Plan for Bad Times - Look For Opportunities

‘Designing Strategies’ Newsletter

January – February, 2012 Volume 9 – Issue 45

Coulda, Shoulda, Woulda…

“Coulda, shoulda, woulda…” That’s the usual response we get from my husband whenever someone in the family looks in retrospect. Normally, that means something didn’t turn out quite the way we hoped it would. If we had studied harder, we could have received a better grade. If we had waited just a little longer, that suit, television, snow blower, or computer would have gone on sale and saved us money. If we had handled that presentation better, we would have landed that big project.

The sky’s the limit when it comes to situations where we might have done something just a little sooner, faster or better. If we had, odds are we would have achieved a better outcome. You would think we’d do more advanced planning, wouldn’t you? If we plan for bad times, often we can identify opportunities to change bad times into good. Being aware of potential challenges before they arrive provides the chance to work through a series of ‘What if?’ scenarios. Scenarios lets us plan for bad times before they occur.

Think about this for a minute. Had you assumed at some point in your business planning that a long, drawn out recession could hit, and given some thought to ways you could, or should, react, do you think your firm ‘coulda, shoulda, woulda’ fared differently when it actually did happen? Giving some advance thought to what challenges might arrive on your doorstep allows for time to think through a number of options for coping. Things might be changed. Different approaches might be applied.

How might you have planned for your biggest client or customer leaving you for a competitor? What might you have done when a major customer stopped paying your invoices on time? What if a large sector of your customer base all of a sudden just disappeared? What if one of your biggest vendors or suppliers suddenly went out of business? Too often we blindly roll along from day to day, thinking that life is fine and our business is doing well—until something bad happens. Then, we enter scramble mode, trying, or at least hoping, to get things back under control.

All of these situations, and more, have occurred over the past several years; in many cases with devastating effects. Too many small businesses were hit by the shock and awe of it all. Most had never thought a recession of this scope and magnitude could actually hit their business. They had not created an emergency plan to address major change. A plan for bad times prepares you better to deal with unexpected problems.

I’ve become a fan of Jack Stack, CEO of SRC Holdings Corp. (formerly Springfield Remanufacturing Corp.), in Springfield, Missouri. The organization started in 1983. Stack and a dozen partners banded together to buy a floundering division of International Harvester to save its employees jobs. Today, SRC employs over 1200 people in 17 business units.

In an interview (No More Etch-a-Sketch Planning) in the December, 2001 issue of Inc. magazine, as the US faced a dip in the economy, Stack shared that his company routinely plans for recessionary times. “We’ve been planning for a recession for the past 19 years. For 18 of them we looked pretty stupid. Now we look smart.” Always planning for the hard times, or at least talking about them and how challenges might be addressed can be the difference between a company’s survival or destruction. Planning for bad times before they arrive can make you look like a genius too.

Scenario planning can make a major difference in an organization’s ability to cope with significant changes to your business environment. It can put you in a position to better understand and manage risks that could realistically confront you in the future. Think of the process as asking your leaders a series of ‘What if?’ and ‘Then what?’ questions. What could seriously affect your company’s ability to grow and succeed? What if the cost of oil quadruples? What if incandescent light bulbs become illegal? How might these things affect your business or your suppliers’ businesses?

You might want to give some thought to things that could plausibly become reality in the not too distant future. Identifying potential challenges and how you can address them as part of your annual planning. Understanding how those changes could affect your ability to succeed can put you way ahead of your competitors. Reviewing options for solutions can assure your continued growth in spite of hurdles and barricades thrown in your path.