Since 2020 has been such a challenging year, I want to share my thoughts about how as CEO, you might want to conduct your strategic and operational planning process.
No one can predict with any certainty what will happen in the next 6 to 24 months. Ignore both noise and distractions; rely on your own leading trip wire indicators for your company.
First, I recommend planning for the worst. Meaning, your first scenario should be a worst case scenario. What does that look like?
Assume that any loans you have from your bank will be called in; your biggest customers drop you as an approved supplier; your customers drag out payments well beyond acceptable payment terms; your key suppliers / vendors slow down shipments and require payment in advance before delivering; and, key employees depart.
I do not want to spread doom and gloom but here are some interesting observations you should consider:
Airlines are down 80% to pre-pandemic levels; that industry is a leading indicator of many business facing industries (dining, car rentals, lodging, conventions, trade shows, events)
Various industries have seen dramatic changes and swings in demand, both up and down
Government funding has dried up; it is uncertain if additional support will come and if it does, how much and it what form
Companies are finding that, mostly, “stay at home” workers are more productive
Nearly 70% of our economy is consumer based spending; some companies (hotels, motels, bars, restaurants, retail, clothing, and entertainment) will likely go out of business as weddings, religious ceremonies, anniversary and birthday parties, and even corporate events become virtual if they are held at all
In short, uncertainty and volatility are at extremely high levels, and will remain that way for at least another 18 to 24 months.
A worst-case scenario paints a picture for the CEO of what the bottom looks like. You may not be there now and you many never get there but you need to understand what it looks like and what you will need to do if you ever find yourself on the way there.
Second, I recommend creating a two-year, go-forward revenue forecast. Start with the worst case, then create the best case, then develop the most-likely case scenario.
How do you do this? You first identify the key assumptions for each scenario. As an example, for my manufacturing companies, I have recommended creating different plans based on the possible time frames that Boeing and Airbus will turn on the growth spigot again.
Following crafting the assumptions, create building blocks of your different revenue streams. As you go through this process you need to set “trigger points” that will require additional actions if things happen, or don’t. To make it easy, the trigger points can be laid out in a “If this, then that …” format.
Third, your future is totally dependent on your clients. Make certain that you have a clear and concise plan for staying in touch with those buying from you. Ideally, you want to understand what their strategies are and what their forecasts look like. Focus on building stronger relationships.
Finally, don’t forget about “new cheese.” In times of uncertainty there are opportunities to land new clients. Don’t be afraid to pick up the phone and call prospective clients.
Ken Keller is an executive coach who works with small and midsize B2B company owners, CEOs and entrepreneurs. He facilitates formal top executive peer groups for business expansion, including revenue growth, improved internal efficiencies and greater profitability. Email:[email protected] Keller’s column reflects his own views and not necessarily those of the SCVBJ.