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Why Your Business Plan Needs a Plan B

An iconic British company has the slogan “because there is no plan B” plastered on the side of its lorries to tout its green credentials. Catchy slogan, lousy practice.

So what exactly is a Plan B and why is it important? Quite simply it is a contingency plan in the event that your main source of income collapses, so now you can understand why it is so important. In the context of this article it isn’t something that is wheeled out of cold storage in an emergency , it is a plan of action that is undertaken in order to prevent a crisis rather than react to it. Forward planning, if you like.

In the “good old days” most businesses chuntered along with the same loyal customers returning monthly, in a regulatory environment that they were comfortable with and where products changed infrequently.

That was then. Consider your own circumstances now – how much of the above no longer applies? What are you doing about it – are you shrugging and accepting your fate or do you wring your hands with angst each Monday morning in fear of losing more customers as the week unfolds?

The list of what can go wrong is endless and each sector has its own peculiar circumstances but it is worth exploring some of the more common threats that most businesses face, whether they are long term structural ones or short term phenomena.

  • Recession means that people spend less, demand lower prices and loyalty evaporates.
  • A large customer goes out of business or is bought over and moves their account.
  • Legislation deems your product to be illegal, dangerous or makes it unnecessary.
  • Technological advances make your product obsolete or uncompetitive.
  • Adverse publicity covering your sector.
  • The weather.

Now that you are pondering the vulnerability of your own business the question is how to formulate Plan B, whether or not to implement it and if so how to do it.

It will probably consist of examining the range of products and services within your portfolio and developing them or bolting-on similar offerings that broaden or deepen your business base. You may even decide on a radical move such as purchasing a totally different business to utilise spare capacity. Wherever you end up your Plan B will be the result of serious soul searching, discussions with staff , competitors and friends.

If your Plan B is robust enough it will probably morph into your regular business which is no bad thing but it is crucial that you don’t lose focus or take your eye off the ball in your existing affairs. Also, it is vital that you have properly researched any new venture or product extension and can utilise as much of your current market knowledge and skills to ensure that the path you are embarking upon has been properly mapped out and is understood. All too often one hears about people getting into a market just as the established players are getting out.

All that remains now is to work out the timescale together with the nuts and bolts of implementation and make sure that it is realistic with enough over-run built in because as we all know things doesn’t always go according to plan.

Norman Younger BA(Hons) FCCA is a company formation agent and equity partner in a firm of accountants specialising in helping start-ups. Business int...
Good Article, the need for a contingency plan is one of the first things I was taught during my studies so I would never underestimate it (and I hope no one else would) however its good to see articles like this which wil reinforce the message in to the heads of entrepreneurs across the UK.

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