July 6, 2023
Every entrepreneur dreams big dreams — and it shouldn't be any other way — but sometimes things go awry. To be successful, especially in 2023, a new business needs to remain flexible in its processes and develop easy-to-understand contingency plans in case the idea isn't as big of a hit as expected. Expect that surprises will happen continuously, and it will be your reaction to them that will make the difference between success and failure.
Planning for setbacks is not negative thinking; it is prudent and will help you be prepared mentally and strategically. Having a "plan b" and even a "plan c" in case things go differently than forecasted will help you pivot your business direction quickly when needed. Keep a notebook or file specifically for this planning, write the potential problems down, and have the action plan/solutions ready before they happen.
Have budgets that include different realized sales targets, and plan your cash flow projections accordingly. Include projections that integrate sales that reach "On target" (100% of target), "Overachieve" (120% of target), and "Underachieve" (80% of target) numbers. What will this do to your monthly cash burn rate? Understand that market conditions will change from quarter to quarter and year to year, meaning you will need to navigate.
Establish banking relationships before you need them. The long-standing joke is that banks only lend money to people that don't need them. This can be true. Have a bank relationship and, ideally, arrange loans before it's an emergency. A line of credit from your bank, for example, need never be used but can be critical when you hit a bump in the road. Your budget needs to include a plan for a possible decline in sales.
Expect that surprises will happen continuously, and it will be your reaction to them that will make the difference between success and failure.
Staff Turnover. Even the most loyal staff leave companies. Therefore you must have contingency plans and (new hires) in line. ALWAYS be hiring in the sense that you continuously have a strong pipeline of candidates. "Network" in your industry, not only to grow but also as a "plan b" if a key person suddenly resigns. Expect that your staff resources, both senior and junior, could change at any time and be ready to fill the gap.
Unpaid Invoices: Just made a big sale, great! But what if they don't pay !!!?
For more on this, see the article "How to collect on an unpaid invoice."
Will you be able to manage the stress? Managing a business is about the key leaders managing their own energy and focus first. See our article. "Stress Management for Business Owners."
Want a business hack to all of this? Hint: ... keep a journal that includes "Threats & Challenges" to your business, and regularly do a "what if" analysis that includes unexpected setbacks that could occur and what you would do to react.
For more advice, support, and information on ways we can help, please contact us - Curtis Mackenzie - MD New Frame KK www.newframe.jp