Gliders and Grinders Will Prosper Alike In '06

Some people glide through life. They go to work late, arrive home in time for the 5:30 p.m. news, and they get a lot of breaks along the way. They marry the boss' son or daughter. They get promoted and become equity partners in the firm. If you are one of these types of remodelers, please skip forward to the last paragraph. The meat of this column is for the grind-it-out, Type-A worry warts, who daily drive their businesses through a host of near misses and a slew of potential setbacks.

The year ahead holds great promise, but it's got its share of potential potholes. At least three come to mind. Undoubtedly there are more, but here it goes.

1. Internal Revenue Service audits are trending higher. According to the IRS, the number of audits of individuals earning more that $100,000 annually rose by 20 percent during the year that ended last Sept. 30th. About 1.58 percent of those earning more than $100,000 were audited, up from 1.25 percent from the previous year. The IRS will not disclose how it selects tax returns to audit, but they are expected to continue to sharpen their focus on self-employed workers who deal largely in cash, the Wall Street Journal recently reported.

2. Hiring requires more due diligence than ever before. Attracting and retaining a talented team is hard. Now comes a survey of workers between the ages of 25 and 40 confirming that many place a premium on flexible work schedules over higher pay and increased responsibility. According to the latest update in an annual Emerging Workforce Study, published by Spherion Corp., 60 percent of workers of all ages say time and flexibility is a very important retention factor. The study also found that 51 percent of those under age 40 will look for a new job within a year. Only 25 percent of those over 40 will do the same. Kids these days!

3. Mixed signals from the housing market. Residential real estate transactions directly translate to remodeling and repairs. And with new and existing home sales pacing at nearly $8 million for the past few years, the market is expected to cool a bit. Reading the remodeling tea leaves may become more difficult. This is where worriers have to keep from getting carried away. The underlying market remains very favorable for remodeling activity. But there will be local adjustments to be made in many parts of the country. Nationwide, home sales fell 8 percent last October. It increased 1 percent in the desert Southwest, but slipped by 14 percent on the West Coast. Grinders should stay focused on the following.

a. Interest rates are higher, but remain historically low.

b. Mortgage equity withdrawals used by homeowners to fund repairs and remodeling are trending lower, but again, the numbers are staggeringly high. Goldman Sachs estimates that $834 billion was cashed out from residential real estate last year. In 2006, that number is projected to dip to $758 billion. Again, no cause for concern. There is plenty of cash available to fund remodeling activity.

Now that the gliders have rejoined the column, 2006 will be another wonderful year for remodeling. Business will certainly be good enough to reward gliders and grinders alike.