What if? What do you do when things do not work out the way you planned? Do you have a back-up plan, i.e., a contingency plan? When an entrepreneur is starting a new business all they see is opportunity. They may consider, for just a moment, that things might not work out they way they expect. But do they really create a plan for the What If?

In 2005 very few people were planning for an economic recession to hit 2007/2008. I am guessing that many business plans written in 2005 did not list a contingency for an economic downturn. Today, though, many business plans will include disclosure about the risk of the current economy. Almost every business has experienced a decrease in sales. Few businesses are an exception to this, but there are a few businesses thriving in today’s economy.

So how do you plan for contingencies? Consider at least 4 or 5 possibilities that could go wrong. Then make a list of how your business would deal with these challenges. There are simple ideas, many of which are being implemented by companies today. The most obvious is to reduce costs. Many companies look to lay-offs as a way to save cash. But there are other, sometimes more effective, ways to reduce expenses. Another would be to reduce the number of products or services, or even to expand your offerings. There are many alternatives to back-up plans. You might need to consider extreme ideas too, for example, one of my clients considered finding an investor or seek a willing buyer.

Even if the What If never happens, you will have analyzed the strengths and weaknesses of your business from a different view point. Which just might aide in the long-term success of your business.