What will the next decade be like? No one has a crystal ball. However, I have been watching economic shifts over the last few years. And I am starting to see some patterns take shape. These are the areas that I want my fellow event professionals to keep in mind as they begin to prepare for the next few years of business.
Communication is being disrupted
The way that we communicate with clients is being disrupted this very minute. Since 2000, we have seen the shift away from the phone as the primary means of client communication to email. By 2030, email will no longer be the preferred method of correspondence. Make way for messaging!
Right now, we cringe when we get client demands via Instagram DM. We shudder when we wake up to a barrage of client texts at three in the morning. But this is Gen Z’s preferred method of contact. Email is too formal and too personal for people ages 10 to 24. Email also requires too many steps for these young adults and kids with a quick finger on the phone trigger. Email is to Gen Z what the phone is for many of us Gen Y or Gen X. (Don’t you dare call me without an appointment! I will not pick up.)
We will not always be at the mercy of these social media messaging inboxes that have little tracking and business functionality. This technology will continue to evolve. It is likely we will also see a much more streamlined messaging system that is easier to employ for work purposes. Until then, try to find a balance with this ever-dominant method of communication and your own business systems. Messaging is not going away.
Get your staff properly classified
It is not unusual for me to see event workers misclassified as contractors. This puts you at risk with the IRS leaving you open to potential penalties and back tax due. If you have any control over how your team does work for you, they should be classified as employees. Contractors need to be experts in their field. They call the shots on their contracts, their invoicing, and their payment terms. Contractors are not trained by your company to fulfill their jobs. Anything less than this can be frowned upon by the IRS.
If you live in California or New York, you have likely seen that the IRS definition is made even more strict by state labor laws. These two states often dictate laws that begin to slowly form in other states across the country. Typically, we see Washington follow next. Little by little, more states begin to adopt more worker protections. Right now, the IRS defines the standard nationally. Get right with the IRS, and you’ll be prepared for when your state tightens its own labor laws.
It’s likely we will see tax reform on these limited classes to something specifically for ‘gig workers’—a hybrid of the contractor and employee. But the IRS moves slowly, and it could be another decade or two before we see any major amendments to the tax code.
Boom now, bust later
Anyone who has been in business for a decade or more can tell you all about the economic cycles they have experienced—even before the pandemic shock of last year. Events are currently booming, and they will continue to do so through at least 2023—potentially through 2025. After that, it is best to prepare for some sort of bust. When will that happen? How will it happen? What will the trigger be? All this is impossible to predict. Economic boom-bust cycles tend to happen about every 10+/- years. We are due.
Now is the time to squirrel away cash for that eventual bust. How much should a business save? You want to have a minimum of one month of cash outflow covered (expenses, equity draws, and debt repayment). If you can inch your way toward three to six months of cash outflow, you will be in a much more secure position for the next recession. Keep in mind, a normal recession is not as crippling as a complete shutdown, such as in 2020. Yet, it can cripple you if unprepared.
Something else to keep in mind: once you feel secure in your business savings, it’s OK to stop amassing cash. I see some business owners with beefy reserves that are not serving a purpose. While this is incredibly admirable, it may be completely unnecessary. That cash can often serve a greater good for that owner whether it be used in a retirement account or invested in personal property, stocks, or mutual funds. The goal is to feel secure in that business cash reserve, but not at the expense of smarter personal investments for the owner outside of the business.
2022, we are ready for you! It feels good to be looking forward. I am excited to see what the rest of the decade brings to our wonderful industry.