Pooh and Piglet walked home thoughtfully together in the golden evening, and for a long time they were silent. ~A.A.Milne
Yesterday, June 21st, was the Summer Solstice, the longest day of the year. I went for a late evening walk to catch the sunset after 9pm and walked in silence like Pooh and Piglet. As I walked and mused on the fact that this marked the end of an era, as it was also the day my youngest of three sons sat his final school exam and so marked the final day of his school career.
For myself and their mother, this marked the end of a phase of life, of being a parent at the same school for the past 24 years. We are happy to have been able to provide them with the opportunities that have come with that, including that each of our sons has built friendships over their own 14-year journey at their school that will last them a lifetime.
Each year is marked by seasons, by changes in the length of days. Like a year, each life is marked by phases and cycles within each phase, and the same is true for business and the broader economy.
For business leaders, perhaps today is a good time to pause and reflect on the fact that each business has internal cycles and is subject to external cycles. Each cycle also has phases, so the more we bring awareness to cycles and phases, the more we can be and feel in control of our response and plan accordingly.
At the moment we are entering into a time of high inflation and high interest, something that has not happened for well over 30 years in the global North. What do you do about this for your business, particularly if you have never had the experience of this before?
In short, there are elements of these phases and cycles that are understandable and predictable and we can learn from the past and look ahead and so plan and act accordingly in the right away and at the right time. Just as each year we can plan ahead for the seasons, for your business when we know interest rates and inflation are spiking we can predict and plan to a large extent.
I was around in the 80s as a young Chartered Accountant trained in and working with accounting standards that included a high focus on inflation and “current cost accounting”. I have then had a 35-year career with many repeating phases and cycles.
I love being in conversation with new people, so visit my site and book a zoom if you would like to sound out your own thoughts, concerns and potential opportunities.
I close with one thought I am focussing on right now, which is the shift that will come in the market for buying and selling businesses. In recent years we have seen Private Equity fuel valuations thanks to their plentiful low-cost capital. However, with the cost of capital rapidly increasing, I am reminded of the Buffett phrase “nobody knows who is swimming naked until the tide goes out”. I often work with business leaders on everything from succession and sale of their privately held business to listed companies focussed on growth by acquisition. Now we know that inflation is not transitory but here to stay for some time, the game is going to radically change. If you are in the business of selling or buying businesses, the phrase “may we live in interesting times” comes to mind!