Our biggest fear is the unknown. The “unknown” is scary. What is it? When it manifests itself, how do we deal with it? What impact will it have? 

You see where I’m going with this. The sensible advice we often hear is, deal with what we can control and don’t worry about what we can’t. Fantastic advice but when the “non controllable’ hits the fan, what do we do then? Ignore it?

I was co-hosting a Success Authorities video cast called Conversation St. this morning with colleagues Linda Ruhling and Ronn Lehmann and our guest was Patrick Donahue. During the conversation, I asked Patrick what he thought were some of the biggest challenges facing CEO’s. You know what he said…”the unknown”. Exactly. 

It’s a little like how our mental state changes before and after a visit to the Dr. We make an appointment because we don’t feel quite right. After all the tons of paperwork, we finally get to see the Dr. and tell them the symptoms and they ask questions. They may do a physical exam and then they deliver the possibilities and maybe prescribe some medication. When we leave the Dr’s office our mental state is usually much better. The symptoms or the cause of the symptoms haven’t changed, but we now know what we are dealing with and some action is being taken to make us better. We are back in control! Or at least we think we are.

So how do we minimise the effect and  wrestle back control for the “unknown’. Scenario Planning. Let’s look at why scenario planning is so important:

Risk Mitigation

It helps businesses identify potential risks and uncertainties in advance, reducing the impact of unexpected events. It also encourages proactive rather than reactive decision-making. In othere words, face the uncertainty before the uncertainty faces us.

Improved Decision-Making

It forces leaders to think about multiple outcomes, which sharpens strategic thinking and flexibility. It also ensures decisions are solid across a range of possible future scenarios, that frankly, had not been thought about before.

Competitive Advantage

Small businesses can adapt more quickly to changes compared to larger competitors when they’ve planned for different scenarios. This can result in positioning the business to seize unexpected opportunities much quicker than companies that have long drawn out decision making and complicated processes.

Resilience Building

This activity encourages a mindset of adaptability and preparedness, which is critical for navigating economic shifts, technological changes, or market disruptions.

Face the Future with Confidence

Lastly, buy facing the worst scenarios, our mindset is ready for the worst and we can be confident we can handle it.

How Can Small Businesses Do Scenario Planning?

1. Start with Key Drivers

   Identify the most significant external and internal factors impacting your business (e.g., economic trends, technological changes, customer behaviors)

2. Develop Plausible Scenarios

   Create 3-4 scenarios based on variations in these key drivers (e.g., best-case, worst-case, and moderate-case scenarios).

3. Assess Impacts

   Analyze how each scenario could affect your business operations, finances, supply chain, and customer base.

4. Stress-Test Strategies

   Evaluate how your current strategies perform under each scenario. and adjust plans to ensure they are resilient and flexible.

5. Engage Your Team

   Involve any employees you may have and other stakeholders in brainstorming and scenario development. They offer valuable perspectives and increase buy-in.

6. Monitor Key Indicators

   Identify signals or early warning indicators to help recognize which scenario is unfolding. and set up a process to review and update scenarios regularly. Items on a weekly scorecard for this can help.

7. Integrate into Business Planning

   Make scenario planning an integral part of your strategic planning cycle rather than a one-off exercise.Use it to inform decisions such as market expansion, investment, or product launches.

8. Simplify for Scalability

   Small businesses don’t need complex models. Focus on qualitative insights and actionable steps to keep it practical and impactful.

Scenario Panning is a really useful tool to that makes us better prepared and less fearful of the future. It also forces us to be more strategic rather then less the tactically and reactionary focused.