Letter from the Founder

 

I learned long ago to trust my gut feelings and instincts rather than economic forecasts and predictions.

 

At the time of this writing (January 2008), economists and other financial talking heads are warning that there is a 50 percent chance of a recession, while Fed officials say that the economy will slow, but there will be no recession.

 

For those of us in the real estate industry, the recession is well under way. Our questions or not “if,” but “How long will it last?” and “How much worse will it get?”

 

I’m now in my 36th year in the real estate services industry, and like anyone else who has been around that long, I’ve seen the economy cycle through good times and bad.

 

Remember the 1970s? Recessions occurred every three or four years. In the 1980s and 1990s, they were five- or six-year phenomena. But then in 1994, real estate took off, and except for a minor sputter, never slowed until 2007. That’s approximately 13 years of economic expansion.

 

I wish I could say that we in the business community maximized profits during those “boom” years. While we were financially successful, we developed bad business habits. For many of us, sound, proven business principles were abandoned or forgotten in the overheated economy.

 

As long as there was enough money in the checking account, who cared?

 

For us, demand for surveying work nearly exceeded our capacity to get it all done as efficiently as usual, and a lack of experienced and capable personnel left us scrambling to meet deadlines. And when your first priority is to survive your work burden and focus on project deadlines, business development efforts take a back seat.

 

More dangerous was how easily money was available during the last five to six years. Credit from banks and vendors was alluring. Fortunately, at Compass Surveying, we did not listen to the “siren song” and never leveraged our business with borrowed money or easy payment plans. We are now seeing the value of that decision.

 

So here we are after the gold rush. The phone doesn’t ring as much, and there isn’t an urgency to many project deadlines. Sales are down.

 

I thought the downturn would be limited to speculation, overbuilding and the “bubble” in the residential sector. After all, historically speaking, mortgage money is cheap.

 

Unfortunately, this slowdown is a credit squeeze and liquidity crisis that is unfolding, threatening not only residential real estate, but commercial and industrial projects as well.

 

And it was inevitable. “Busts” are products of “booms,” and vice versa. In the boom/bust cycle, bullish excesses set the stage for bearish corrections, which, in turn, spark the next boom.

 

I always knew that an economic downturn was coming. I just did not know when. Conversely, I know that an economic upturn is coming; I just don’t know when.

 

I do know this: At Compass, 2008 is a testament to more good times than bad as we mark our 25th year in business.

 

After a quarter century, we cannot thank our clients, teammates and friends enough for their support, business and trust. We are proud of the projects you have entrusted us with, and we look forward 25 more years of helping you achieve further success.

 

Sincerely,

 

Michael Filipski, PLS

President

Compass Surveying Ltd