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Shifting Balance | Business Travel News

By mid-2022, small and medium-sized enterprises are wrestling with a number of powerful but conflicting market forces that are challenging executives to assess the economic terrain, forecast future scenarios and make decisions about internal spending, including travel. Executives at small and medium-sized companies have to contend with persistent inflation, some persistent supply chain issues, and stubborn staffing and retention issues. On the other hand, sales of many companies have bounced back and Covid regulations have been dropped, allowing some business operations to approximate pre-pandemic positions.

BTN Managing Editor Chris Davis spoke in early July with Mark Schneiderman, a business consultant who works with small and medium-sized enterprises as well as an attorney and former C-suite executive, to discuss SMEs’ perspectives on the market and their assumptions. Can influence spending decisions. An edited transcript follows.

Given the various market forces right now—some recovery from Covid, some recovery in sales, but labor shortages and inflation—how are your typical SMEs handling it?

It’s tough. I would say they are quite cautious. People were really excited coming out of Covid that things were going to start moving, and you started to see movement in the market. You start to see some travel. You start to see things start to pick up, and quickly Wall Street goes into a hole, and the economy goes into … whatever you call it, stagflation or whatever we’re going to call it right now, and it’s really changing the way people think. .

I saw a bunch of deals that I thought were going to die completely. I think people are a little afraid to invest money in the market. They are afraid to buy equipment and find out where they will go, because no one really knows. There is a lot of talk that we’re headed for a recession or something worse, a kind of extended recession. Some small businesses are definitely feeling scared right now.

I have a client who runs a landscaping company. He’s had trouble finding labor for three whole years now, and you’ve just reached a point where you’ve scaled back your business, saying, “I’ll just do what I can.” He’s getting more calls than he can handle, and he won’t take deposits because he doesn’t know when he’s going to get the materials.

It certainly created a very cautious environment, I would say. I have clients who are full tilt, but they are at the larger end of the SME market. They are full tilt because they have the benefit of all the covid relief funds they have received. These things put them in a position where some of them are becoming very aggressive and acquiring other companies, acquiring properties. They are really going after it.

Does that vary by sector?

I see this in the service industry. In terms of production, not so much. I’m seeing some consolidation in manufacturing, actually, where larger entities are buying them or getting private equity. But the private equity market is about to dry up a bit as funds become less available.

How does this cautious environment translate into future planning and strategy? Is it more about trimming?

I think it’s a lot of wait and see, because people are worried. The housing market is said to be falling, and I even thought it would be sooner than expected, as there are still hundreds of thousands of mortgages that are at risk of default right now. This is more than what happened in 2008. But ’08 was different because it was all backed by securities, so when it collapsed, it was a domino effect. You don’t have that same problem these days, but you still have a huge problem, when will this market cool down? I think things will start to normalize themselves as mortgage rates go up, because they have to. They have no choice.

Overall, I think everyone is going to wait in the medium term [elections] Right now. I think that’s going to start to determine where things are really going to read out. Realistically, how much will the medium term affect our economy and everything else?

What are the different ways that could go? If Republicans overturn Congress, how might that change SME ideas or strategies?

I think they’ll be more confident, whether it’s legal or not. I think there will be some more confidence in the market. There have been a lot of things that have shifted to the left where money is going and how much money is going out versus what is really creating market opportunities. I thought I was a Republican, and I’m not. [Laughs]

Given all this, what should we expect in terms of domestic spending on travel and other business needs?

In terms of internal expenses, like travel and marketing dollars and all that kind of stuff, the year before Covid, I think I traveled 36 weeks. If I travel 15 weeks this year, that would be a lot. And I think that’s consistent across the board from people I talk to and people I travel with a lot.

Do you think that this is permanent?

Unfortunately I think it has some permanence. I don’t think it’s a good thing. I think there’s something to be said for the fact that we’ve all found ways to communicate more and be able to have certain meetings virtually, but there are some meetings that still need to be in person. And I think it wouldn’t be good to not have enough events and conferences. I think they really lose something from virtual that can’t be replaced. You’re not going to replace a 1,000-person conference with a 1,000-person virtual meeting. It’s not exactly the same thing.

Beyond the medium term, what are the metrics or indicators that can help SMEs assess what is coming?

From my point of view, some of them would say they look at the market, which is a terrible place to look, because the public markets don’t really indicate what’s going on, and they don’t indicate what’s happening on Main Street over the years. They are almost polar opposites. Main Street collapsed during Covid and the markets were flying. So they are not good indicators, at least not in the last decade. To me, the biggest indicators are unemployment and banks. Are the banks going to give loans? Are they willing to come out and support? If the interest rate is too high, there is no money.

As long as money is cheap and money is cheap, small businesses can survive. And you have to change the labor market a little bit and we’ve seen some of that. We are definitely seeing more candidates available, more people working and willing to take lower paying jobs than before, because the extra money they earned sitting at home doing nothing during covid is gone. And now they have to work again, which is a good thing. And I think that will help stimulate the market, get some small businesses back to where they need to be.


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