The Covid-19 pandemic has forced every business to look ahead and answer questions they’d never had to ask to before. And as the uncertainty persists, you’ll need to plan carefully to meet whatever opportunities and threats lie ahead.
You’re best placed to know what’s right for your firm in a volatile climate. But having an independent expert to help ensure that you’re heading in the right direction can prove invaluable.
Our experienced advisers are on hand to help you get your business in shape for an unpredictable future.
Planning for uncertainty
When nobody knows quite what’s round the corner, it’s important to plan for all eventualities.
That’s what scenario planning is for. It allows you to formulate flexible medium and long-term strategies, based on a detailed assessment of a range of plausible situations.
Scenario planning is vital when evaluating new markets, acquisitions or investments. It reassures stakeholders that such initiatives have been properly stress-tested and will generate value for the business.
Scenario Planning – A vital planning tool during times of uncertainty
One key area that is often overlooked when budgeting and forecasting is scenario planning (or ‘what if?’ analysis) but this has never been more important.
Budgeting is a vital financial management tool: it allows you to track how much has been spent against planned expenditure, it can help to identify potential future issues such as crunch points on cash flow, and it also helps with longer-term planning through forecasting future cash and reserves levels.
The importance of budgeting is heightened in current times, where circumstances are changing on what seems to be a daily basis.
One of the difficulties in making plans, budgets, and strategies at present is the level of change and uncertainty (although after Brexit and now COVID-19 perhaps uncertainty is the ‘new normal’) and so there is a greater need for businesses to be nimble and flexible.
Better financial information allows better decision making, and it is therefore important that decision makers have relevant and accurate information when making those decisions.
Scenario planning allows organisations to make flexible medium and longer-term plans. It allows senior management to make more informed decisions that are based on an assessment of many and varied situations.
So, what is scenario planning? It is making assumptions about the future and seeing what impact these will have on the future of your organisation, what it does, and how it does it.