Business Planning: Be Ready to Change in Turbulent Times
Change can sometimes make or break a business. Small businesses that have an effective business plan in place and that successfully navigate swiftly changing currents use these five basic strategies.
Testing assumptions: Most predictions about the future are based on assumptions. Often people aren’t fully aware of those assumptions. Consider a restaurant chain that offers low-calorie healthy fast food, assuming that a certain customer segment will choose its eateries on the basis of healthy nutrition.
However, the chain also assumes that experts agree on exactly what a healthy choice is. If the public begins to perceive nutrition advice as shifting and uncertain, one of the pillars on which the company is built begins wobble. In planning for an uncertain future, take time to consider the assumptions on which your own enterprise is based. Consider how sturdy they are.
Bracketing expectations: Business planning is based on specific expectations. During uncertain times, smart companies bracket their expectations, thinking about what would happen if sales or material availability fell off or soared beyond the norm. The strategy is exactly what professional photographers use when they take the same picture several times at different exposures, just to make sure they get the perfect shot.
A company that uses copper in manufacturing expects the price of copper to remain within a certain range. A company that makes souvenir pens expects to make and sell a certain number of pens each year.
Having a Plan B: Your business plan spells out what you hope to achieve if all goes according to expectations. If you’re competing in a rapidly changing marketplace, sketch out a Plan B that includes the steps the company will take if something unexpected happens.
Identify the most likely levers of change — the introduction of a transformative new technology or a shift in customer demographics, for example. You don’t have to go into great detail. Just chart the direction to take.
A Chicago-based fine art photographer had work that sold well in several galleries in vacation spots like Santa Fe and Sarasota. He decided it was time to open a gallery in Chicago, where he could sell his work directly to the public. He found just the right location and crafted a fine business plan, with reasonable estimates of operating costs and sales revenue.
But he also developed an alternative Plan B, in case his numbers didn’t quite work out the way he hoped. That plan included subletting gallery space to other fine art photographers and using the space for studio photography classes to help pay the rent.
Seeking reliable sources of information: Predictions are most likely to prove correct if they’re based on the best available information. Check out industry-based journals, business reports in trustworthy newspapers, and market assessments from reliable sources.
Tracking changes. Transformations that change markets or technologies may seem to come out of nowhere, but early signs often suggest that change is coming. Keep scanning the horizon for anything interesting that pops up. It could take the form of results from a technology pilot project or a survey on changing customer trends.
Even an article in the business section of the newspaper can tip you off to something brewing. Every time you come across something that piques your interest, ask yourself: How could that affect the business we’re in?