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Planning in the Face of Uncertainty
Anyone out there excited by the current state of American politics?
I didn't think so.
Regardless of your political persuasion, I'm guessing you're a lot like most of the business owners I know: tired of the political rhetoric, the finger-pointing, and the lack of civility inflicted by our system of non-stop campaigning. But, perhaps just as significantly, I’m exhausted by the amount of work it takes to run a business against the backdrop of political uncertainty.
Let me explain.
After 5 years of consecutive growth – 20-40% year over year – 2016 was the first time in a long time that we’ve had to truly dig deep just to match the prior year's performance. Leads were down by nearly 50% and many of our clients found themselves looking for new ways to replace business that had been a “sure thing,” the year before. Working directly with B2B small business owners gave me a front-row view of the state of affairs. And, what I saw wasn’t pretty – fully one third of our clients had to battle major sales challenges, most agreeing that their setbacks were directly connected to the uncertainty of the election.
Indeed, Portlanders weren’t alone. According to a recent poll by the National Association for Business Economics, more than half of businesses rated last year’s election as negative for the economy. Moreover, The Washington Post reports that business investment in factories, equipment, and technology had fallen for three consecutive quarters – the longest streak of declines since 1979.
So what happened?
Most business owners expect election years to be a bit tepid. We know that the enemy of investment is uncertainty, and elections leave us wondering about the future. Businesses pull back on the big ideas, and hunker down until things seem settled.
But 2016 proved to be the year of the massive political plot twists. As the primary season wound down it became clear that all bets were off; Trump – perhaps the least predictable candidate in modern times – would be the Republican nominee. While most assumed the general election would follow a standard trajectory, the weeks and months leading up to November 8th were anything but pre-ordained. The crazier the election, the more challenging it became to generate new business.
Luckily, overseeing a strategic marketing firm gave me a few advantages. Most significantly, many of our Key Performance Indicators are predictive. When everyone was scratching their head at the Trump nomination, I was looking 3 to 6 months ahead, seeing that the small business climate was about to go from bad to worse. While I couldn’t have predicted the outcome of the general election (who could have?) I knew that I had to make some very real changes (mostly sales and marketing) to offset the bizarre election cycle.
And these moves paid off. What was looking to be a financially bumpy 3rd and 4th quarter turned into a pleasant country ride. More amazing was what happened immediately after the election – the phone started ringing again. It seems, at least anecdotally, that leaders were ready to get back to the business of… doing business.
I first penned a version of this article for the Portland Business Journal back in December. Like many, I wasn't sure what a Trump administration would bring, but I assumed the election-year uncertainty would wear off quickly as the country got back to "normal."
Since then, it would be hard to argue that we've settled into any sort of normalcy. Indeed, while business picked up considerably and the Dow is at an all-time high, the continued levels of chaos and political vitriol have more than a few of my peers wondering, "what's next?"
At the end of the day, I believe great business leaders are wired for optimism and the possibility of great outcomes. Just take a lesson from Warren Buffet who, in the midst of the chaos of the Financial Crisis of 2008, managed to make $10 billion when everyone was running for the hills. As it turns out, the smart money is on leaders who keep their heads up and their foot on the gas.
It’s anyone’s guess on what the future holds, but if 2016 taught us anything it’s that we better have a plan... and we better buckle up.