It’s Chaos
We have a channel in our Slack instance where people at Permanent Equity can post all of the funny things we see in pitch decks. Recently this has included a company that had a slide devoted to its “superb marketing strategies,” which included “email, brochures, and business cards,” and also a business that described the functionality of Microsoft Excel at length so prospective investors could get a better sense of its “proprietary estimating software.”
But the best of the recent bunch was a struggling consumer products company that clearly decided at the last minute that its deck needed a SWOT analysis and so hastily (or lazily) put together a 4x4 that included being “battle tested” as a strength and “world chaos” as a threat.
I mean, it’s hard to take something like that seriously. That said, and I’m not being glib here, if world chaos is a threat to your business – provided what happens falls short of apocalyptic nuclear war – you might rethink how you’re running things.
What I mean by that is that world chaos is standing in here as a risk factor that is (1) inevitable and (2) would have a blanket effect on everyone. That means competitors, too. So if you’re running things the right way and in a position to outlast them in a crisis, world chaos would be an opportunity for a business to gain market share, do acquisitions, and hire away talent.
That’s because the consequences of chaos aren’t evenly distributed. It exposes weak balance sheets before strong ones and companies that don’t have pricing power before those that do. For example, during the pandemic, when air travel ceased, our airplane parts business was able to operate from a position of strength because it had no debt while competitors had built entire businesses around selling highly-levered, low-margin, high-turn inventory. When that model broke, they pulled back and sought liquidity, while we hired and reinvested. Looking back, the team was able to make maybe 10 years of progress in 12 or so months.
In other words, if “world chaos” is listed as a threat on your SWOT, one of two things is true: either the SWOT was hastily (or lazily) pulled together or there’s something you’re doing that’s making you more fragile than maybe you should be.
– Tim
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