Are your business plans strong enough to reach your goals, yet flexible enough to adapt to changing circumstances?
No matter how well we think we can predict the future, all businesses must adapt and roll with some punches. Creating plans that account for potential scenarios you might encounter can provide the leverage needed to quickly pivot and adapt in times of crisis.
These seven steps can help you create adaptable plans so your business can still achieve its goals—even when things out of your control might not go as planned.
All you need is the right plan, a strong level of commitment and effective implementation.
Step 1: Determine Your Current Situation
The best starting point in planning for the future is to determine where you are now. What’s working well? What isn’t?
Determine your current priorities, pinpoint your key issues and identify your present opportunities. You won’t be able to document a plan for the future without creating clarity around your current situation.
Once you’ve established what your current outlook is, test your perception of your business’s situation. Use a diagnostic tool to help you gain a bird’s-eye perspective of how you’re performing in key areas concerning your business’s profit and growth. (We recommend also asking other leaders in your team to complete it as well so you can consolidate the data and compare different views on what the key issues are.)
Having a solid understanding of where you are now and what your company’s key issues are will help you to lay strong groundwork for implementing the strategies that will accelerate the growth and profits of your business.
Step 2: Identify Where You Want to Be
Create your plan by outlining your vision or future plan with strategic initiatives. In comparison to your current situation, what are your goals for the future? How will you resolve your key issues and take advantage of the right opportunities?
When the future seems particularly uncertain, it’s tempting to plan in short timeframes, but we recommend extending your timeframe to be between six months to a year.
The plans and strategies you implement may include initiatives such as profit, growth, employee engagement, technology, acquisitions, divestments or even exit, depending on what your vision is for the future.
Step 3: Consider What External Factors Will Influence Your Business
Reflect on the external factors that are likely to influence your business (such as political, economic, social, technological, legal and environmental factors). Consider how these dynamics may play out by the end of your planning timeframe and how they may impact your business plan.
From here, identify the two factors that you believe will have the biggest impact on your business in the timeframe you’re considering.
Step 4: Develop Potential Scenarios Based on These Factors
Use the two factors you identified to develop three potential scenarios of the impact your business might feel as a result. For example:
- Scenario 1: Both factors result in high impact to the business (high overall impact to business).
- Scenario 2: One factor produces high impact, and the other produces low impact (medium overall impact to business).
- Scenario 3: The other factor that was low in scenario 2 produces high impact, and the other produces low impact (medium overall impact to business).
For example, if the two factors that you think will have the biggest impact on your business are personnel issues and government legislation, your three scenarios might look like this:
- Scenario 1: High business impact from personnel issues with high impact from future government legislation (high overall impact to business)
- Scenario 2: High impact from personnel issues with low impact from future government legislation (medium overall impact)
- Scenario 3: Low impact from personnel issues with high impact from future government legislation (medium overall impact)
Step 5: Test Your Plan Against Your Potential Scenarios
For each of the three scenarios, list the key resulting attributes that can impact your business, and then compare the scenario to the strategies and plans you’ve set (in Step 2). Your objective is to make sure that your plan can withstand each of these scenarios—not to assess the probability of each of the scenarios.
A helpful method is to use a grid with your strategies listed vertically down the page and three scenarios listed across the top.
Next, make notes in each box as to how you would adapt your strategies to succeed in each specific scenario.
Step 6: Adjust and Finalize Your Plan
Using your notes, consider if there are permanent adaptations that you should make to your business plan based on the scenarios you’ve identified. Embed your best ideas back into your original plan.
Step 7: Evaluate and Prepare to Repeat
The scenario planning process can be repeated on an annual or biannual basis determined by the level of change in your industry, the economy or in your business.
Once you’ve come to the end of the planning cycle, begin again with Step 1 to evaluate your situation and revisit the diagnostic tool to help test your perspectives.
Creating Adaptable Plans for Your Business
No one can predict the future, but you can position your business to withstand uncertainty. For more information about how to evaluate your business’s strengths, weaknesses and opportunities today and into the future, connect with your Warren Averett advisor or ask a member of our team to reach out to you.
This article was originally published on October 28, 2020 and most recently updated on September 14, 2022.