The COVID-19 pandemic has emphasized the importance of adaptability for companies. Many businesses have had different experiences than they had planned for 2020. But that doesn’t mean all is lost.
As you make plans for 2021, remember that you’ll likely have to 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 to create plans that are adaptable 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 the 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?
In times of crisis, 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, pick 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.
- 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 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.
|Scenario 1||Scenario 2||Scenario 3|
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: Repeat and Re-Evaluate
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 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.