March 2020 was a scary time to be a business owner. Things were still going well for us, but the future was very uncertain — for everyone!
Ali and I took some time that month to plot out two sets of scenarios for our business.
- Determining how long could we sustain the company if we lost x clients, or if recurring revenue dropped by a certain percent, or various other potential situations that COVID might cause.
- Setting “triggers” for various things to happen if things went very poorly. We’d dip into savings if scenario 1 hit, we’d lay off some of the team if scenario 2 hit, and a bunch of related ideas.
The plan was simply to be ready. If things went poorly business-wise because of COVID, we’d have already made the necessary decisions on how to handle the latest issue.
In his book “Clear Thinking“, author Shane Parrish offers that exact suggestion, saying:
A good position allows you to think clearly rather than be forced by circumstances into a decision. One reason the best in the world make consistently good decisions is they rarely find themselves forced into a decision by circumstances.
Our primary goal was to avoid hitting any of the trigger marks, which we were able to do. 2020 turned out to be a very solid year for us financially, so none of those actions had to be taken but it was comforting to know how we’d handle the most likely situations that could occur so we wouldn’t be “forced by circumstances into a decision”.
We can’t plan for everything that might happen, but making decisions before you’re in the middle of the circumstance gives some peace and helps insure clarity in the action that needs to be taken.
