The End of Easy Money
Let’s talk about the end of easy money today, and see what that could mean for us as business leaders.
I was reading a post from an economist that I follow last week and it was around the end of easy money and the return to fundamentals. And the first reply to that post – not normally something I read – but it said something to the effect of, “Return to fundamentals? What does that even mean?” And I got a little bit deeper into that particular person’s profile, and it was clear that they hadn’t been in the business world for very long and that they were an enthusiast of some of the new investment opportunities – NFTs, crypto, etc. And it dawned on me, you know, some people just don’t understand what the last 5 to 10 years, easy money, has meant, in terms of what people prioritize and how people build companies.
But for those of us who have been through cycles before, it still made me wonder, for 5 to, you know, 10 years of this state, how much of our views and actions have been shaped by all these headlines of runaway valuations and the emphasis on speculative assets and their perspective growth.
This return to fundamentals really boils down to two key things in my beliefs, which is number 1 profitability, and number 2 durability, or resilience.
So, when you’re in a hard money environment, or a neutral environment, focusing on profitability through systems and delivery improvements, is something that is of universal need, the durability conversation, right, so that’s just not one that over the last 10 years was had very often in the marketplace. When COVID started, you started hearing it come up for a little bit, but it lasted about 6 months, when we realized that, you know, in some form or fashion we were going to be ok. I didn’t hear much talk about durability or resiliency.
Much like planting a tree, the best time to think about and act on business durability is 20 years ago. And the next best time is today. So do things like investing in your people, building contingency plans, and making sure that all of your lead and lag indicators for your business performance are the right ones. They’re going to tell you what you need to know to predict what’s going to come next as well as to look back and make improvements.
So the end of easy money, return to fundamentals. The way that I personally get energized around that is building profitability and building resiliency into your business drives real long-term value. It might not be headline stuff. You might not get any magazine interviews as a result of it. But it’s lasting. And it positions you to be here tomorrow and beyond.