In Florida, storm clouds often rush in when least expected. Heavy downpours occur, strong lightning, wind and rain come – seemingly out of the blue. Could that happen to your business as well? Are storm clouds lurking far away that could appear quickly and significantly disrupt your business?
What if you lost 30% of your revenue overnight?
In 2004, I had my Vistage group do an exercise where they presented a plan to the group as if they lost 30% of their revenue overnight. Many of the Vistage members pushed back on the scenario, saying it was very unrealistic that would ever happen. However, they begrudgingly did the exercise and created a restructured organizational chart and budget reflecting what their business might look like if they suddenly lost that much revenue. Based on feedback from the group, they fine-tuned their plans to ensure they were feasible. We hoped they would never need to implement those plans.
Does your leadership have plans for 70% reduction in revenue?
Several years later, the economic downturn occurred, hitting some of those same businesses hard. Several members told me that they wished I had asked them to present a plan for a 50% or 70% reduction in revenue rather than just 30% because that is how significantly their businesses were impacted by the downturn. Thankfully they had a good starting point for the changes they needed to implement since some of the toughest decisions had been identified during the exercise in 2004.
What is your backup leadership plan?
I feel that it is very important for every business to have a backup plan for what they would do if something significantly impacts the business in a negative way. Those who have a plan can more quickly take action in an objective manner, rather than letting emotion influence their decisions. Those Vistage members who had a plan going into the downturn weathered the storm much better than those who had no plan. And those who took quick action to right-size their business also survived and recovered more quickly once the economy started to pick up again.
Are you prepared for 2017?
As we move into 2017 and you prepare your plans for growth, I’d highly suggest that you also consider a backup plan in case any distant storm clouds rush into impact your business.