Brexit and the US Presidential Campaign Should be Daily Reminders to Scenario Plan in Your Business

Posted on 12th October 2016 in Forecasting

Written by Daniel Killoran

The old way of comparing unwieldy spreadsheets by using pivot tables is a cumbersome task. In an offline, manual-driven admin world it is easy to think that ‘hoping for the best’ is a sound business strategy. However, the cloud has changed everything including what-if analysis and forecasting. With no degree in Excel required, it’s easy to plan and predict the future so you have confidence no matter what.

With the US presidential vote happening in less than one month and, nearly 4 months on from the UK’s ‘vote of a generation’ Brexit, the word still on everyone’s lips is uncertainty.

Pre-vote we had hopes, fears and every wild prediction under the sun. Post-vote, depending on what you read, these predictions are either happening, not happening, might happen or might not. The only constant is the uncertainty.

We wouldn’t hire anyone from this management team…

bury-head-in-sand

While it can be argued that uncertainty is bad news for business, with the lower spending and the reluctance to invest, there is another side to the coin.

With uncertainty, any number of scenarios may play out, each of which will probably carry risk. Now risk is made up of downside risk but also upside risk. We are already seeing increases to tourism projections because of the weaker pound and UK exports (depending on supply chain exposure) are materially cheaper.

SMBs can’t bear the brunt of the damage

Smaller businesses have limited ability to hedge currency exposures so it is a challenging environment post-Brexit. However research is coming out to say that SMEs may actually be safer. An investor survey by IW Capital found 52% intended to support SMEs following a Brexit vote with that number increasing to over 70% for the under 35s. Reasons for this varying from a beneficial regulatory environment to the inherent risk involved with small business at least being a known quantity.

What all of this uncertainty and risk means is that planning is more important than ever. Big accountancy firms will tell you plan, plan then plan again and what this should mean to you is scenario planning.

Plan to see the financial impact of imports getting cheaper should the pound recover, plan for if it does not. Plan for tariffs, plan for inflation, for investment fund opportunity and anything else that could materially affect your business. The other option is burying your head in the sand…and that isn’t really an option is it?

Plan to plan but don’t plan for that to take hours

With FUTRLI you can quickly set up scenarios then copy them over, changing key assumptions in line with the different scenarios. As time goes on these forecasts will be replaced with actual data. This actual data will not only show you which scenarios are still reasonable but it can also directly feed in to the forecast, making it an ever updating, ever relevant set of predictions.

Hoping for the best and firefighting is a dangerous business strategy. With the foresight gained through scenario planning you will be able to spot opportunities and act on then sooner and, importantly, see the iceberg before it’s too late.

Try it for free

Don’t just take our word for it. See how easy it is to create forecasts and business reports in minutes…

Start free trial