Most of us operate our businesses in very competitive markets where the business environment is constantly changing. The most successful companies can pivot their strategy quickly when it is not working. This requires a process to know when to pivot and have an alternate plan ready. That’s a Plan B or in some cases also Plan C and Plan D.
Here is an example of being prepared to pivot. A startup education company planned their entry to the market with a strategy based on their industry knowledge. The plan had a detailed eight-month sales process to contract with their first school (Plan A). They had a detailed financial model showing when they would run out of their initial funding.
Their prepared Plan B was to look for existing education companies which might be acquired if their sales plan did not work. Plan B also modeled the cash needed for a small acquisition with planned additional funding.
After four months of Plan A, management concluded that their sales efforts were failing. The cause was they had no existing school operations, therefor credibility with potential school clients was lacking. They had to find a way to gain credibility before their cash ran out, so they began to explore their Plan B options.
Plan B resulted in the acquisition of another company that had two schools operating and a management team with considerable industry credibility. The target company needed additional capital and back office operating support which led to a deal that worked for all. The next step was to develop Plan C for the combined companies.
Plan C focused on conserving cash, acquiring additional school contracts, building a mobile system for operations, enriching their curriculum and building the combined management team. Within 90 days they were operating in six schools and growing in student enrollment. The company was well on its way to becoming a successful growth story.
The take away points from this case are:
- Having a detailed Plan B for a pivot is necessary to implement quickly when Plan A is not working.
- The detailed Plan A needs to have key indicators to show how well the plan is working and what needs to change.
- A detailed cash flow forecast will drive the sense of urgency to make changes.
- Plan B must have detailed next steps, so the management team knows where to start making changes.
- Having multiple plans, gives management the courage to pivot strategies.
We suggest that your Plan A and Plan B be reviewed quarterly to determine if they need modification. It is likely that market forces will require a few tweaks and not major changes. The quarterly reviews serve as a reminder of what is most important in your growth process and reinforces the focus on business drivers.
C Squared Solutions partners are experts in planning and modeling.
Call us today to schedule a free 2-hour assessment.