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By Les Cunningham
1) Policyholders continue to need your services. 2) Companies that do not make a profit go out of business. 3) Third-party administrators (TPAs) increase what they expect from their program contractors. 4) TPAs lower what they pay for program work. 5) Labor prices increase. 6) Material prices increase. 7) Overhead expenses increase. 8) Supply chain disruptions increase. 9) Good employees become more difficult to hire. 10) Contractors have more work offered to them than they can complete. 11) Inflation is expected to close out the year above 5%. 12) Buyers of local companies with national network connections increase. 13) COVID-19 changes the rules of business.
So, what am I trying to say to you regarding 2021 versus 2022? I am saying to you that I am absolutely convinced numbers one and two will repeat themselves in 2022, and I believe numbers three through 13 will repeat themselves too.
The question is: What are you going to do in response to predictions one and two in 2022? Bureau of Labor Statistics data suggests around 20% of businesses fail in their first two years and 45% during their first five years. In my consulting business, I’ve found that it’s certainly no picnic in the years that follow. In fact, it seems to get harder and harder. I also haven’t seen prices on many things decrease below what they were the previous year. Nor have I seen many needs, wants and desires decrease below what they were the previous year.
I would like to share some thoughts on what you might consider doing in 2022 regarding what I’ve pointed out. The first thing you might do is to decide whether what I’ve said has any validity to you and, if so, what points you think are valid. The second thing to decide is whether your company is going to continue as a for-profit business. If it is not, please meet with your CPA and file for non-profit status for 2022 and future years. If you decide to move forward as a not-for-profit company, please discontinue reading this article and get on with your business life.
If you decide that you want to continue as a for-profit company, the third thing is to review your written business plan and consider what adjustments to make based on what you’ve decided to change in 2022. The fourth step would be to sit down with your company and discuss what they think needs to be addressed, and how and who is going to address it. Please write down the results of the discussion so you can review it monthly to see how things are progressing.
I would like to address the 13 items I’ve mentioned and what you might consider doing about them as a for-profit company.
I hope this article helps you, your employees and your company operate a company that serves all of you and produces a 10% net profit before taxes in 2022!
Les Cunningham, CGC, CR, CCR, CGRa, is a highly respected industry consultant and author of Accountability Through Transparency. He can be contacted at (800) 525-1009, ext. 14 or by email at Les@BusinessNetworks.com.