses there are, and the more those houses change hands, the more business there is for the home improvement industry.

The good news is that home equity in the United States is now approaching $9 trillion, and Seiders expects that to drive remodeling and renovation sales in the $220 to $225 billion range this year. That will include a lot of window, siding, and roof replacements, as well as other exterior projects.

Then there's this silver lining: As product demand by builders recedes a bit, and — fingers crossed — if oil prices drop, those letters you've been getting from suppliers, the ones announcing price increases on everything from asphalt shingles to aluminum flashing, will be fewer.

And why let economists create your reality? Isn't it the case that if you're looking for double-digit growth this year, or a stronger net profit, it's pretty much in your hands? If you want, you can ratchet up your marketing to produce the additional leads that justify hiring another salesperson or two. You can improve your closing rate and your leads-to-demos so that you're getting more revenue for those leads.

Don't forget referrals. If 5% of your business now comes from low-cost, high-close referral leads, what would your balance sheet look like if those referrals resulted in 10% or even 15% of your net good business?

One other thought: Now is not too early to begin planning if you're thinking about taking on an additional product line or opening a branch location in 2006.

The truth is that, for your business, this year can be any kind of year you want it to be.


REPLACEMENT CONTRACTOR will hold its second Executive Conference Feb. 24 –26 at the Orlando World Center Marriott Resort in Florida. Count on two days jam-packed with excellent speakers —including REPLACEMENT CONTRACTOR columnists Dave Yoho, Phil Rea, and Richard Kaller. The conference is a great opportunity to educate your staff and network with fellow company owners. Start the year off right by making it a point to be there.