Most businesses spend a lot of time, money, and energy trying to take uncertainty out of their business models. Everyone likes predictability. In a company, predictability makes everything work better. Banks, business partners, investors all make decisions based on how predictable and accurate a company’s forecasts are. If you have ever worked in a publicly traded company, you know that the stock market builds a company’s forecasted results into the future stock price. When actual results don’t live up to forecasts, the company’s stock price is punished. The market does not like unpredictability.
Unfortunately, there are events far outside the control of companies…things like presidential elections. No matter what side of the aisle you are on, as a businessperson the worst thing about presidential elections is the uncertainty they create. As the country moves into the general election phase of the 2016 campaign, the “uncertainty” factor begins to seep into the minds of the average voter, and therefore, the average consumer. I am a staunch believer that businesses can deal with whatever candidate gets elected. Nobody’s going to move to Canada if their candidate doesn’t win. I always find those comments by celebrities amusing.
We have a few more months of uncertainty as the candidates go around the country promising people they will fix every problem and blaming the other party for all the country’s ills. It’s an ugly, cringe-worthy exercise that costs billions of dollars, and it won’t change in my lifetime.
My one hope for this election is that it doesn’t deteriorate into the elongated process that happened in the 2000 election between Bush and Gore. Can someone say “hanging chad”? For those of us who remember the election, it was incredibly close. No winner could be called. The Supreme Court had to vote to decide who won. This delay went well into the holiday season in 2000, and by then you could cut the uncertainty with a knife. When people are uncertain, they don’t spend money, and during the holidays this is devastating for a retailer.
I was running a retailer that had just gone under a major store expansion during that election year. All normal business metrics supported increasing the store base in anticipation of a robust holiday season. I never thought a “hanging chad” would cause us problems. But, it did. Consumers could not deal with the uncertainty of the election results and stopped spending money on discretionary items, which is what we were selling (apparently people don’t like to spend $30 on a candle in tough times!). It was the beginning of the end for the company.
I am not naïve enough to believe that uncertainty alone caused the demise of that company, but it didn’t help. I hope we don’t repeat anything close to the angst of the 2000 election. This last year has been the strangest presidential campaign in my adult life. Trump turned everything upside down. Maybe that’s good. Maybe that’s bad. One thing for sure…it creates uncertainty. If you own a business, that’s not something you want to deal with.