We live in a time of economic uncertainty.
Multiple times a day, economists, analysts, commentators, modellers, advisors, executives and many others analyze every available balance sheet and economic data to understand the current state of the economy.
With the latest technology, we can take any piece of information and then turn it upside down, quantify it, qualify it, extrapolate it, shake it, bake it, etc. We are constantly bombarded with data and headlines that purport to impact our personal financial futures, and we have now reached a point where the constant poking and prodding at the data is doing more harm than good.
If you are always looking for perfect predictions to make promises, chart a course, or take action, an obsession with data can lead to fatal delays and derailments. Just because you have the means to crunch the numbers endlessly and predict every obstacle doesn't mean you should. Take the upcoming US election for example. Every day we see headlines about which candidate's policies will move the market and how those policies may have long-term effects, yet many election promises go unfulfilled. With the stock market rising under every combination of administrations in Washington, delivering average returns of over 10% per year since 1970, timing or trading based on election data would be futile.
After all, nobody has a crystal ball, but history teaches us that wealth comes from acting boldly, early and right. If you take the long view, all the short-term data will have little impact on the validity of your decisions.
Trying to measure and quantify every bit of data will only paralyze you before you even begin. Instead, you should focus the same efforts on figuring out whether your basic business plan makes sense and will work over the long term.
Most successful long-term entrepreneurs also factor in intuition, a keen ability to spot trends, and a refined ability to identify and capitalize on new opportunities.
As a passionate entrepreneur in residential real estate resale, self-storage and property management, here are my top four considerations to help you navigate analysis paralysis.
1. Successful ventures aren’t built on perfection, but on good strategy and good execution.
Great execution trumps great strategy any day. It is essential to understand that where you start is not necessarily where you end up. You will pivot, shift, triangulate, and change direction at least once along the way. Nothing stands still, and all markets are constantly changing. Opportunities are most often embedded in imperfection.
As an early entrant into the self-storage business, we moved quickly to ramp up our services and capacity to meet the sudden surge in demand caused by the pandemic. Many people relocated or rearranged their residences to make space for working and learning from home. At the same time, supply chain disruptions created unexpected commercial demand as retailers transitioned and shifted inventory from brick-and-mortar to online sales.
2. When considering a new business venture, it's best to follow the 70 percent rule.
If you can assume that roughly 70 percent of your basic assumptions are correct, that's usually enough to get started; getting to 90 percent isn't worth the delays and associated costs.
When we began acquiring a North American real estate brokerage network that would later become Peerage Realty Partners, we could not have anticipated the sudden changes that rising interest rates would cause in the residential real estate market, nor could we have foreseen the class action lawsuits that would disrupt our established streams of buyer-side commission revenue.
Peerage Realty was founded with strong, experienced leadership and prudent financial forecasting, which has enabled it to strengthen and grow its business in the face of industry headwinds.
3. The worst outcome of waiting for perfect launch conditions is potentially missing the opportunity entirely..
While it's common to get bogged down in the pursuit of ideal situations and metrics, it's better to judge “very good” now than six months from now. While we face declining sales and rising interest rates, we remain confident that market momentum will return and continue to operate our mortgage, title and insurance businesses. Moreover, doing this work at a more challenging time results in a very focused and lean operating unit.
4. People are indecisive because they are afraid of making mistakes.
This reality often leads to another common mistake: crowdsourcing decisions and seeking affirmation from a variety of sources. While it is always wise to listen, broadly seeking and considering the opinions of others can hinder progress and exacerbate the tendency to overthink. After all, only you know your own assumptions and risk tolerance.
Data analytics is crucial to a company's strategic planning and success, but it's the grit, determination and discipline to stay relevant and adapt execution to make the most of changing opportunities that will separate the winners from the losers.
