The life of a small business owner has always been a wild ride. You have good days and bad days, successful years and lean years. But at least there were constants in your life, such as the length of your commute, the gym you attended, or your favorite place in the city to grab a drink.
Now the turmoil introduced by the COVID-19 crisis has shattered our illusions of normalcy and exacerbated any existing unpredictability. If you thought it was hard to forecast in 2019, you felt the full fury of entropy in 2020.
“The coronavirus pandemic has introduced extreme uncertainty into nearly every aspect of society,” explains a business analysis from the Harvard Business Review. “Will healthcare systems hold up? Will scientists develop a vaccine? Are essential workers safe? When can regular employees go back to the office? The answers to these questions—when there are answers—seem to change daily. And with each change, the stock market (and our hopes) rises or falls. Since the COVID-19 pandemic began, we’ve seen pervasive uncertainty manifest in a sudden and massive divergence in macroeconomic projections.”
Yes, the past 18 months have brought an endless stream of questions. How have you felt about the answers? As noted above, the problem wasn’t an absence of opinions on various COVID-related issues. It was their validity. You might hear an expert emphatically state something on Tuesday only to hear it contradicted by the new consensus on Thursday.
Within this tornado of truth, it was difficult to look ahead. For many entrepreneurs, the future seemed like a low priority compared to the emergencies they were dealing with on a daily basis. Even if you had the energy and time to consider your next financial quarter, it was nearly impossible to feel confident in any type of trend or prediction.
It would be understandable for any business owner to throw their hands in the air and decide to ignore forecasts entirely. Yet, I think that would be a mistake. The chaos of the pandemic is beginning to dissipate as a sense of consistency slowly returns to our lives. Are things back to normal? Nope. But they’re settling down, which is allowing trends to emerge.
This phenomenon is probably familiar to any readers who are parents. Prior to the birth of your first child, you probably had many routines in life. Given the stability you enjoyed, there was the luxury of comfortably planning for events and trips. You didn’t know exactly what tomorrow would bring, but you had a fairly good idea.
From the moment your baby is born, life is thrown upside down. Your sleep habits become a joke, and your work life becomes anything but routine. I remember a morning when I arrived at work late because I’d stayed home to watch my daughter take some of her first steps. Later that day, sitting at my desk at work, I was forced to rush home after receiving a frantic call from my wife. My daughter had fallen onto the coffee table in our living room and split her lip open, requiring a trip to the ER. Like I said—having a child removes predictability from your life.
The pandemic obviously brought a much higher level of turmoil than child-rearing. But with the proliferation of positive factors such as stimulus programs and vaccines, it’s becoming more like it is for empty-nesters when those crazy kids grow up and move out of the house. Consistency and peace of mind are once again possible.
“The divergence in economic forecasts should narrow somewhat going forward,” insists the Harvard Business Review. “Greater clarity will emerge on the effectiveness of recent stimulus, and any further fiscal or monetary measures will likely be more modest in scope. The gradual lifting of lockdowns will facilitate the collection of economic data. Our knowledge of the virus and its spread will improve […] While the coronavirus pandemic poses a unique challenge to macroeconomic forecasters, the profession has faced similarly profound shocks in the past and emerged fortified. The global financial crisis of 2008 caught most economists napping. But the insights gained in areas such as the economics of financial contagion and the impact of unconventional monetary measures have improved the quality of today’s forecasting models.”
In this post-pandemic world, there will always be surprises (many of which will be unpleasant). But you can trust in our ability to learn. The challenges of the past are informing our future, which is why forecasts are becoming more accurate. We should never trust a prediction completely, but we can base our business decisions on trends. And each passing day is providing more actions to steer the trends and more data to inform the forecasts.