A Serenity Prayer for the Entrepreneur
Managing People, Production and Markets During the Coronavirus Pandemic
- The Coronavirus has altered our economic reality and we are all still trying to make sense of the long-term effects on our lives and our businesses
- This article provides an overview for a series of articles focusing on how small businesses and entrepreneurs are responding to problems they face
- The goal is to offer a frame of reference to understand emerging business realities and help entrepreneurs find better ways to get things done during this infection point
There are problems, and there are conditions.
You can manage problems. You can’t manage conditions. You can only hope that the conditions eventually change and become problems you can manage.
Until then, as the storm of economic disruption whips around us, let us all open our prayer books and end up on the same page: None of the business failures and struggles appearing from the Coronavirus are our fault. But cleaning up the mess will be our responsibility and finding a safe harbor must be our immediate objective.
Fortunately, our policy makers have given many businesses and organizations room to maneuver. We have invented a new form of economic forgetfulness in the past 90 days, and it’s an amazing accomplishment that our business infrastructure did not completely crumble during this period. Banks are providing forbearances to landlords, landlords offering rent holidays to businesses, businesses are using government money to float payroll, suppliers and creditors have paused in respect for the conditions we face.
Unfortunately, that’s not sustainable and, within the next three to six months, most of the intractable conditions will transform into nearly intractable problems.
The most recent economic forecast from the Congressional Budget Office (download here) in early July offers a dire perspective. A 5.9% decrease in Gross Domestic Product and an unemployment rate of more than 10% at the end of the year. By comparison, these numbers will make the 2008-09 recession look mild. Wages among those who hold onto their jobs will stagnate, and the output gap (a measure of the lost economic potential) stretches negative through 2030.
That’s a daunting sum of lost resources, a polluted ocean of wrecked economic vessels bobbing helplessly in the storm.
The Condition Our Condition Is In
And, if that were not enough, the added uncertainty of social unrest and a highly consequential Presidential election looms in front of us. The reality of structural racism has shackled vast portions of our community, limiting their potential economic contributions. The subset of our economic decision makers that thrive on the volatility trade continue to feed off the instability created by this President, but that is a damaging trade for anyone trying to build a lasting, stable business. These conditions will persist for the near term, but better decision making in the corporate offices and at the ballot box might soon give us reasonable problems for us to manage.
Over the next six months, our conditions include:
- A persistent public health crisis that will not go away until a vaccine arrives, as masterfully chronicled by Tomas Pueyo
- A divided political system that will drive differences in consumer behavior
- Intense dissatisfaction in and distrust of key economic and political institutions
- An extraordinarily fluid monetary policy that will give rise to dramatic shifts in the banking and finance sectors
Broadly speaking, the manageable problems include:
- Making your workplaces as safe as possible, either by virtualizing them or changing the physical work environment
- Finding the “comfort zone” for your customers, in terms of your interactions with them and your ability to serve them
- Strengthening your banking relationships to take advantage of opportunities and responding to potential threats
- Communicating your real economic situation with your vendors, suppliers, landlords, etc. and anyone with whom you have a substantial economic relationship
- Talking with your employees about their fears, their problems, and how you might be able to help them cope with them
About This Series of Articles
Business and political reporting tends to focus on the national dynamics, but macro political or economic trends can become a dangerous distraction to entrepreneurs trying to stay afloat. We cannot control the stock market, affect interest rates, or obtain the market power required to reduce our cost of capital. We do not have the power to change the economic conditions. Our goal should be to identify tractable problems and address them as systematically as possible.
We entrepreneurs should therefore seek our primary navigation from local trends and as much real time information as we can gather about microeconomic performance. Fewer people will be going out to malls, movie theaters, and restaurants. Industrial production will face continued gaps in the supply chain because of disruptions from coronavirus hotspots as they continue to flare. Many of these changes will be due to local effects, arising in the near term from public health issues but, over the medium and longer term, from structural changes in consumer behavior.
A focus on local conditions is increasingly important as the public health crisis evolves. Clearly, “red states” are responding differently than “blue states” and, even within states, the variation in consumer behavior is turning out to be substantial. The aggregation of national data will have its place, and all these micro trends should be placed within the context of the national economic and political scene, but evaluating what’s going on around you in your local neighborhoods and communities will be critically important.
This article is the first in a series, combining first person accounts of the economic change in my Philadelphia region with an examination of economic projections and business data from a variety of sources. As a disclaimer: my family has been in real estate development and ownership for more than 70 years, and, as the CEO of our management company, I have the privilege of interacting with hundreds of businesses and organizations each day as tenants, suppliers and partners for the work we do. I am also an active investor and participant in multiple companies in the software and technology business, and have had the honor of serving as a political appointee and staff member for Democratic politicians at the local, State and Federal levels during the course of my career. Many of the stories that I bring to this discussion will come from the businesses and people with whom I interact. My economic interests influence my opinions and the companies I choose to include, and my political views will be in evidence as I suggest changes in fiscal and monetary policy to support entrepreneurship and reduce income inequality. I will try to be explicit in these articles about what I reasonably believe to be economic fact, the nature of my relationship to the businesses I use as reference points, and the data sources that help guide the assumptions behind my reasoning.
The series will contain four types of articles:
- Winners and Losers: Even though the near-term winners and losers are readily identifiable, the longer-term gains and losses are yet to be realized. These articles will profile specific businesses, and the steps they are taking to overcome the problems they face.
- Infected Economies: Articles with this title will examine economic data and attempt to make sense of it within a local frame of reference. I will focus on the Philadelphia region as it is the center point for my work and investment, but I will attempt to provide tools and datasets that others can use for their own local regions.
- Contaminated Politics: More than ever, local businesses and entrepreneurs rely on government to provide assistance and clear guidance to help us through. The severe divide between the parties, mixed with the fear that policy makers face in making any decisions, will bear heavily on our individual and collective success.
- Finance and Funding. We bailed the banks out in the last recession. So far, they’ve done a pretty good job in bailing us out through the Paycheck Protection Program (PPP) and other government efforts. These articles will track the next phase, as we find out if financial institutions will sustain or abandon the businesses they serve.
Ultimately, like all the business and organizational leaders profiled in this series, I am also trying to understand what is happening around us and make the best of it. My hope is that the insights I share, and the feedback you provide as readers, help us all emerge from this crisis with our health and businesses intact.
Let us pray.