the recession has started! (what you need to do NOW)

Hey everyone, it's Mike Andes here. I'm the founder of Augusta Lawn Care. I'm actually just headed over to pick up some decals for some of our franchisees and their trucks. They can order them from us and I'm just picking them up. But I want to make this video because it's extremely important. And I was just looking at some data that came from the economy. I truly believe we're headed for a recession in the next 12 to 18 months. I said this a couple months ago to our managers locally. And that was before the war. That was before all this craziness happened with inflation rates going up and oil oil prices skyrocketing. So this is all just confirmed my suspicion that we are going to have a recession in the next 12 to 18 months. In this video, I'm going to talk about what you should be planning, how you should be focused on getting your business ready for that time, and I'm also going to talk about the indicators as to why I believe this is the case. So first and foremost, why do I think it's so evident that we're going to go into recession? If you look at every single time that the cost of oil has gone over $100 per barrel, we've almost always gone into recession after that. We're, we went up to like $130 a barrel. It's come down somewhat, but because of the Russian war and Ukraine and all the rest of it, the oil prices are through the roof. What that's going to do in the next several months is put a massive damper on the spring rush that we usually anticipate for the landscaping and lawn care industry. Home improvement people are not going to put that extra deck on. They're not going to install that extra paver patio. They're maybe going to lay off on doing as many treatments on their lawn because the cost of fuel is now eating several hundred extra dollars out of their paycheck every single month. Also, what's happened this past week, this is the big one. Mortgage rates have gone through the roof. A 30 year fixed mortgage in the past few weeks has literally doubled, almost in interest. And so literally just a few months ago when I was buying real estate, we're looking at 2.8, 2.9% interest. You're now looking at over 5% in interest on a 30 year fixed mortgage. What this means is we're in bubble territory right now when it comes to the prices of real estate. Things are just absolutely astronomical in terms of price. But when the interest rate goes from 3% to 5%. That is the equivalent of raising someone's mortgage, their mortgage payment, monthly mortgage payment, by 20%. And so when you do that, you make it unaffordable to buy houses. So in the past week, we've already seen an inflection point in real estate. And mark my words, mark my words that in two months you're gonna see people start talking about how the real estate market we might be looking at, like 2006, 2007, we could be going into a real estate crash. And mark my words, it's not in two months, it's now. Right now, we are already seeing the softening because in the past few weeks, the interest rates have gone absolutely berserk in the mortgage world. So the fact that oil's gone up, mortgage interest rates are going up, the Fed is raising interest rates because they've lost control of inflation. And things are going up way too fast in terms of costs. And the consumers are going to start struggling to pay these inflated prices. And with the commodities and oil and everything going up, we are in for a really rude awakening. Now, I could be completely historically wrong in all of this if tomorrow the war in Ukraine ends and supply chains start to figure themselves out and everything gets ironed out and oil prices come back down. But I just don't see that happening because the Fed is way behind on raising interest rates. We have a massive inflation problem in this country, and in order to tamper that, they're going to have to raise rates. And to do that, you're going to be literally doubling already as they have mortgage interest rates. You're going to be. The cost of debt is going to go much higher. That leads to less spending. That means to less people not taking home equity lines of credit on their home anymore and doing the extra home improvements on their home. Because now the cost. Because now, because now the value of their home is actually going down somewhat. And that's going to happen. So what should you be doing in your business now? Right now you should be absolutely focused on paying off debt and setting aside dry powder. Because in the time of recession is when everything is sold for pennies on the dollar. Marketing, hiring trucks, equipment is all much, much cheaper. And you can take massive opportunity when things are very cheap during a recession. Right now, everything's expensive. Trucks are really expensive, equipment's really expensive, Hiring is expensive. Marketing, everyone's trying to market it's expensive. If you can keep powder dry and not be in debt right now and pay those things off, have cash ready to be deployed during a recession, you can absolutely dominate your market. You can take over and hire and buy trucks. When all of your competition is selling their trucks, getting rid of their employees, this is the time to prepare. The time of peace is when you prepare for war. And right now, the past two years, with all this stimulus money being injected and interest rates being cut to zero and the housing market just going through the roof and the stock market doing well, we have been lulled to sleep. And I promise you, we are in for a very hard crash and awakening that is going to be very difficult. And so prepare for it secondarily, if you are the chuck in a truck, if you are servicing customers for 20, $25 per cut, you're going to get wiped out. Because that price conscious customer is the first person that goes and mows their lawn by themselves. They're the first customer that's going to drop service because their job is on the bubble and they get cut from their job. You want to be servicing that customer that is insulated from these events. The customer that has three or four properties, is 78 years old and cannot physically do the work themselves and is willing to pay a premium price for a premium product. That is the type of customer you want during a recession. And so focus on those things right now. Because trust me, even though I see the indicators of it now, it's not going to happen for several months. In a few months we're going to start seeing headlines. Towards the end of this year, it's going to start happening. We're going to see the bubble of real estate and oil prices being high and everyone borrowing money and all this stimulus and all of this is we're going to have a rude awakening. You can't just pump trillions of dollars in the economy, cut interest rates to zero and let the real estate and commodities go through the roof without having a rude awakening with debt. So I just encourage everybody stay, as they say in the Marines, stay frosty, stay prepared and get ready for a crash. And during that time of contraction, you can absolutely expand if you have powder dry and you've been focused on the right type of customers.