Improve Business Operations Today by Planning for the Worst Tomorrow
Hope for the best, and plan for the worst. As a small-business owner, that’s one adage you can’t afford to ignore. Proper planning can be the difference between a business weathering the storm or succumbing to the elements. You already know the importance of a clear business vision — measurable goals, key indicators, and an assertive growth strategy — but your business plan also needs to include contingencies to keep you on track even when things don’t go your way.
Why Planning for the Worst Is a Smart Business Strategy
A huge part of success in business is focusing on the future and your specific measures of success. You don’t want to become sidetracked by worrying about everything that could negatively impact your business, but those potential hiccups can’t be overlooked, either. The best way to avoid distraction and anxiety is to have a plan in place.
When your business is at risk, you will want to be prepared. Whether it’s a power outage or a natural disaster, here are a few of the crucial ways planning for a worst-case scenario can help you.
- Save Time: When a plan is already in place, you won’t waste precious hours scrambling for a solution.
- Save Money: A plan should get operations up and running as quickly as possible. That means less downtime, which is crucial when every minute may equal money lost.
- Instill Confidence: Your customers, investors, and employees will be reassured when you have a strategy in place to deal with something out of left field.
How to Plan for the Worst
It’s easy to create a bright picture of the future and everything you want to accomplish, but it can seem more difficult to plan for suboptimal situations. The good news is that if you know how to plan for the best, you already know how to plan for the worst — just use the same strategic principles in reverse. These critical actions will help you put together a proactive plan for dealing with worst-case scenarios.
- Identify and Examine External Factors: In order to prepare for something, you need to know what’s coming. Take a close look at current economic conditions, market size, competition, technology, and industry trends. This examination will help you identify potential threats to your operations on a daily, monthly, and quarterly basis.
- Recognize Internal Threats: Some worst-case scenarios are homegrown. Examine how prepared you are for a key performer falling ill or leaving, a data breach, or poor financial planning.
- Ask “What If” Questions: Brainstorm through possible situations that could negatively impact your business. Formulate responses to avoid or counter each scenario, and include these solutions in your plan.
- Question Assumptions: Whether you realize it or not, there are likely many assumptions built into your business strategy. Even believing your business is industry-changing could be founded on assumptions rather than evidence. Review your core beliefs about your business and its strengths. Identify and vet beliefs that may be based on assumptions before continuing to use them as the foundation for your growth strategy.
- Learn from Others’ Mistakes: Conduct case studies of how similar companies deal with adversity. Look at companies that came out the other side as well as ones that weren’t able to recover. Find out what led to the companies’ troubles and how their actions led to success or failure.
- Create Key Risk Indicators: Just as you have Key Performance Indicators (KPI), you should also develop Key Risk Indicators (KRI) that will help you identify what numbers or trends indicate trouble ahead. Identify warning signs that may jeopardize your company, monitor them, and know what corrective action you will take if they occur.
- Develop a Bare-Bones Financial Model: A bare-bones financial model is a worst-case financial forecast that shows what your business would look like if everything was cut to the minimum. Planning for this scenario before you experience it guarantees that you will survive even if the worst happens.
Once you know how to think about worst-case scenarios, you need to apply that critical analysis to the most vulnerable parts of your business — data and people. Make sure you are properly prepared by following our guidelines.
Create an Effective Cybersecurity Plan
Cybersecurity is more than passwords. A survey by Nationwide found that 79% of small businesses do not have a plan in place for a cyberattack. To protect your proprietary knowledge, customer and employee data, and other sensitive information, you need to employ a robust cybersecurity plan.
- Conduct an Inventory: The first step is to understand the types of data your business holds. Next, identify what measures are currently in place to protect that data. Make sure only employees who need to access specific data can do so.
- Keep Good Records: Once you’ve identified all the data in your organization, create a comprehensive record of what it is, who can access it, how long it will be kept, and where it is located. Update this as needed to improve and ensure ongoing security.
- Put the Right Protections in Place: Strong cybersecurity relies on layers of protection. Your plan should include a combination of passwords, encryption, firewalls, and backup methods. Some of these elements can be deployed internally, but it is also smart to use a third party — like Frontier Secure — for expert protection and backup. Frontier Secure stays up to date to protect your devices from the latest online threats.
Create a Viable Succession Plan
Succession plans are liable to incite anxiety and dread, but they are a crucial part of keeping your business afloat if important members of your team are no longer involved. When you or another crucial team member is injured or decides to move on, the best way to keep the business alive and kicking is with a specific plan that outlines who will step in and take over.
- Look to the Future: Effective succession planning is necessary for both short- and long-term company goals. Different phases of your organization may have different leadership needs. Keep in mind where your business will be when considering the type of person who should be at the helm in the future.
- Consider Outside Talent: Succession planning doesn’t need to be limited to internal talent. When you broaden your scope, you also expand your company’s potential success. Likewise, consider people from various departments who show potential. Think outside current definitions and titles to make sure you put the best people in the right positions.
- Don’t Keep It Secret: Make sure everyone in the organization — from senior managers to frontline staff — knows about and understands the succession plan. Business-wide engagement and buy-in is a key to the plan’s success.
Bottom Line Benefits of Worst-Case Planning
Preparing for the worst is beneficial if potential threats affect your business. However, planning for trying times also helps you run a leaner, more progressive business right now.
- Sort Needs from Wants: After putting your worst-case scenario plan together, you might discover that you could do without things you previously thought were necessities. If you have been looking for ways to boost your profit margin, these discoveries could be a quick and painless solution.
- Face Your Fears: Many business owners avoid planning for tough times because they’re afraid to consider that things could go south. The mere act of putting a plan together forces you to face those fears. You may come out with new optimism and determination to keep those doomsday scenarios from ever becoming reality.
- Renew Your Resilience: Knowing that you are prepared for whatever may happen can boost your confidence, help you steer your company into the future, and allow you to take risks that will better position you for success.
Although business planning usually focuses on the positive, taking a detailed look at potential downfalls is just as important. Bolster your business by planning for success and preparing for the worst — you’ll be thankful you did when you bounce back after a potential disaster.