There was Never a Normal...

Disruption is Normal

I continually hear people say they can’t wait for it to get back to normal, meaning pre-pandemic conditions and at the same time there are a lot of voices talking about the new normal. I don’t believe that anyone can actually explain what normal was or will be in the business world. Has there ever been a normal? If you think about business in terms of a timeline, I believe you would see that there has been a continual pattern of disruption throughout our history here in the U.S. and while we have had periods of relative calm, they have often been disrupted and business has had to change and adapt to the new paradigm which then became what is often called normal.

Going back in time the United States has a history of disruption:

• Industrial Revolution occurred between 1876 and 1900 followed by the civil war and the completion of the cross-country railway system in which the country entered a period of rapid growth.
• The age of science and mass production between 1900 and 1950 during which the country experienced the Great Depression.
• ?The age of science was followed by the digital revolution also known as the 3rd revolution and lasted from 1950 to 1970.
• The country experienced the oil embargo between 1973 and 1975.
• Second energy crisis in 1980
• Double-dip recession from 1981 to 1982
• S&L crisis 1990-1991
• Tech bubble from 1995-2001 and the bursting of the Dot.com tech bubble in 2000
• The attack on the World Trade Center; September 11, 2001
• 2001 Enron implodes
• 2002 Stock Market crash
• 2003 The Iraq War was launched
• 2005: Hurricanes Katrina and Rita
• The great recession due to the sub-prime mortgage crisis that lasted from 2007 until 2010.
• Black Lives Matter movement starts
• 2016 Presidential Election of Donald Trump
• In 2020 the world experienced a major pandemic that has disrupted the entire supply chain and business as we know it, which we thought was normal. ?

Certainly, during every period in between, I am sure people described that particular period of time as normal only to have it disrupted and a new form of normal evolve. With all this disruption in the U.S., what really is normal, and can we define it? History has a tendency to repeat itself and hopefully, we have learned from the past.

Through all the various revolutions to business, depressions, recessions, dot-com crashes, housing crashes and pandemics, one thing is true, disruption to the business environment is what is normal. So, when we talk about the new-normal, what are we really talking about? I believe we are talking about what seems to many, periods of clam, between every major disruption. But the reality is that those periods of calm will not last, and as history has shown, more disruption is guaranteed to be coming our way. The problem is that business owners tend to get complacent when it is calm.

With the anticipation that the clam we may be experiencing in business may not last and more disruption is coming it is imperative that business owners start preparing their businesses to be adaptable and flexible in order to not just survive but to thrive during these challenging times and the ones to come. What is really normal in business is disruption and the need to learn to be flexible and agile. Businesses like human beings, are living breathing entities that must adapt, evolve and change in order to survive. Adapting to a constantly changing environment is what is normal in business.

I can remember a time when it was suggested that business must create a 20-year plan for their future, that evolved to a 15-year plan, then a 10-year plan. Planning for 10-years out is not realistic in our fast-paced business environment today. The business environment is changing much to rapidly for a 10-year plan to be effective. As a business owner you have to adapt and evolve at a much faster pace than ever before. I believe that even five years is too far out to look ahead and plan. Too many things will change to make even a five-year plan effective, and three-years may be too far out as well. Twelve months may just be the new norm.

It is important to understand that what got you to your current state in business pre-pandemic may not be what you need to get you to the next step in your business progression. Pre-pandemic business was running smoothly, and many businesses were making good money, the norm, then like hitting a brick wall in your car doing 80 mph it all came to a screeching halt. Many business owners had become complacent thinking that this pre-pandemic environment was normal, and it was going to continue for a very long time. If you are thinking that as soon as the pandemic is over, business will return to what was considered normal, I think you are in for a rude awaking. Too many things have changed, and we are entering into a new age of business requiring us to reevaluate, adjust, plan and move forward at a much faster pace. The strategy that the business had pre-pandemic may not be the same strategy that will work post-pandemic. The future of the business environment has once again changed. Those who adapt to this change will excel moving forward.

What will this future of work look like post-pandemic is anyone’s guess, but every business still needs to adhere to some key business principles and evaluate and adapt to what will be considered the new face of business.?

Has your Strategy changed?

It’s time to rethink your strategy and is it clear how you will add value to the customer and meet the customer’s needs coming out of the pandemic? Those needs may have changed and thinking it will be business as usual is a huge mistake.

How do you determine if your previous strategy is still effective or not? By communicating with your customers more often than you probably think is necessary. What are their needs post-pandemic, how has their business changed, what can you do to meet their new needs? Having a clear strategy on how you will meet and exceed customer needs is the first step to a thriving post-pandemic business

Reevaluate your Vision of the future:

There has always been a need to have a clear vision and direction of where the business is going. It’s most likely that your previous vision, if you had one, has changed. We can no longer look out ten years or even five years but need to be thinking of where you want your business to be in the next 12-months based on the information you have obtained from communicating with your customers and business intel you gather on the current business environment.

