“A rising tide floats all boats….. only when the tide goes out do you discover who’s been swimming naked.”
This is Warren Buffett’s addendum to the famous ‘rising tide’ quote.
So what does it mean?
When things are good all businesses are making money but when things turn south many are exposed.
The flip side of that is many highly successful long-term businesses achieve their biggest gains during low tides as they win market share from the naked swimmers.
I was speaking to a 40 year old business recently who’s CEO jumped up on the whiteboard and mapped out their business lifecycle over the last 40 years, highlighting 4 moments where the Business significantly grew. Each of these moments coincided with economic downturns. The reason they grew was because they chose to invest whilst their competitors were doing the opposite, meaning they had better quality people and capacity for growth when the cycle turned.
In Australia, the tide’s been coming in for 27 years (last recession was in 1991).
It would seem there has been a change in season and the tide is starting to go back out – banks have tightened credit supply, residential construction has slowed considerably, the uncertainty created by a federal election/change in government and the US/China trade war keeps heating up.
How well equipped are you for the change in season? Over the next few articles we will prompt some reflection around how aligned your business model, strategy and structure is to the environment.
Finally, a ‘save the date’. We will be running a workshop on this topic on Thursday May 23rd.