As we look ahead with predictions for the pest control industry in 2011, we may have a sense that those companies still around will get through the remaining economic struggles. Pest control companies are adjusting by cutting excess spending, reducing credit outstanding and putting aside rainy day cash. Companies are trying to gain relative leverage against bad economic times by diversifying their service portolio and taking advantage of weak spots that they find in their competitors’ positions. Simultaneously, companies are focusing on strong core services that will produce the most profit. Some companies are simply trying to add market share at any price, but adding this revenue will not produce profit. It is a mistake. Companies cannot for long make money by losing money.
There are signs that the economy is improving. Housing and employment have attempted a rebound. With credit outstanding down and savings up, companies may be ready to spend. Then again, maybe things won’t work out so well. When I entered the pest control field, part of my thought process was to find steady employment. I loved the idea of being in low-tech rather than high-tech. Low tech doesn’t change much and therefore lacks much of the volativity of high-tech employment. Ants, rats, bed bugs, bees, birds, etc., will always be with us, the same pests they are today or were yesterday.
Having essentially said that the pest control industry is “recession resistant,” never in the last 50-75 years has the pest control industry outlook been more closely tied to the general economy than today. Those who understand macro-economics, which in today’s world means global economics, know that our country and our world is in deep trouble.
Back in 2008, George Bush described a world in a “global crisis.”
The global crisis George Bush spoke of is far from over. I repeat, the global crisis is not over.
In researching this article, I came across many videos. Some are so frightening that I won’t present them. But the truth is in front of us.
The following video presents the case that the economic crisis will reach it’s worst point only in 2011-2012. (Please ignore the end of the video, which associates the video with a particular spiritual/religious bent. I don’t think that negates the truth of the economic information). Just watch and listen to the first few minutes of the video.
Steve Meyers of Greenbelt Commodities states, “The only thing that’s been accomplished is that we’ve kicked the can down the road.” (Interpretation: The true economic crisis, as symbolized by the can, has been pushed further into the future). But, “in 2011, 2012 we will catch up with the can that’s been kicked down the road. (Interpretation: The U.S. and other world governments have been throwing money at the problem by printing money, to stimulate their economies, until such time as they cannot print more money). “It’s Financial Armegeddon…We have not come out of the first crisis, we have only repackaged it…It’s a Ponzi scheme that won’t end good.” (Interpretation: While individuals and corporations have been trying to fix their finances, they have only been able to do it because governments are printing money and getting foreign governments that are in a better position to buy this new and overwhelming government debt). “The next two years will be the most challenging this country has ever faced…the bond market has spoken.” (Interpretation: There will be a bond market crash). This will be perhaps the worst crisis of all, worse than the housing crash, the credit crash, the high unemployment we now face. Most honest economists and politicians who dare to speak it, say that if anyone or any country is in charge, it is China. China has become the largest world producer and is the primary backer of U.S. debt.
(Just listen to the first few minutes of the video).
The following video humorously presents the financial woes of Europe. The message is the same. No one in the western world really owns anything. It is all simply heavily mortgaged debt.
If you want to understand why homeowners and businesses are failing in proportions that far exceed the norm, you must understand that it is not just people and companies that borrow. National banks and governments borrow constantly.
For an individual, these dominoes are rent, food, training, etc. For a company, these dominoes might be payroll, capital expenditures, insurance, etc. At the highest level, when talking about countries, the dominoes are nothing but accumulated debt, debt that was used to finance expansion, war, healthcare, tax incentives, etc.
In the old “Cold War” era, we spoke of countries toppling like dominoes to the Soviet Union and China. Now, we are talking pure economics. In Europe, we have seen the collapse of Iceland, Greece, Ireland, with the next countries in line being Portugal, Spain and Italy. (BTW, there is no better magazine than The Economist, for understanding the economic pulse of the world). In the United States, Governor Chris Christie is telling it like it is, that the economic system is broke, plain and simple.
Several states are now on their way to bankruptcy. California, the 7th largest economy in the world, may be one of these states heading for bankruptcy. It won’t help when no one wants to buy state bonds. Then, when the U.S. steps in, that is, forced to step in to save the states, no one will want to buy U.S. bonds.
It’s a big mess. Eventually, the crisis will be solved. It’s hard in the face of these economic woes to have confidence. This type of portrayal may not help matters. But then again, maybe it does. Why? Because first we need to realize that no one in the western world is in the drivers’ seat and the eastern world is ill-equiped to take charge. No, we all must individually, as corporations, as states, countries and collectively, we must each fix our own house without damaging the other. Slowly but surely, we must each continue to rationally and reasonably rid ourselves of credit, while with faith in the future, continue to save, invest and enjoy the fruits of our labor.
Getting back to the pest control industry, my prediction is that without further federal monetary stimulus for the housing market, the termite industry will continue to suffer as the public attempts to figure out which way the wind is blowing – housing values up or housing values down. Eventually, more buyers will come into a market with pent-up demand and the termite market will recover. But it could be a long time coming.
Pest control companies with cash reserves will be able to gobble up previously credit happy companies.
Small one-man pest control companies will do well, if their owners have “the gift of gab” and can parley that word of mouth into maintenance accounts. Larger companies that learn to maximize marketing dollars will do well.
Some companies will fold, not because they can no longer survive the trends, but because the emotional stress of it all will just make them want out.
Companies that take on high risk assignments to keep the money flowing will regret it. I predict that lawsuits will rise as customers check their pockets and think twice about contractors that dug deep in those pockets without delivering high quality pest control.
Companies having cut back quite a bit, will attempt to expand this year, causing greater competition where there is money to be made.
The two most important pest control company positions necessary to survive 2011, will be company accountant and risk manager. Growth always requires strong, inspirational leaders and a loyal, top-knotch labor force. Moreso than in the past, growth will require a modern era marketing arm and a real estate savvy for “location, location, location” applied to pest control territories.
The customer is always in charge, but I should say that moreso than ever, the customer is king… or queen. Pleasing your customers will be imperative. Their expectations will be higher for the dollars they spend for pest control. Loyalty built on the foundation of reliable service and good communication are essential. Many customers will hold onto that low-tech service because they know it is a necessary service, but they will be very observant, expecting nothing less than the best service possible.