How’s your business plan for the next year or two? Hopefully, it’s all over the place. With so many conflicting reports about the state of the economy (”green shoots” versus “double-dip recession“) and where inflation is headed (”it’s going to soar!“, “beware deflation!“) only a fool would have a cast-iron plan in place.
Or, as turnaround expert Jim Weight puts it, “You’ve got to be downside protected.” A former finance director at Westminster Healthcare (it used to own the Priory rehab centres) and HIT Entertainment (which makes “Bob the Builder”), Weight has also helped several businesses where there has been no Plan B.
“I come across it a lot,” he says. “The MD convinces himself that rather than plan to make a lot of his friends redundant, he’s going to perfect that all-important sales pitch, the money will come in and everything will be fine. Occasionally it is — but often it isn’t.”
If the pitch doesn’t come off, you still have to find a way to survive. So, when confronted by optimistic salespeople — and, after all, you pay them to be optimistic — you have to know what you’re going to do if their expensive sales trip doesn’t yield results. Having that downside protection plan ready to roll in the bottom drawer of your desk is essential.
And, right now, you need plans C to Z as well. What if the economy does improve rapidly? What if inflation takes hold? What if demand from overseas markets soars while the UK stays in the doldrums?
What if a major competitor runs out of cash and you need to expand quickly to fill the vacuum? Even devoting just half an hour at every board meeting to scenario planning one situation so the key decision-makers know roughly how they’ll react is time well spent.
Two other things worth adding. Financial muscle is always important, whether you’re working to Plan A, B or Z. Companies with robust balance sheets — that means cash and manageable liabilities — always look more attractive to customers.
Don’t forget that your strategy probably remains the same whichever plan you’re executing. Strategy is defined as succinctly articulated, long-term goals. Any of your plans should be able to move your business towards them — even during uncertain times.
(Check out the Chartered Institute of Management Accountants’s guide to maintaining strategic direction through a downturn, too.)
