Let’s face it: there is no more uncertain time than now. You’re trying to run a business and plan for the future during a worldwide pandemic, an event that last happened in 1918. Nobody was prepared for this; the pandemic creates uncertainty even in industries that are doing well. (That doesn’t even mention that you need to do this act while monitoring your sixth graders’ Zoom math class and worrying that your mom goes to the grocery store way too often.)
But you still have to make plans. You have to guess what your inventory needs will be and how much labor you will require. Or whether you should convert your business to making masks and hand sanitizer.
Forecasting for uncertainty isn’t easy and it’s certainly nerve-wracking, but there are good and bad ways to go about it. I learned a couple of the don’t’s the hard way: with abject failure. Yeah, a big, ole belly flop in the pool when I’d been planning on a graceful dive. But, as they say, you can learn a lot from failure. I did. And you can learn a lot from my failure too, you lucky devil.
Learn From My Failure
About three years ago, Office Accomplice was kicking it. We were acquiring clients, bringing in revenue, expanding the business. So I decided to add to our client offerings by providing HR services.
I was ready to grow and grow big! I hired an employee with HR experience—who wasn’t cheap—as well as a manager to oversee bookkeeping operations, freeing up my time so I could conduct business development. Sounds good, right?
What went wrong? In a word: everything.
The plan didn’t work. Even a little. It was DOA. I had a full time person on payroll who didn’t have enough work to justify full time hours. She also didn’t have the necessary sales experience (or desire) to woo clients. Bottom line, she didn’t bring in enough income to pay for her costs.
The bookkeeping manager was also a failure. How should I put this? She didn’t do her work. I don’t know what she was doing during the time I was paying her, but it wasn’t working on delighting Office Accomplice clients. We started to lose clients because she would not respond to their questions or concerns. I spent my time bailing water out of the boat.
After a few months I made the hard decision to unwind the mistakes I had made. I had to fire two people in three weeks and decreased the HR part of my business to zero. It has taken two years to recover from the financial damage I did to my company.
In terms of forecasting, my crystal ball really let me down. In the years since, I had a lot of time to think about why. Here are some of the things I realized.
I Made Assumptions (Without Realizing It)
- There was basically one narrow path to success that relied completely on me and on the HR professional to sell services. When I encountered bandwidth issues, success was not possible.
- When I hired the HR person, I was not clear to her (or to me) that I expected her to do sales and bring in clients. I didn’t realize it was an expectation until she didn’t meet it.
- I assumed the new management hire would jump in and be successful from Day 1. Instead she was wildly unsuccessful, and we had not prepared for that contingency.
- HR is a different sales process than we had encountered before. I had assumed it would be the same.
- I only had a plan A. I needed plans B, C, D so we could change direction to achieve success.
I Failed to be Honest About All the Variables
- Bringing in two more employees required a lot more management. I had small children and simply didn’t have bandwidth to supervise two strangers. I had ignored these factors since they weren’t part of the business.
- I didn’t do the necessary research or forecasting for a range of possibilities. I should have broken my forecast into time based (monthly) success metrics. Without that, I had no weekly measure of where the business was supposed to be.
- I took too long to realize it wasn’t working. Because I hadn’t set out benchmarks ahead of time, I didn’t realize it was time to throw in the towel.
Preparing for the Future
If you’re starting a new business line or making other major changes, spend time forecasting and breaking those forecasts out to time-based milestones. And be honest about variables. What are all the things that could go wrong? What will you do if they happen? At this point 2020 could throw just about anything at us and I wouldn’t be surprised. We’ve had a pandemic, murder hornets, and fire tornados. Surely aliens will be landing any minute.
Identify what failure will look like, so you can recognize it.
- Outline contingency plans. If plan A doesn’t work, what are plans B, C, and D? Know how you can pivot to the alternate plan if necessary.
- Keep yourself accountable. Before starting, know how long you will give your new endeavor. What are the metrics for success or for calling it quits? Know when you will bail out and how will you move on.
- Have an exit strategy in mind. Knowing variables ahead of time helps make decisions when you’re in the mix.
And that’s how you forecast for uncertainty. Frankly, it’s a good strategy for everything in your business right now—since pretty much everything is uncertain.
Making plans for your business? Contact Office Accomplice and find out how we can help.