Am I Prepared to Handle Risks I Can’t Even Envision?
At the end of his book, Same as Ever, author Morgan Housel leaves the reader with questions rather than conclusions.
Questions that he addresses in the book, but now you are asked to answer them yourself including…
Am I prepared to handle risks that I can’t even imagine?
My hunch is that the indie retailers that made it through the pandemic, are more likely to embrace or at least accept uncertainty.
Their confidence bolstered by the experience. However, I also wonder if it has also made us more risk averse.
The government bailing us out is probably a once in our history event. March 2020 is still a recency bias as we owned inventory and were facing shutdowns.
Here the truth…there is no planning for the unpredictable.
And over the 35 years I have been in planning, and 50 years in retail, I have only witnessed 2 events that caused disruption.
One was in the fall of 2007.
In that one, we saw the slowdown as early as Spring of 2007, but did not know how extreme it would turn out to be.
The second was of course the Pandemic.
It is important to note, that neither event in the long run hurt indie retail and in fact I could argue indie retail became stronger from both events. During this same period from 2007 to today, one of the chief competitors to indie retail, the mall and department stores lost market share.
Even the rise of e-commerce has not impacted indie retail and some have embraced and prospered as they learned to navigate social media and social media selling.
Even 9/11 only had a temporary impact of a week or so, as we stayed glued to our televisions.
But then an interesting phenomenon happened...
Customers went back to our shops in search of community and business exploded to match Christmas like revenue. It was a lesson we believed would happen after lockdowns and that turned out to be correct, only more sustained. That made sense as shelter in place and subsequent lockdowns were longer and this time supply chains were disrupted, creating a longer recovery.
For those who dwell in uncertainty, it is not supported by history.
In my experience in fifty years of being part of indie retail, 96% of the time business followed normal trends.
And in the 4% of the time it didn't, they were followed by surges in business that more than offset the losses. After the bloodbath of December 2007, business normalized until October 2010, which then saw a very strong cycle of growth until March of 2020. The pandemic recovery saw double digit and profitable inventory turnover, in a time frame never seen at least in my lifetime that was so across the board in every vertical. And today we are witnessing those increases flattening out but being sustained.
History is valuable as it teaches us that worrying about uncertainty is a waste of time. Focusing on the unpredictable is a useless use of time and energy. However building a strong sustainable business does allow you to handle the valleys that do happen, even if they are rare.
A disciplined approach is achievable and one of the reasons I believe Management One planning offers the greatest tool to remain disciplined and flexible to manage risk. It has predicted accurately for 96% of the time over the last almost 4 decades on how business will trend, AND also delivers one of the best progress monitoring and cash flow tools available to indie retailers.
Indie retailers are entrepreneurs. Baked into our DNA is the need to build and create. That requires an element of risk. Focusing on the unpredictable, diminishes your innate ability to do what you do best; build, grow, nurture and drive ingenuity into your business.
Onwards and Upwards,
Marc
