A clear-eyed look at the landscape today makes a few things clear: Planning
COVID-19 and our societal response is incredibly disruptive, and wreaking havoc for many
Uncertainty about what the “new normal” will be, and the route to get there, is unclear – and will be for an extended period
One thing we do know for sure: there will be significant changes!
In a March 23-25th survey by the National Center for the Middle Marketrevealed:
86% of survey respondents reported that COVID-19 had an immediate negative business impact with 25% believing it will be “catastrophic”
78% expected growth to decline, 70% planned to pull back on growth initiatives, and 64% thought they would be shrinking workforces
The average expected drop in sales was 46%
51% said that the “ongoing uncertainty” is the most difficult aspect to manage now
Sobering indeed. Across the board, business leaders we’ve spoken with over the past few weeks are unclear and concerned about how they will get through the next few months. Even when parts of businesses seem solid, there’s unease about “wild cards” and recession.
How can business leaders plan more effectively in these volatile and opportunistic times? As our global economy adjusts to the multi-faceted impacts of COVID-19, businesses are in for a turbulent for 6-18 months.
How turbulent? Think about whitewater rafting on a Class 4 river with “whitewater, large waves, long rapids, rocks, maybe a considerable drop, and sharp maneuvers may be needed.” If this sounds apropos, think about three transitional objectives:
First … Stay Afloat!
How to survive over the coming weeks and months? First things first; keep the doors open:
Manage cash flowand access available liquidity
Keep team members safe, engaged and onboard
Take care of basics with customers, operations, suppliers, and other stakeholders
Use trusted advisorsto get help as needed
Keep the faithand hold on!
Many companies will determine viability in this phase.
Next … Assess, Anticipate and Plan.
As the first shocks diminish, companies get a breather. While the turns ahead are still unclear, companies can stabilize and organize to navigate through the turbulence ahead.
How can you prepare? Four steps will be difference-makers:
Assess changes underway in markets, suppliers and your business
Scenario plan and financially model different “futures” based on different assumptions,
Formulate key actions, dependent on which scenario emerges, and
Determine leading indicators that trigger when, where, and how to pivot
With planning and preparation, clarity and confidence grow. While future is murky at best, you’ll be better prepared to respond to whatever comes your way.
Then … Prepare Your Pivot(s)
Although there will still be uncertainties and surprises, your ability to navigate will improve as you:
Apply agile planning discipline, watch leading indicators and discern trends
Pivot to the plan that’s right for each phase of the emerging “new normal”
As the crisis subsides or lessens, review and re-plan to navigate the new normal
There is no right answer in our current environment. This can be challenging for leaders as people look to you for answers. It’s important to not feign certainty of what’s coming, and to openly share what you do know when you know it.
The next best thing to having the answers is to have solid plans for the options ahead. At Shepherd Advisors, we’re helping companies use scenario planning to improve probabilities of surviving the turbulence and thriving in the emerging new normal.
Email us if you want to learn more about scenario planning and our PIVOT 2020 regimen.