What if you could test the results of your decision, before you made it?
Any growth – and particularly if it is fast – brings both opportunities and risks. It is very important to consider the pros and cons of different scenarios before deciding your strategy.
How fast could you grow? How fast should you grow? How will growth affect your cash flow? (Often growth gobbles up cash far faster than you imagine it will, so some sensitivity analysis on your projections is very valuable.)
How will your different functions keep in step with each other so that you do not let down either new or current customers? A review of your capacity plan and further sensitivity analysis can save a lot of pain later!
Any new offerings will tend to me much more attractive and exciting to your team than the existing but vital “bread and butter” ones. How will you incentivise the team to maintain attention on the core business, which also brings in vital cash to support the new developments?
Considering several scenarios and then choosing the best has several benefits:
a. You are confident that this is the best bet in the current market conditions and you are alert to the risks.
b. This also gives you the likely impact information which can then inform your risk assessment and mitigation.
c. If there is a significant shift in the market, you will have already considered alternatives and can move faster to address the new conditions than competitors.
It is also very important to pick up the qualitative issues, such as your competitors’ likely response to your growth and innovation, and your internal capacity and capabilities which may need to be addressed too. This whole exercise makes your business much more resilient – and able to adapt to change quickly.
If you would like to see more about how growth modelling and risk assessment could work for you, get in touch.