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Thoughts On Business Scenario Planning - Gillum Strategy Partners

Brad Gillum
Brad Gillum

The document discusses scenario planning for businesses to plan for potential impacts of COVID-19. It recommends that companies develop a range of scenarios based on their business, build financial models to assess the impact of each scenario, determine trigger points for actions, and create action plans. It also suggests setting up a program management office to monitor the situation and refine plans on a weekly basis. The goal is to enable quick decision making, cash preservation, and positioning the company for recovery.

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Gillum Strategy Partners V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business
V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 1 | www.gillumstrategy.com Scenario Planning: A well thought out plan for the range of potential business impact scenarios arising from COVID-19 enables quick decision making, cash preservation, and the ability to emerge from likely market downturn in a strong position COVID-19 Impact The COVID-19 pandemic is creating a humanitarian crisis of extremely large proportion. In conjunction, businesses are being significantly impacted and will need to plan adeptly to manage through the challenging and rapidly evolving environment.
V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 2 | www.gillumstrategy.com Scenario Planning The plan that each company had in place as we entered 2020 is no longer valid. In addition, each companys market dynamics are changing over time. As such, we have been working with clients on planning to support a wide range of scenarios, with a keen focus on preserving cash, optimizing cash flow, maximizing optionality, and setting definitive trigger points with action plans if / when that trigger point is reached. The process we suggest is outlined below. Step 1. Develop Range Of Business Scenarios Arising From COVID-19 Impact Conduct session with management team to frame full range of potential business impact scenarios arising from COVID-19 pandemic. Define each scenario and tie to internal and / or external metrics that can be monitored. In defining each scenario, be clear on what segments and / or geographies are impacted, how they are impacted over an estimated time period and to what degree.
V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 3 | www.gillumstrategy.com Once the full set of scenarios have been built, develop estimates on probability for each based on latest information. These scenarios and probabilities can and will likely be adusted over time as the situation evolves. Step 2. Develop Baseline Financial Model Build an excel based linked baseline profit statement, balance sheet and cash flow projection tool in weekly buckets if highly levered or in monthly buckets if not. Structure model to reflect all the permutations of the segments and geographies that comprise the business, and ensure it aligns to how the business currently reports its financial results for quick comparisons and variance analysis going forward. Step 3. Model Impact Of Each Scenario Use scenario descriptions to determine variables which need to be incorporated in model. Build these variables into model in a way that will enable continued refinement in the future with the impact flowing through the model.
V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 4 | www.gillumstrategy.com Review model drafts with executive team when built to pressure test, and refine based on learnings. Step 4. Based On Modeled Impact, Determine Decision Trigger Points Based on modeled financial impact by scenario over time, determine decision trigger points when the company would want to take certain actions like taking additional cost out, idling plants, reducing replenishment orders / quantities, resetting safety stocks, etc. Step 5. Build Action Plans For Each Trigger Point For each trigger point, build action plan for task, deliverable, owner, time to complete task. Review action plans with management team and owners for input. Refine and firm up action plans.
V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 5 | www.gillumstrategy.com Step 6. Stand Up Program Management Office To Monitor & Refine Plan & Model Set up a team to maintain model and action plans, and refine based on new information and evolution of the business situation. Refine probabilities, degree of impact, timing of impact, probabilities and key assumptions in model on a weekly basis. If new potential scenarios develop, characterize them in the model and build / refine associated trigger points and action plans as needed. Report out and discuss scenario impact on financials with management team on a weekly basis. Alert management team on trending and anticipated timing of any trigger point being reached.
V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 6 | www.gillumstrategy.com Gillum Strategy Partners (GSP) is a boutique strategic consulting firm, providing services to top tier clients in a broad base of industries, including technology, manufacturing and services. GSPs areas of expertise include go-to-market strategies, marketing effectiveness, channel and alliance management, growth strategies, sales productivity and operational improvement. We emphasize pragmatic solutions with measurable results and often work with our clients through implementation. Address: 155 North Wacker Drive Suite 4250 Chicago, IL 60606 息 2020, Gillum Strategy Partners. All rights reserved. No part of this work may be reproduced in any form without written permission from the copyright holder. Contact: Brad Gillum Managing Partner 312.961.1441 brad.gillum@gillumstrategy.com

