Proactively Manage Risk In Your Business With Contingency Planning

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Dec 1

The exercise of contingency planning allows us to have a framework of identifying risks, prioritizing risk, and planning against risk as a way to channel energy productively into our business.

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Sometimes as business owners, we can get very rigid with expectations about how we want to reach a goal or implement a strategy in our business. This can often lead to us being unprepared and easily blindsided by risks or roadblocks that arise in those circumstances.

Today’s topic is Plan Bs, which is contingency planning as a risk management strategy to get proactive in planning for the gaps and weaknesses in both projects and our business operations.

What is Contingency Planning?

It's plan B in a nutshell. A course of action designed to help you respond effectively to a significant future event or circumstance that may or may not happen.

This can be what I like to call "If/Then" planning. Identifying risk and once you identify, okay, if this happens, then what do I do? I'm gonna take this into a sports analogy. If you're not a sports fan, I think it's still gonna be accessible to you, don't you worry.

The Football Quarterback Example

The quarterback is the leader of the team, which is you, the business owner. You are calling the shots.

Imagine you're the quarterback in a huddle, you're at the 50 yard line, and you want to reach the end zone for the touchdown. You are like, I got it. You call the play.

All right, everybody breaks, gets on the scrimmage line and everyone's in alignment, ready to go. But before the ball snaps to you, you look at the other team and you see that they are not lined up the way you thought they would be.

We're going to take this into two scenarios.

Quarterback A: He's only got the one play. He planned for the best case scenario of "I am at the 50 yard line, I want to go to the end zone. This play in my opinion is how I feel we'll best get there." But he has no other alternative solution for what he's seeing. His option is, I guess we just run the play and take our lumps.

Those lumps might be that defenders easily break through the offensive line and he gets tackled, which is a loss of yardage. Potentially he gets injured, or he fumbles the ball. The other team grabs it and runs for a touchdown. Or maybe, it's still a positive outcome, where there's minimal yardage gained but the play is essentially not that effective. Alternatively, they could forfeit the game. They could just quit and be like, “Well, we're not gonna do it at all.”

Quarterback B: This quarterback calls the play, has the same goal, gets to the scrimmage line, sees the other team lined up in a way that he was not expecting, but he had done his homework in advance and he had thought through scenarios.

Well this is what I want to happen, but what could get in the way of that happening?

How Contingency Planning Plays Out

This is where contingency planning comes in.

Identifying the risks is the first step. The team could line up in an alternative way.

If that happens, what would I do? That's the if.
Then if this happens, then what do we do?

That's where coming up with the Plan Bs, the alternative, plays to call. The quarterback is standing at the scrimmage line, seeing what he is seeing, and he then has the opportunity to call an audible before the ball is snapped to him. That is changing the play.

He calls out an alternative thing, his team realigns. The ball snapped, and he went for it. That increases the likelihood that the play is gonna be successful, that there's gonna be forward motion. If they don't hit the goal of reaching the end zone and getting the touchdown, maybe they at least make it 10 yards and get the first down.

Or they get into field goal range to kick for three points. So there's just alternative positive outcomes that can happen.

Why Consider Contingency Planning

What quarterback do you want to be in your business? Do you wanna be the one trick pony that has one idea for how things can go and if anything happens outside of that expectation, there's paralysis and a sense of defeat potentially?

Or an alternative quarterback with plan Bs in mind? Agile and resilient, pivot on a dime and allow for positive outcomes to still happen.

Minimizing the risk and preventing the risk is essential for entrepreneurship. 2020 was a great example of that, of something that nobody saw coming, or had planned in their business, regardless of the size of the business.

Many businesses were scrambling to figure out what to do differently, to acclimate to the new situation and circumstance of the world.

Why is this all so important?

The exercise of contingency planning allows us to get a lot of that stuff out of our head onto paper. You have this framework of identifying risks, prioritizing risk, and planning against risk as a way to channel that energy productively into your business.
It also allows us to identify blind spots and that we may not otherwise see when we are caught up in the weeds of the day to day.
It allows us to become more resilient and agile. This is so necessary for sustainability as an entrepreneur and being able to see the plays call the shots, pivot as needed.
It's a recipe to allow us to not grip too tightly to our expectations and outcomes, and that can lead to more life fulfillment ultimately.

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