Why Scenario Planning for Your Business is Like Yoga for Your Body
Posted on 31st March 2017 in Business
Written by Freya Hughes
If you’ve never heard of scenario planning, let’s position it as your yoga habit. It’s a discipline that works to unify your mind, body and spirit. While we cannot guarantee spiritual epiphanies, FUTRLI can certainly calm the mind. Planning for all eventualities, you can relax with confidence knowing your business is in under control…which means plenty more time for yoga on the beach.
When you’ve invested time, money and love into your business, all you want is to see it blossom. You know already that you can’t 100% accurately predict what’s around the corner, but you must be prepared for whatever might come next. You wouldn’t start a work out without stretching, so when making a decision in business it’s essential to do so with as much preparation as possible. Stand strong in your warrior pose and be ready to tackle your next challenge.
Not having a business forecast is like turning up to your yoga class wearing chainmail; expect clunky, disjointed and worrying movements. If you’re kitted out in lycra, then you can mould your business to where you want it to be.
Make scenario planning a habit and stretch your mind
Essentially, you’ll be reviewing 2 or 3 options for your business. Imagine your warm up. You need to be ready before you put your body through its paces. You’ll want to achieve something from your class and this is what scenario planning is: the improvement of skill. As you progress, you’ll notice your body toning up. As you plan for eventualities, you’ll notice your business looking stronger and ready to cope. You’re looking to do this in a defined time frame. Let’s imagine a very basic example: you want to buy more equipment. You’d want to know that, firstly, you have enough in the bank, and, secondly, that you’ll get a good return on that investment before you went ahead with the purchase.
FUTRLI doesn’t limit you with forecasting, so you can look as far into the future as you need, to explore so you can feel secure in your decision. You’ll need to commit to this, as you would a hobby. Going to yoga 3 times a week is going to get results, fast. This routine is applicable to your business. Clear your mind and diary to think about different scenarios and make it a habit.
Scenario planning is similar to your ‘what if’ predictions – you can even think of them as one. If your goal is to expand, then do you have the capacity to grow in a region or nationally? And what will the impact of that growth be on other areas of your business? You’ll need a clear idea of how much revenue will return to the business, and how quickly it’ll come in, to see if it’s a worthwhile project. Similarly, taking on new staff members is a gamble. With scenario planning you’ll be able to play with start dates and the number of people you might hire. Don’t stretch your cash too far – you can alter the details of their employment to better suit your bank account.
Prevention is better than cure
Scenario planning is used by accountants and business owners to be forward-looking and to stay ahead of potential events, rather than reacting when they occur. In reality, this would be like taking up yoga to battle arthritis before any symptoms set in. Of course, it should be noted that scenario planning is only as effective as the actions you take – with an unstable market, you can’t predict what’ll happen next but developing a strategy for an event will help determine how to act. Think of it as a baseline to work from; planning and preparation is half the battle. A flexible plan in place will de-stress your life as a whole – all of those ‘what if’s that keep your brain in overdrive can be put to bed for now.
A useful feature of scenario planning with FUTRLI is its ability to conduct multiple scenarios. Use as many as you like, perhaps starting with a best, worst and middle case scenario for each question you’re asking about your business growth. The more you do it, the stronger the position you’ll find your business in. This technology gives you the tools to plan for as many eventualities as you like – having a base scenario and layering other options on top will let you change the position of your business quickly and confidently.
Flex your business’ muscles
The day-to-day operations of your business might keep you busy fire-fighting, the simplicity of scenario planning will, once set up, allow you to extinguish these ‘fires’ and give you more focus on your trajectory. Use it as a navigation tool, a compass to get your business and mind through the clutter of life. Yoga’s deep breathing and meditation practices help shift your focus to something a little bit bigger than the issues you face. This is the same with scenario planning. The discourses you’ve opened your mind to will help you see the bigger picture and actually understand your business and market better.
And why else? Because using an automated system will mean real-time data will be automatically sucked in from your accounts package (eg Xero, QBO). Using the cloud, the ins and outs of your cash flow are constantly updating so admin days become (thankfully!) a thing of the past. Your sales can change so quickly that the budget will be unrecognisable by the second quarter of the year, and not resembling your actual results by the end of the year. Conducting forecasts and creating scenario strategies on a frequent basis will help you to feel more grounded and calm. And breathe…