If there was one lesson we took from my wife’s conference and event management business was that no matter how thorough we were, in every conference or event there was that unexpected occurrence. Something completely unplanned coming out of nowhere that had to be handled, usually in a very short timeframe.
Sometimes such occurrences were not particularly important but others were critical, like the confirmed speaker who disappeared, not even arriving in town let alone at the conference, or the time the sound technician went AWOL on Day 2, with one of the country’s leading politicians due to open proceedings for that day.
Then there was the emergency call we got from an interstate conference organiser the morning their conference registrations were scheduled to open. One of their staff, the one with all the pre-printed delegate registrations, had neglected to tell his management before he got on a plane to fly to Darwin that he had a fear of flying. When he fled the plane he did so with all the registrations and ticket print outs.
So how do you successfully handle the unexpected? There will be times when you are caught off-guard.
Small business does not have the expensive high-tech options the military have. They can afford to spend money on very expensive simulators to practice all sorts of scenarios. The military simulation and virtual training market reached $8.4 billion in 2009; a market that is expected to grow.
Small business does have alternatives that cost a lot less than a simulator. Three tools can help:
1. Contingency planning - Brainstorm all the possible things that could go wrong in your market and in your business. Can you feel a matrix coming on? Matrices are always a good tool to sort out what is important and what is less important.
Likelihood and consequences are the vertical and horizontal arms of your matrix, from Low to High/Significant. What must be considered and planned for are those contingencies which have HIGH likelihood of occurrence and SIGNIFICANT consequences.
2. SWOT analysis is another tool to use. If you use SWOT properly in your planning you will be looking to see how your Strengths can be used to take advantage of the Opportunities you have, or how to overcome the Weaknesses you have if you are to take advantage of those Opportunities.
It is the final sector in the SWOT quadrant that must be considered in this context; what happens when your Weaknesses get in the road on an on-coming Threat? What will you do in that situation?
3. What-if analysis can be used to evaluate the financial impact of changes in your business. Spreadsheets are the tool to be used here. What is the impact of a 5%, 10%, 15% fall in sales for example? What happens to your Gross Profit margin in a discounting war? What happens if both occur together? What happens if there is a blow-out in expenses?
The benefit of expecting the unexpected is that you can plan for that eventuality and having planned for it, prevent the occurrence or be in a much stronger position to successfully handle it. So expecting the unexpected is not so contradictory after all.
© Copyright 2010 Adam Gordon, Profits Leak Detective
Some profit losses are pretty obvious - so you fix them.
BUT, what if you don't know profits are leaking, cash out the door?
Possible leaks could be anywhere.
Are there some clues or symptoms that are tell-tales?