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Thoughts On Business Scenario Planning - Gillum Strategy Partners

  • 1. Gillum Strategy Partners V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business
  • 2. V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 1 | www.gillumstrategy.com Scenario Planning: A well thought out plan for the range of potential business impact scenarios arising from COVID-19 enables quick decision making, cash preservation, and the ability to emerge from likely market downturn in a strong position COVID-19 Impact The COVID-19 pandemic is creating a humanitarian crisis of extremely large proportion. In conjunction, businesses are being significantly impacted and will need to plan adeptly to manage through the challenging and rapidly evolving environment.
  • 3. V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 2 | www.gillumstrategy.com Scenario Planning The plan that each company had in place as we entered 2020 is no longer valid. In addition, each companys market dynamics are changing over time. As such, we have been working with clients on planning to support a wide range of scenarios, with a keen focus on preserving cash, optimizing cash flow, maximizing optionality, and setting definitive trigger points with action plans if / when that trigger point is reached. The process we suggest is outlined below. Step 1. Develop Range Of Business Scenarios Arising From COVID-19 Impact Conduct session with management team to frame full range of potential business impact scenarios arising from COVID-19 pandemic. Define each scenario and tie to internal and / or external metrics that can be monitored. In defining each scenario, be clear on what segments and / or geographies are impacted, how they are impacted over an estimated time period and to what degree.
  • 4. V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 3 | www.gillumstrategy.com Once the full set of scenarios have been built, develop estimates on probability for each based on latest information. These scenarios and probabilities can and will likely be adusted over time as the situation evolves. Step 2. Develop Baseline Financial Model Build an excel based linked baseline profit statement, balance sheet and cash flow projection tool in weekly buckets if highly levered or in monthly buckets if not. Structure model to reflect all the permutations of the segments and geographies that comprise the business, and ensure it aligns to how the business currently reports its financial results for quick comparisons and variance analysis going forward. Step 3. Model Impact Of Each Scenario Use scenario descriptions to determine variables which need to be incorporated in model. Build these variables into model in a way that will enable continued refinement in the future with the impact flowing through the model.
  • 5. V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 4 | www.gillumstrategy.com Review model drafts with executive team when built to pressure test, and refine based on learnings. Step 4. Based On Modeled Impact, Determine Decision Trigger Points Based on modeled financial impact by scenario over time, determine decision trigger points when the company would want to take certain actions like taking additional cost out, idling plants, reducing replenishment orders / quantities, resetting safety stocks, etc. Step 5. Build Action Plans For Each Trigger Point For each trigger point, build action plan for task, deliverable, owner, time to complete task. Review action plans with management team and owners for input. Refine and firm up action plans.
  • 6. V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 5 | www.gillumstrategy.com Step 6. Stand Up Program Management Office To Monitor & Refine Plan & Model Set up a team to maintain model and action plans, and refine based on new information and evolution of the business situation. Refine probabilities, degree of impact, timing of impact, probabilities and key assumptions in model on a weekly basis. If new potential scenarios develop, characterize them in the model and build / refine associated trigger points and action plans as needed. Report out and discuss scenario impact on financials with management team on a weekly basis. Alert management team on trending and anticipated timing of any trigger point being reached.
  • 7. V I E W P O I N T Business Scenario Planning Developing Plans For Full Range Of Potential COVID-19 Impact On Your Business Gillum Strategy Partners | V I E W P O I N T | Page 6 | www.gillumstrategy.com Gillum Strategy Partners (GSP) is a boutique strategic consulting firm, providing services to top tier clients in a broad base of industries, including technology, manufacturing and services. GSPs areas of expertise include go-to-market strategies, marketing effectiveness, channel and alliance management, growth strategies, sales productivity and operational improvement. We emphasize pragmatic solutions with measurable results and often work with our clients through implementation. Address: 155 North Wacker Drive Suite 4250 Chicago, IL 60606 息 2020, Gillum Strategy Partners. All rights reserved. No part of this work may be reproduced in any form without written permission from the copyright holder. Contact: Brad Gillum Managing Partner 312.961.1441 brad.gillum@gillumstrategy.com