Bulletin Board Magazine 2021 V4

Plenty of Lessons Past and Present

Plenty of Lessons PASTAND PRESENT byWilliam C. McNamara, CPA, CCIFP,The Curchin Group, LLC

William C. McNamara, CPA, CCIFP The Curchin Group, LLC

W hat lessons and knowledge have we gained in 2021? A great question many business owners should consider. Believing that I have learned way more in hard times then good, 2021 was a very good year for learning. Simply getting it right out of the box has taught me little. But problem solving through trial and error, these undertakings provide life lessons that never leave you. As the pandemic has shown us all, we need to have flexibility to change directions when new circumstances present themselves. As business models for 2022 are planned and modified here are some results and risks from 2021 to consider. An industry annual survey conducted by the Construction Finance Management Association (CFMA) and completed in July 2021 published some important benchmarks for contractors. While the survey covers numerous areas of a company’s financial health, earning reports are always critical. The 1,207 companies who responded and shared their detailed financial results reflected return on equity values of 30% and return on asset results of 13%. While not huge gains, both ratio’s trended positively from the prior year. 80% of the respondent’s received federal funding under the Payroll Protection Program. This infusion of capital to small businesses provided relief during the most critical times of COVID. Managed efficiently, these PPP loans will provide liquidity cushions entering 2022.

The U.S. Bureau of Labor Statistics tracked job losses for the period February 2020 through November of 2021, the construction industry has seen a net loss in employment by 115,000 positions. The reduction in construction industry jobs may be good news in disguise since it is relatively lower than the leisure and hospitality industry which lost 1,334,000 positions. The question becomes; Who will fill those openings? The Sage Policy Group, Inc.’s Chief Economist Anirban Basu, MPP, MA, JD, PhD points to the losses incurred in enrollment at vocational schools as a significant factor to the shortage in the skilled labor market. Many parents have felt that college was the gateway for their child to obtain middle class status. However, Dr. Basu notes we now see that the “heavily indebted college student, proficient in 18th century French literature, missed their calling as being an extremely awesome welder and highly employable”. Developing a plan to measure risks has proved invaluable in the past 24 months. Classical risks business owners often evaluate are inflation, interest rates, and customer demand. Well in 2021, those risks have been easily mitigated. The Federal Reserve has kept inflation and interest rates in check. The market demand for new housing is ravenous. Labor, skilled labor specifically, is a shortage and risk factor for a builder.

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