Create Different Scenarios with Clear “If – Then” Statements
These days, the only certainty seems to be continued uncertainty, and as a result, forecasting has become more art than science for many growth-stage companies. Budget plans from the beginning of the year were replaced by “COVID plans”, which were, in many cases, replaced again by a new COVID reforecast, sometimes with multiple iterations. With continued lack of clarity on the days and weeks ahead, planning for the next year may seem like an impossible task.
We recommend beginning with a seemingly simple approach to scenario planning: create different “If – Then” statements that imply varying levels of impact on your business:
“IF we have mass-distribution of vaccines and COVID-related restrictions are lifted in early 2021, THEN…”
“IF there are no widely available vaccines and significant COVID-related restrictions persist for the full year in 2021, THEN…”
While your outlier scenarios may not represent a likely outcome, understanding both will help you to better define parameters of your team’s planning conversations and quantify level of business impact. Incorporating key levers of your business such as pipeline generation, competitive dynamics and customer retention into these “If – Then” statements will likely yield larger variances between the “floor” and “ceiling” scenarios and offer additional insight into your planning conversations. Consider continuing this exercise with additional scenarios (that are between your two extremes) and identifying both controllable and uncontrollable factors. While you may not be able to control changes in customer budgets or buying behavior, or dictate when vaccines will be available, you can reallocate investments and resources to areas less adversely impacted by the pandemic.