When Political Shockwaves Hit Business
Inflection Point
One weekend in July 2024 there was an assassination attempt on former President Trump, and on the following weekend came the withdrawal of President Biden from the presidential race. These events are a stark reminder that socio-political shockwaves arise unpredictably. Yet they can have great impact on growing businesses. Leaders need to be prepared to deal with such inflection points.
(published July 22, 2024)
For example, the 911 attack in 2001 yielded a steep stock market drop, declines in travel and tourism, increased insurance and security costs, supply chain disruptions, plummeting consumer confidence, and delayed investment in business due to uncertainty. Some were short-lived, but others marked a lasting inflection point.
Unpredictable as such events may be, the leaders of growing business (which don’t normally have sophisticated risk planning regimes) can help mitigate negative impacts by implementing a few practices that serve well at any time:
Build resilience and flexibility into operations including your selection of suppliers and partners and by maintaining alternatives.
If possible, prioritize geographic diversification of your customer base to reduce dependency on any single region that may undergo upheaval.
Customers are impacted by such shockwaves too, so constantly reinforce customer relationships through excellent support, adaptability, and communication to build trust and loyalty that can survive crises.
Assure you have access to emergency funds or flexible credit lines for the liquidity needed to navigate turbulent times.
Engage in scenario planning by postulating various potential shocks based upon history, then develop a list of actions for each that would help your company withstand the potential repercussions.
Of course, it is impossible to anticipate every event, as shockingly demonstrated over the last two weekends. Moreover, with a laser focus on the immediate needs of perfecting product-market fit and on scaling, growing companies have little time for prognostication about other things. Yet shockwaves will come.
Let these shockwaves be the impetus for your company to spend a little time thinking about potential inflection points and what you can do to mitigate their impacts.
Bill Haines, Partner