Originally published in Business & the Economy, June 1, 2023
CLAREMONT, CA—The recent banking crisis exposes the need for stress testing for other industries as well, according to The Society for the Advancement of Consulting® (SAC). It is time for organizations roll up their sleeves, conduct rigorous stress-tests, and prepare for all eventualities. This ensures not just survival, but robust resilience in the face of potential crises.
Manufacturers Should Stress Test to Secure Growth
“Manufacturers must stress test their organization to ensure they support their quote and order backlog, growth plans, and financial objectives. These should include profitability, working capital, and margins,” points out Lisa Anderson, president of Claremont, CA-based LMA Consulting Group, Inc. and manufacturing expert known as the Strongest Link in Your Supply Chain®. “To take advantage of the unique opportunities coming down the pike, companies will have to be prepared to scale rapidly without hiring an army of workers, pivot on a dime with changing business conditions, and invest in forward-thinking projects, no matter the economy.
“Successful executives continuously assess the feasibility of their sales forecast. They evaluate their ability to supply their customer’s needs within reasonable lead times, and they audit their projected EBITDA and cash flow requirements,” she adds. “It will be essential to stress test your end-to-end supply chain. If any link breaks due to global conflicts, labor strikes, or natural disasters, your ability to deliver product to your customers will be hit. Additionally, it is imperative to ensure your technology and infrastructure are not vulnerable to cyber-attacks, and that your ERP system and related technologies will support profitable growth.”
Mitigating Business Disruptions: The Imperative of Crisis Planning
“Disruptions and risk can come from any number of areas,” says Kathleen McEntee, President of Kathleen McEntee and Associates Ltd, a full-service marketing firm focused delivering results by distinguishing businesses with straightforward messaging addressed in the right mediums to the right audiences. “Who would have thought the banking crisis would have had the ripple-down effect on so many firms? In some way, every business is impacted.”
“The truth is we are all at risk,” she notes. “It is what measures we take to prevent and mitigate the impact that sets us apart. Have a crisis plan in place, not just on paper. Identify potential crises and have a ‘dry run’ on how you will communicate within your organization, to customers, to vendors, to suppliers and to partners—especially your bank.”
“In addition to a crisis plan, take stock of your clients—volume, profitability, and relationship,” McEntee notes. “You have to be important to your customers if you want to keep them—especially in times of crisis. If they’re valuable to you, you must become equally as valuable to them.”
Don’t Let a Good Crisis Go to Waste
“It’s often been said that when we don’t learn from history, we are doomed to repeat it,” says Linda Popky, president of Redwood Shores, CA-based strategic firm marketing firm Leverage2Market Associates, and author of the book Marketing Above the Noise: Achieve Strategic Advantage with Marketing That Matters. “Some of the most valuable lessons can come from watching and learning from others’ mistakes.
“Not only should businesses be running their own diagnostics to catch problems before they become public, they should also be monitoring public perception and emotion,” she notes. “When people make decisions based on fear, they feed that fear and can cause a situation to spiral out of control. We can’t control others’ actions, but we can be prepared with responses to various scenarios that can calm the situation and show leadership and stability.”
Have a Plan B to Protect Your Key Initiatives
“I have one word for you: Insurance,” says SAC Founder Alan Weiss, PhD. “Not all deposits and investments are insured, you have to carefully do due diligence. And you must have a Plan B—backup insurance—for every important initiative you launch and every major client you want to sustain.”
The Society for the Advancement of Consulting (SAC) is the premier association for independent consulting professionals who subscribe to an industry code of ethics and provide significant consulting results among their clients. Founded by Million Dollar Consulting guru Alan Weiss in 2003, SAC offers a series of in-person and online programs to help consultants share best practices and learn from industry experts and thought leaders in the business world. SAC today has members in 14 countries around the world.
For more information, go to http://www.consultingsociety.com, email firstname.lastname@example.org, or call (909) 563-1803.