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Risk Analysis & Contingency Planning. “Failing to plan is planning to fail” -Effie Jones. What Happens When a Good Plan Goes Bad…. The CVE Bakery: How Can You Plan for the Impossible?. And Even When Things Go Right, Things Can Go Wrong…. NW Works Janitorial and Business Plan
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Risk Analysis & Contingency Planning “Failing to plan is planning to fail”-Effie Jones
What Happens When a Good Plan Goes Bad… • The CVE Bakery: How Can You Plan for the Impossible?
And Even When Things Go Right, Things Can Go Wrong… • NW Works Janitorial and Business Plan • Actual growth exceeded plan by 330% • Board of Directors, staff and infrastructure issues • Mission in question
NW Works Lessons Learned • Business plans need to be flexible and dynamic. Where you start is not where you’ll finish • Getting the culture ready is not something that is often addressed as a part of making a NP business successful- it needs to be • Core issues need to be addressed ahead of time or as they arise, including:
Valuable Questions to Ask • What if scaling has some negative impact on clients? • What if the success or failure of scaling threatens to change your mission? • How will your stakeholders deal with a failure? • How will your stakeholders deal with a success? • What is your scale?
Contingency Planning • Use “what if…” scenarios • Develop “Plan B” (and Z) for major decisions • Analyze major risks and make plans to mitigate them • Test Business Plan assumptions • Conduct a sensitivity analysis
Mouse trap’s built and nobody comes • Grand expectations • Insufficient marketing • Wrong product • Wrong market
All things to all people • No clear: • Niche • Target market • Differentiation strategy • Lack of clear competitive advantages We sell everything!!
But we still have checks… • Undercapitalization • Slow start up • Unexpected expenses • Overstocked inventory • Didn’t plan forbusiness cycles
Low capacity to deliver • Inexperienced business management • Untrained/wrong staff • Weak systems & infrastructure • Chaos
Risk Analysis Exercise
What is a Risk? • Possibility of loss or injury • Someone or something that creates or suggests a hazard
Risk Analysis • What can go wrong? • What exactly is the risk (cause not symptom)? • What are important risks? • What shall we do to mitigate or reduce severity or avoid risk? (actions) • Don’t confuse risk with cost • If risk materialize can have costs
Remember the SWOT? • Likelihood of becoming a real risk? • Budget size • Probability • Outcomes/impact if risk does happens? • Staff • Money • Time • Customers • Etc. weaknesses Threats
Sensitivity Analysis Exercise
Risk Management • Start with the most severe risks • List possible actions to reduce probability and/or cost • Some risks can be avoided (e.g. avoid a specific requirement) • Contingency Planning - for the most severe risks that cannot be mitigated • List actions to take should the risk materialize/occur
Ongoing Process • What did we learn? • What are the tasks of RM? • What is the risk status? • What has to be changed?
What’s it for? • Sales document for raising grants from donors and investors. • Internal management guide for all business functions. • Communication tool to inform key stakeholders
What’s a “Good” Business Plan? • Solid business concept • Viable business model • Realistic and quantifiable financial projections • Achievable targets • Meaningful social impact • Demonstrates demand • A competent management team • Analyzes risk and plans for it • Doable!
Tips #1 • Analysis to action (situation and risk) • Information relevant to decision-making • Data, facts, stats, numbers – back it up!! • Timeframe • Format • Use of titles and subtitles • Graphics / pictures • Length • annexes
Tips #2 • Language • Repetition • Crisp and clear • Compelling • State assumptions • Executive summary • State problem, goals and needs up front • Key points
