What is the Great Normalization of 2015?
Kevin F. Clune, CLP
The “Great Normalization” is occurring among small business owners, according to William Phelan, President and founder of PayNet, Inc. You know it is January by the flood of predictions for the year ahead but I thought this one deserved attention. What does Phelan mean by this term, why should you listen to his opinion, and what impact will it have on your particular business in 2015?
"By the Great Normalization, we are describing the shift from a fear based market to a normal risk taking market.” According to Phelan, this is a healthy sign that indicates “the psyche of the business owner and their level of optimism is becoming more positive.” He said this is a shift from the years of 2010-2011, “which was an era of flight to quality and survival”. I was very pleased to read his prediction for the equipment finance industry in 2015: “We can see in the data that businesses are investing above the replacement cycle now. They are moving into a phase of organic growth which is driven by demand for their goods and services.”
We all read many positive articles and hear all sorts of optimistic predictions from “experts” at the beginning of the New Year. What is different about William Phelan? PayNet Inc. is the leading provider of installment credit ratings. They help lenders like Clune & Company, make prudent credit decisions. With their database of 23 million loans & leases worth over $1.2 Trillion dollars, they provide predictive information for subscribing lenders. When Phelan states that “small businesses continue to show strong balance sheets and income statements”, he is definitely speaking from a position of authority on the health of the U.S. private company economy.
The next logical question was to translate what this means for the overall U.S. economy and for your particular business. Phelan concluded, “The U.S. private company economy makes up about 50% of all GDP in the U.S. – so it’s an enormous economy. I think U.S. private companies can drive domestic growth in the U.S. in 2015." For those in our industry, there was this: “These companies will look to equipment finance lenders as a major source of capital to fund their growth.”
For more specific information about this discussion with Mr. Phelan, the interview was featured in a January 6th article of Equipment Finance Advisor.
It is our hope that this rising tide will lift all boats, including yours. Bring on the “Great Normalization” of 2015.
Happy New Year,
Kevin F. Clune, CLP
Clune & Company
