Everywhere you go, people are talking about inflation, rising housing prices, and a shortage of parts. While everything is going well in the economy right now, I sense that something is about to happen.
I feel like we are in a deep rest before a battle. It reminds me of a scene from The Lord of the Rings: Return of the King where Gandalf is talking to Pippin on a high balcony during the dark of night before a looming battle. Pippin says, “It’s so quiet.”
Gandalf replies, “It’s the deep breath before the plunge.”
“I don’t want to be in a battle,” Pippin said. “But waiting on the edge of one I can’t escape is even worse.”
The “deep rest before the plunge” has never been more real to me than right now. I sense that some big economic change or event is about to happen. This article is less about predicting what the next economic event is and more about how to prepare for it.
What are the best ways to be prepared for any economic change?
- Understand your cash position. In good times, people can sometimes afford to be a little lax with cash. However, as we enter a pre-economic change, it is really critical to look at your cash position differently. Make sure your supply of cash is strong going into this next economic event.
- Get whatever line of credit you need in place. It’s easy to borrow when times are good, but it’s hard when times are bad. Establish a good relationship with your bank now.
- Make sure you have the right people in the right seats on the bus. During a good economy, we don’t think about this much, but in a bad economy, we pay for having the wrong people in the wrong seats. Look at your positions. Are they filled with the right people?
- Make sure you have good communication with clients. Establish a good rapport with anyone who buys your service or product. Don’t wait until a crisis to start communicating with clients. We saw the problems that this caused during COVID-19. The time to begin interacting with your clients is when you begin the relationship with them, not during a period of economic change. When a change does occur, your communication patterns will already be established.
- You have to know what your flywheel and hedgehog are. During Covid, many people returned to their flywheel and hedgehog. During an economic change, focus on these key elements of your business. Remember, your flywheel is your repeatable process. Your hedgehog is made up of three things: what you are passionate about, what you believe you could be the best in the world at (or already are the best at), and what drives your economic engine (how you make money).
I’m no future teller, but I believe we are experiencing “a deep rest before the plunge.” To prepare for this plunge, or next economic event, examine your cash supply and line of credit, make sure you have the right people in your organization, and define your flywheel and hedgehog. And go read Jim Collins’s book Good to Great. This book talks about how to find the right people for your organization and how to discover your flywheel and hedgehog.
Written by: Wade Wyant
Red Wagon Advisors, West Michigan Scaling Up Coach