The COVID-19 pandemic has already led to major changes in various industries as well as the Canadian economy as a whole. As it becomes clearer what the country’s economic recovery will look like, it is evident that businesses will need to adapt to the many changes affecting them, and must remain agile in order to flourish in light of further market shifts. In a recent article from Inc.com, author and consultant Marc Emmer outlines six ways that business owners can adapt their business to a changing marketplace:
1. Conduct a STEEP Analysis
As a business owner, you should always be aware of the external environment your business operates in. A STEEP analysis takes into account the social, technological, economic, ecological and political trends relevant to your business; your business’s success will be determined by how well it can adapt to these evolving trends.
2. Separate Trends from Hype
Assign members of your team to evaluate external trends in your industry on a regular basis in order to determine how relevant they are. Will these trends meaningfully impact your industry, or are they a distraction from your core business?
3. Scenario Planning
Your strategic plan should include more than one scenario; while you may think you have a good idea of what will happen to your business in the future, you should consider planning for a variety of outcomes. These plans will act as an insurance policy in case those outcomes do occur, saving you from having to plan on the spot.
4. Create a 6+6 Budget
When forecasting the future financial performance of your business, consider using a combination of actual historical results in addition to future forecasts. For instance, consider using a rolling forecast, which involves a re-calibration of forecasts and resource allocation every month or quarter based on what’s actually happening in the business.
5. Business Continuity Plan
In the past few months, many businesses have attempted to implement business continuity plans only to find out that their plans were out of date. As a business owner, you should regularly be assessing a variety of risks to your business and updating your continuity plan accordingly. Some relevant things to consider in light of COVID-19 include: how to contact your employees in case of an emergency, what alternative methods you have to access your documents, information, and data, and how your team uses technology to leverage collaboration.
6. Develop Contingency Plans
You may find it valuable to plan for a number of different specific events so that you already have processes in place when these events occur. Having these processes in place helps to give clarity to your team during times of uncertainty, and provides a framework for making decisions.
An example of such a plan:
Scenario A: Loss of Customer XYZ, 22 Percent of Revenue
Risk Level: Medium
Annual cost: $2 million
While planning takes extra time and effort, it helps to protect you and your business in the event of sudden changes. The future of your business could depend on your ability to plan ahead.