We are still projecting double-digit growth for our business unit next year. The majority of that will come from geographic expansion and product expansion because of our partnership with Renovo. [The private equity company that purchased Reborn in 2022.]
We have put together more of a conservative plan for 2023, so we don’t have a big shift from our target to our reality if a recession affects us.
That said, I have been doing this for 40 years and I have been through some major recessions and COVID. I do not suspect we’re going to see a substantial impact on our business.
Over the past few years, everybody has seen their backlog grow to levels they have never been accustomed to in this industry. We have always targeted a 30 to 45-day backlog, but we have been months out the past couple of years.
I anticipate seeing interest rates continue to rise, which is going to cause a pullback on consumer financing and make cash flow tighter.
I think that having a little bit of a headwind with a minor pullback might be a good thing for the consumer because we can start getting our suppliers back to normal lead times and give the consumers better experiences. Organizations that are able to correct the backlog issue will be able to capitalize on market share.
Larger remodelers will be the first ones to realize that benefit, while, in my opinion, smaller standalone remodelers are going to struggle. I anticipate seeing interest rates continue to rise, which is going to cause a pullback on consumer financing and make cash flow tighter. The smaller remodelers that have not prepared their balance sheet for that are going to face a challenge.
Because there is so much unknown, remodelers have to be very nimble and flexible. If lead times shorten, how do we react quickly to that on the marketing side? How do we capitalize on that?
Remodelers have to be looking at their data even more than they have in the past. Larger remodelers who have those systems and dashboards in place are monitoring those metrics already, so they will have a leg up in that area.