Is it better to buy at the top of the market or at the bottom?
This is not a trick question. At a recent automotive trade group meeting, two warm-up questions were posed to the participants. They were: “What sales revenue do you expect for next year?” and, “Are you planning to make any equipment or facility investments this year?”
As you would expect, the answers were all — except for our responses, that is — very optimistic. Not that we’re pessimists, but for years we have watched the shrewd operators know when to buy and when to wait. We don’t know if we’re at the top or near the end of the cycle, but modern economic history has shown that we don’t stay at the top forever. The smart operators are very calculating, independent thinkers who do not follow the herd. For example, Warren Buffet invested $5 billion in Goldman Sachs on September 24, 2008 (while most of us were running for cover), and made a very handsome return on his investment.
We’re not saying not to invest; what we are saying is that you should base your decision on hard data (i.e., booked business with realistic, predicted volumes), not emotions and hype.
By the way, remember that the goal is long-term profitable growth, not increased sales.
Are you absolutely certain you should build that new facility or purchase that new press now?
p.s. We know successful business is all about guessing right, so we encourage you to base your decisions on as many facts as you can.