I recommend that every business create a plan of where they want their business to look like in the future. Before we begin any journey, it is important to know where we are starting from. What is the current state of the business, which has most likely changed, and what do you want it to look like a year from now? Looking out in the future no further than a year allows you much more flexibility to adjust, adapt and change with the constantly changing business environment.

Examine your Core Values: The business should continue to articulate and operate from their core values; this has not changed. In fact, in difficult times, it’s important to evaluate your core values and determine if you were truly operating from a set of clearly defined values or have you drifted away from them, and is it time to bring them to the surface to determine if you still believe and operate from the same set of core values.

Upgrade your Leadership Skills: Leadership is more critical now because of the changing business environment. The leadership skills you used pre-pandemic may need to be re-evaluated and it may be necessary to upgrade your leadership skill sets to deal with a rapidly changing business environment were employees want to be engaged and be a part of something that is bigger than themselves and provides meaning in their lives. Whether your business does well or not will come down to effective leadership. You can’t rely on leadership skills you learned 20 or 30 years ago. It’s time to upgrade your leadership skills.

Talent Management is more critical now than ever before: The current reports coming out in the news are saying that there are a lot of jobs with no one to fill them. This is due to a number of reasons, employees afraid to come back to work because of Covid, parents not having a source of childcare in order to come back to work, individuals making more money on unemployment and government programs so there is not an incentive to return to the workplace.

All of these factors make leading and managing the workplace environment even more critical. Employers competing for a limited labor pool will resort to offering higher wages, better benefits, and varying work schedules to accommodate the changing face of employment. The new experience of working from home has also disrupted the traditional business environment and many former employees who were accustomed to coming into the office every day, no longer want to be in the office creating greater challenges to leading and managing your talented employees.

Have you evaluated your Marketing and Sales plans? The methods of marketing and selling in your businesses has changed dramatically due in part to the digital revolution. If you have not examined your marketing methods and evaluated its performance, then it is time to do so. Doing the same thing over and over again expecting different results is a recipe for slow sales.

Selling has to be a proactive activity. We can no longer wait for it to come to us, we need to be going after it and the way to do that is by proactively communicating with your customers. Remember that strategy is determining what it is that the customer needs and then meeting that need. You do that by communicating with your customers and it is the same with sales. If you want to sell more, communicate more. If you want to sell less, communicate less.

Focus on Operations: With fewer employees applying for work and increased wages, businesses need to work on how to create more throughput, with the same production cost or less. The way to do that is through efficiencies and mechanization. If you as a business owner have not value stream mapped or process mapped your business in a long time, now is the time to do so and remove waste from your processes and procedures. Meeting the customer needs in the most efficient and effective manner possible is critical to your financial success. Sometimes, mechanization is the only way to improve output without increasing labor.

Financial Management is a day-to-day activity: With every disruption in the business environment comes a disruption of your financial stability. Managing your finances is critical to your success. During the pre-pandemic norm, many businesses were making very good revenue, and some became complacent. The business environment has changed that, and if you were not practicing good financial hygiene pre-pandemic or pre-any any kind of business disruption, your business is going to feel the effects in a more dramatic manner.

The numbers drive everything in your business and understanding the numbers is important to your financial success. We can’t run our businesses from the seat of our pants but must be intensely focused and have a thorough understanding of our finances.

Make friends with your Banker and engage Advisors: It’s always good to have a good relationship with your banker and that takes being proactive. When business is going well, we tend to not communicate with our banker as often as we should, and many times when business is not going well, business owners will hunker down and communicate even less with their banker. This is the wrong approach.

Your banker wants you to be successful and they understand the strain on business when there has been a disruption. Develop your relationship with your banker during the good times and it will pay off when the bad times come, and they always do come at some point. Enlist advisors to provide a non-emotional outside-the-box view of your business. They often will see things you cannot see. ?

Think building wealth rather than avoiding taxes: I completely understand the desire to not pay the taxman more than you have to, but in minimizing your tax burden, you may be creating bigger problems. In order to avoid paying taxes, many business owners try to spend their money at the end of the year. This, however, is a short-term strategy that will have a long-term negative impact on your business.

When you are thinking about avoiding taxes, you are not thinking about creating wealth in your business. Maximizing after-tax revenue to build wealth is a much more effective long-term strategy than focusing on avoiding taxes. Without having created wealth in your business, you will have difficulty getting any kind of bank financing should you need it or if you decide to sell your business, it will not be as attractive to a potential buyer.

Business wealth will also help you to navigate and thrive during an economic disruption. Not having any kind of cash reserves in the business and needing to borrow from the bank for either short-term or long-term financing will not be possible if you have been focusing on tax avoidance rather than wealth creation.

I don’t have a crystal ball and cannot predict the future of business and work, but I do know if we get lulled into thinking that when business is steady and going gangbuster that this normal, we are essentially driving our car waiting to run into a brick wall with no seat belt on or airbag deployed for our own safety. We need to be prepared and we need to follow these fundamental principles of success in any business. It doesn’t matter what business you are in; the principles are the same.

If you would like to know more on how to increase your top-line revenue and maximize your bottom-line revenue, give me a call, 503-312-3145 or visit my website for more articles and tips.

Gary Furr, LLC