First, what is scenario planning and analysis? Scenario planning has been used for many years within the military to plan strategy and create preparation for the unexpected. The importance of planning and scenario analysis in our business environment is that it enables us to develop competencies in strategic planning and decision-making. It also allows us to build a plan to be prepared for any eventuality or occurrence.

After building and enacting the planned scenarios, the key result is to analyze those scenarios and how your company handled them and document the lessons learned. Then you should come up with an action plan that helps you minimize the weaknesses you have discovered and maximize the strengths.

Many business owners have yet to accept the importance of scenario planning. But if your company develops a series of scenario plans, analyzes the results, and comes up with an action plan, you will be better prepared to handle any number of events that occur with increasing frequency. For example, the impact of a massive power failure, the impact of a hurricane or tornado; the impact of fire; the impact of a significant misappropriation of your business funds; the impact of a major economic failure (ie bankruptcy) of one or more of your major customers; the impact of your bank going bankrupt or closing its doors; the impact of a severe skilled labor shortage; and so on. If you read a national newspaper, listen to the news on the radio or television, or go online, you can read, watch, or hear about at least one (and on a bad day, many) of these events on a daily basis; recognize that these events can have a serious impact on your business.

Is your company ready and prepared to handle such an event? By committing to planning and scenario analysis, you will not escape these events, but you will be much better equipped to handle them.

Actions to take:

1. Build some specific scenarios. Do this every year. Maybe two or three scenarios a year.
2. For each scenario, consider political, environmental, social and technological (PEST) driving forces. For example, if your scenario is the impact of your bank closing its doors: Are there political driving forces that can help your business (will the legislation protect you)? What about technology (for example, if you do a lot of business with credit cards instead of cash, you can contact your credit card company to see if they can redirect payments to a new bank account with very little time to pay). anticipation, i.e. with a phone call)?
3. Detail your preparations to manage a specific scenario. What did you do? Why? Who was important to the problem and problem management? Did you have the necessary contact information? Create a timeline of the events during the scenario simulation. When did the stage peak? What was the most effective and the least effective of the actions you planned?
4. You can define indicators of that scene? For example, in the scenario of a bank closing, what were the first warning signs? If you can’t think of this yourself, look for analysis of these “real” world events (check online and offline).
5. Once you’ve done some research, prepare a list of indicators for every scenario you may face. What can you infer from the scenario? For example, in the scenario of a bank closing, you can infer that other banks could also be in trouble, therefore, before choosing a backup bank (which could be one of the results of your scenario analysis); you need to check the health of the bank. You can also infer that legislation, insurance, or other changes could arise from that scenario. How will you handle those results?
6. Analyze your business response to the scenarios you have created. What have you learned? Look for your weaknesses and your strengths. Create a plan that will allow you to minimize the impact of a serious event that you cannot control.

Don’t wait for bad things to happen to your business; Participate in scenario planning and scenario analysis so your business is prepared and in control of how you handle your way through challenges.