“A rising tide raises all ships.” ~ John F. Kennedy
The tide is a metaphor for the overall economy. The theory is that if the overall economy is rising, everyone benefits. Conversely, if the tide is falling, everyone suffers.
Yet, is any of this consistently accurate? Does the tide affect every business the same?
Looking Closer at the Trends
To see the overall economy, you have to zoom way out. When you are at this level, you can’t easily see any details.
To find meaning – cause and effect – you have to zoom in and look at smaller trends.
- Where is the local economy heading?
- Where is my industry heading?
- What fears and desires are driving the consumer?
- What other factors are impacting the economy?
- Where does my business fit in all this?
A storm surge combined with a high tide can be devastating for low lying areas. But, higher elevations won’t be affected at all.
Context is everything.
When the Tide is Falling
The big trend seems to be an economy that is dropping due to the effects of a global pandemic. Sure it may ebb and flow due to the waves and weather. It may also rise somewhat before it falls again.
There are many different levels of tides during a full cycle. The really low ones and the spectacularly high ones don’t come as often.
In the case of the pandemic and resulting economy, we certainly see the surface trends and maybe some of the details just below the surface, if the water is calm and clear.
First, we see the things that impact us directly. Then we notice the things that we hear about from friends, family, and the news.
Many businesses have already permanently closed their doors. Many more people are out of work. When they run out of money, the economic impact will keep cascading.
Even if there is a vaccine this year, the lagging nature of cause and effect will mean that some industries are will take much longer to recover.
The landscape will be different when a new normal settles in. Much different.
Even a whale can get caught on the beach when the tide goes out quickly. Big or small, many businesses are not going to survive.
Yet looking closer, we can see other things happening.
When the Tide is Rising
By its nature, when the tide is going out in one place, it rises in another. The water has to go somewhere.
This shift in demand is tangible for people and businesses. If we can’t travel or go to restaurants, we will probably do something else. If we can’t work from the office, we will try to work from home.
Many businesses have grown and thrived during the pandemic. Think technology companies like Zoom, medical supplies, and online entertainment.
Chances are they provided something critical in the revised market. They rode a trend.
Even today, small boats will often go with the tide to avoid burning extra fuel.
Fighting a trend is expensive. Riding a rising trend is much better.
What if Your Ship is Not Seaworthy?
Not all ships are created equal.
Some are large ocean-going freighters and tankers. If they stay out to sea, they can weather just about any storm. Yet, if they get too close to the coast, they can founder on the rocks. Size can be a liability when you need to maneuver quickly.
The Titanic comes to mind.
Smaller boats often need to hug the coast so they can dart into a safe harbour when threatened.
If your ship is in disrepair and generally not seaworthy, the smallest tempest can sink it.
Even if you don’t sink, all your energy can go into constantly bailing out your business. The crew is not happy, the cargo gets damaged, and you never really make any money.
A profitable, well-run business with lots of access to cash can avoid the lowest part of the tide and ride a rising trend higher than most of its competitors.
What if You Don’t have a Ship?
If you are 200 miles inland, tides have little impact on you directly. At least at first glance.
However, if you do business with the people on the coast, the impact on them matters to you… eventually. You may lose business, or something you need may not be available.
If you are on the water and don’t have a ship during a rising tide? At worst, you will drown and at best, you will spend all your time treading water.
Watch Macro and Micro-trends
It is essential to understand your market. What factors impact the people planning to buy?
Even a 20% decline in a market can have devastating effects on an industry. The opposite can signal an opportunity.
These micro-trends are buried in the broader economic data.
If you can see the trends within the trends, you can shift direction in ways that pay off down the road.
Fight the Right Fight – Pick a Rising Trend
Fighting a big negative trend is hard work. It rapidly consumes resources you may not have.
If you are committed to fighting, try to pick a fight you can eventually win.
Fighting may seem like the only thing left to do. But in business, you are not literally fighting for your life. It may feel like it. It is not. Surviving to fight another day may be the better choice.
Don’t fight a riptide.
A universal law of business captures this spirit.
To survive and eventually thrive, you have to become profitable before running out of resources, time, and money.
Sometimes you can create a new trend. It happens. Infrequently.
Winning is a lot easier to accomplish if you can tie your fortunes to an existing, rising trend.