G A U G I N G T H E M A R K E T
G A U G I N G T H E M A R K E T
opportunities, therefore setting themselves up for success in years to come.
Incorporating AI technology into financial planning
As AI and automation become more effective, now is the time to embrace digital tools that can give an accurate and real-time picture of a business’ financial health, including a view of how external pressures may create crunches or, for some, opportunities.
This is where scenario planning also comes in. Using insights built from data, business leaders themselves or working with their accountant, can take the following steps:
Identify key risks
To stay ahead, businesses need to pinpoint the biggest risks – whether that’ s market volatility, supply chain vulnerabilities or regulatory changes – that
NOT ALL RISKS ARE CREATED EQUALLY SO IT’ S VITAL TO FOCUS RESOURCES ON THE THREATS WITH THE GREATEST POTENTIAL TO IMPACT THE BUSINESS.
could truly throw a wrench in operations. Alongside looking at short-term factors, businesses must ensure they’ re analysing the long-term shifts in broader areas such as society, economics and technology. Not all risks are created equally so it’ s vital to focus resources on the threats with the greatest potential to impact the business.
Develop diverse scenarios
Facing fear of the unknown is tough for a business owner, but we’ d encourage them to embrace this uncertainty and plan for different scenarios, from the most optimistic( i. e. price hikes with little impact on demand) to the worst case( i. e. staff layoffs and downsizing), along with a middle ground( i. e. non-essential spending cutbacks). Ideally, it’ s best to keep this to roughly three to four scenarios to avoid the risk of falling into the trap of analysis paralysis. Ultimately, by covering a number of bases, leaders can ensure their business is agile enough to proactively tackle challenges head-on, rather than waiting for circumstances to dictate a response.
Engage stakeholders
By involving their employees, partners, accountants, bookkeepers and investors in the scenario planning process, leaders are not only crafting a more robust plan,
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