It’s time to restart your business engines. Get ready to ditch the discounts | Opinion
Hang in there. Keep your masks on. But know that good times are coming.
So says Dr. Anthony Fauci, who predicts that most of us will be vaccinated by Labor Day. Just this week, President Biden predicted new most adults could be vaccinated by the start of summer.
That could signal an economic boom.
“People will get out and celebrate,” says Debra Lieberman, associate professor of psychology at the University of Miami. In an article on the UM website, the professor predicts a mass return to work, gyms, airports, hotels, restaurants, you name it. “There will be lots of parties and lots of sex and people eating and celebrating,” she said.
Sounds like another Roaring 20’s, a period when the U.S. economy threw off the malaise of World War I and the 1918 Spanish flu epidemic and grew by 42%. For the South Florida businesses that will have squeaked by during the 18-month long, pandemic-induced economic collapse, it’s time to restart your engines.
Step one: Get your finger on the pricing trigger.
Why? Because prices are driven by two things: the relationship between supply and demand, and consumers’ willingness-to-pay. Demand is poised to far outstrip reduced supply and willingness-to-pay could be as voracious as a hungry bear waking up from hibernation, according to Neil Irwin, an economics correspondent for The New York Times.
Extrapolating from Irwin’s report, it’s likely that going into this summer, Americans will be sitting on a pile of savings that’s nearly $2 trillion higher than normal. What’s more, President Biden wants to fan the flames further with a $1.9 trillion stimulus package. That’s close to $4 trillion to fuel pent-up demand and it’ll drive prices higher in nearly every sector of the South Florida economy, especially those that cater to both a domestic and international clientele.
So if you’re responsible for pricing at your company, get ready to remove discounts and then start inching your prices higher to pre-pandemic levels and well beyond.
Which leads to step two: Get your company back in tip top shape.
Why? Because all this pent-up demand and extra cash will create a corresponding boom on the supply side. Companies will rush to expand their capacity and hours of operation so they can serve more free-spending customers. That in turn will lead to a hiring binge because serving more customers requires more employees.
That’s very good news for those of us who are unemployed or underemployed or underpaid, or some combination of the three. And it creates an urgent need for companies to address their staffing requirements.
If your company reduced salaries at the beginning of the pandemic, it’s time to put them back to where they were. Otherwise your best employees could well find greener pastures.
If your company was forced to furlough employees as demand dried up at the beginning of the pandemic, get ready to invite the best ones back. If you don’t, someone else will.
Like every savvy businessperson, I have a tendency to be suspicious of forecasts and prognostications from analysts and experts. But it’s true that the feeling of Covid-fatigue is palpable.
A few days ago, a friend came over for a puppy playdate in the front yard. I was bare-foot, wearing an old tee shirt and a pair of faded and frayed Levi’s. On the other hand, she looked beautiful, as if she was going out to dinner with friends on a Saturday night.
“I’m so sick of jeans,” she said, which was prophetic and pretty much sums it all up.
Adam Snitzer is a revenue strategy expert and president of Peak Revenue Performance, a consulting firm that specializes in designing and executing innovative pricing strategies to increase revenue and generate cash. He can be reached at adam@peakrevenueperformance.com.
