The 1,057 Point Swing

The 2016 presidential election results surprised everyone and created much uncertainty in many quarters. Often uncertainty produces fear about what’s going to happen in the future. There’s no doubt that many people have expressed such fear in recent weeks. I watched the election results during the evening of November 8 and remember how futures for the Dow Jones Industrial average plummeted as much as 800 points on the prospects of Donald Trump being elected president. Then when the markets opened on Wednesday, November 9, the Dow marched ahead closing up 257 points. This is a swing of more than 1,000 points in less than 24 hours. What the heck happened?

It’s pretty clear to me that there was a great deal of uncertainty surrounding the direction the election results were headed. This uncertainty produced much irrational fear that drove the markets lower. When cooler heads prevailed the irrationality evaporated and the markets moved up. What is the byproduct of uncertainty and fear? It’s opportunity. It’s my opinion that the greater the level of uncertainty the greater the level of opportunity.

I attended an affordable housing industry conference a week after the election. There was a lot of hand-wringing and pessimism. A number of attendees were convinced that support for affordable housing was going to decline and the industry would blow up. No doubt there are some potential threats on the horizon, but there are an equal if not greater number of opportunities. As entrepreneurs we have a choice to make. It’s the classic “glass half-full or half-empty” choice. There’s no question that things can and will happen that are less than desirable – that’s an absolute. It’s how we prepare and deal with them that matters.

At the industry conference I sat on a panel and posed the following question to the audience. I’ll pose it to you as well. “How many of us have a strategy to deal with the effects of uncertainty?” Out of a room of 750 people maybe two or three hands were raised. Was your hand raised? It’s so easy to become lulled into a sense of complacency. We think we know where our business is positioned in the marketplace, and we generally understand the direction our industry is headed. But then something happens to completely upset the apple cart. Simulating various scenarios and their impact in advance of such occurrences can be very helpful in identifying potential courses of action. But there’s still a healthy dose of optimism that is also required.

The real test for us is how we react to uncertainty. Do we immediately begin envisioning all of the negative possibilities? Or do we lick our chops at what uncertainty could mean in positive terms? Some entrepreneurs thrive on uncertainty. They run toward the disruption caused when things don’t go as planned. Why? Because they know how to adapt. They modify their strategy to fit the current situation. They are nimble and opportunistic. They are unafraid and know how to manage risk.

We too can learn how to use uncertainty to our advantage. To do so we must constantly be looking at a multitude of “what-ifs.” What if the election goes a certain way? What if interest rates increase? What if our top salesman walks out the door? As we cycle through the various possibilities, we weigh the pros and cons. And only seeing the cons misses the entire picture. There are always silver linings in whatever happens – we just have to look and find them.

One of the biggest threats to our affordable housing development business is the prospect of corporate tax reform. Investors use a federal affordable housing tax credit to help fund our developments. If the tax rate goes down, the value of the credit is less and there are fewer funds available for development. With the election of Donald Trump and a Republican Congress, the prospects for corporate tax reform are much improved. But we’ve been hearing about corporate tax reform for the past several years. And tax reform won’t cause the demand for affordable housing to be any less. So even before the election, I’ve been mulling over other ways to deliver affordable housing should the tax credit be diminished or even eliminated. We do have a strategy to pursue an additional product set that will enable us to continue providing such housing with or without the credit.

When we develop a strategy to deal with the effects of uncertainty the sky is the limit. We are able to move forward with confidence and optimism while others may be mired in negativity and limited thinking.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 23 – Misplaced.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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Pluses and Minuses

There’s one thing of which I’m certain . . . I think. Have you ever had this kind of feeling? We entrepreneurs are a pretty confident lot. We are scrappy and tough. There’s nothing we can’t do including leaping over tall buildings in a single bound. Throw us a challenge and we’ll whip it with one hand tied behind our back and blindfolded to boot. Right? Well, maybe. And most of the time.

Entrepreneurs have several “thought enemies,” one of them being gnawing and nagging doubts. Here’s a not-so-fictional example. Let’s say that things have been going pretty well in our business and we’ve had some nice wins along the way. Then we hit a little speed bump – perhaps a contract doesn’t get signed that we thought we had in the bag. Or an important customer stops doing business with us. In other words, we get knocked off our game a bit. That part we can handle with aplomb as we go on to sign another contract or we fix the problem with our important customer. It’s what happens next that can be perplexing.

After we’ve been bucked off the horse so to speak, we begin to have feelings of doubt. For example, we are ready to introduce a new product or service, but we wonder if it might flop. In the past, we would have launched without any trepidation, but now it feels different. Could something else go wrong that that might cause everything to come unraveled? We know that these gnawing and nagging doubts aren’t healthy and could become self-fulfilling prophecies. Yet still they are there and hard to push out of our mind.

Why is our confidence shaken, and doubts have entered the picture? I’ve thought about all of the times this has happened in my life and believe it centers on a rather recent failure in the past. The earlier example that I gave where the contract or customer was lost illustrates this notion. Coming off of a failure makes us wary and more sensitive. As entrepreneurs we have winning in our DNA. Failure is for losers. And yet we do fail and we do lose. Sure we’re resilient, but we can’t ignore what it felt like to fail and lose and we don’t want to experience it again. And so we’re vulnerable to doubt and uncertainty. Subconsciously we’re thinking, “I’m sure what I’m doing now is going to work, but if it doesn’t, I don’t want to be hurt again.” We find ourselves moving forward but wondering . . . always wondering when the other shoe will drop.

Here’s what I’ve learned about myself when these insidious doubts start creeping into my consciousness. I step back and take inventory of all of the positive successes that I know lay in front of me. I may have just lost a deal, but there are ten more that I believe with all my heart will succeed. Now here’s the key – even if only half of the ten deals actually succeed, I’m still way, way ahead. In other words, I’m not looking at the glass half full, but I’m looking at multiple glasses and every one of them is overflowing. Immediately my mindset changes and all is right with my world again. I’ve accepted the fact that I had a prior setback. I’ve accepted the fact that I’ll have more setbacks in the future. But I know that the pluses will always far outweigh the minuses and the winning score will be in my favor – overwhelmingly!

Gnawing and nagging doubts are usually a product of a recent failure. We get past such feelings by looking at the scoreboard and realizing that we are way ahead in the game. Ultimately this makes us unbeatable.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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