Most business planning conversations focus on how to build the model, scale the revenue and reach the goals that motivated someone to start the business in the first place. That kind of forward-looking thinking is important and deserves serious attention.
What tends to get less attention is what happens when things do not go according to plan.
At Dunn CPA Firm, we work with small business owners across a wide range of industries and stages, and one of the more consistent observations from that experience is that the challenges that test a business most are rarely the ones that were anticipated. Planning for the best case scenario is worthwhile. Planning for other outcomes is equally important.
Planning for Both Directions
A useful way to think about it is the analogy of climbing a mountain. A serious climber does not just plan the ascent — they plan the descent with equal care, particularly for situations where something goes wrong along the way. The consequences of an unplanned situation on the way down are often more significant than the rewards of reaching the top, and the same logic applies to running a business.
Having a clear Plan A — the business model, the growth strategy, the vision for where the business is headed — is the starting point. A Plan B that accounts for less favorable scenarios is just as important. The downside risks of a business facing serious headwinds tend to carry greater consequences than the upside of things going well, which is reason enough to give contingency planning the same level of thought.
What Plan B Actually Looks Like
A contingency plan for a small business is not about assuming failure or planning around pessimism. It is about being prepared to respond clearly when circumstances change, and in business, circumstances change.
This can mean maintaining cash reserves that give the business room to maneuver if revenue drops. It can mean understanding which expenses are fixed versus variable and knowing which levers can be adjusted quickly if needed. It can mean having a clear sense of what the business looks like at a reduced scale and whether that version is still viable. The specifics will vary by business, but the underlying discipline is the same: knowing in advance what you would do, rather than working it out under pressure.
Uncertainty Makes This More Relevant
In periods of economic volatility, the instinct for some business owners is to wait for more certainty before committing to a plan. That instinct is understandable, but waiting rarely produces the clarity it is looking for. A more useful response is to move forward with a well-considered Plan A while building a Plan B that is equally thought through.
The business owners who tend to navigate difficult periods most effectively are not necessarily the ones who predicted what would happen. They are the ones who had already considered a range of outcomes and knew how they would respond to each.
Building Both Plans With the Right Support
At Dunn CPA Firm, helping clients think through both sides of this equation is part of how we approach planning conversations. The financial foundation of a business, its structure, its cash flow, its tax position, plays a significant role in how much flexibility an owner has when conditions shift. Getting that foundation right and revisiting it regularly is one of the more practical ways to make sure a business is prepared for more than just the best case scenario.
If you are working through your plan for the year ahead and want to make sure you have considered both directions, we are glad to be part of that conversation.
What I always tell clients in uncertain volatile economic times, which we definitely are in right now is to go ahead and go for it, come up with what your business idea is, your business model, your plan. And that’s your plan a. But also have a plan B of what you’re going to do if at all, if the world collapses. Okay, so it’s kind of like I use this example all the time. Yeah, you want to have a great plan for how to climb Mount Everest. Okay, a great plan. But you want to have just as good a plan to get off that mountain if something goes wrong. In fact, that’s probably more important than the plan to get up at because the downsides to something going wrong are much greater than something successful. So being successful. And I hate, I hate to say this.
But oftentimes it’s not the best case scenario that the small business owner ends up facing. It’s often a worst case scenario.
Sometimes worst case scenario, but I wish it was always best case scenario for the small business owners that they end up facing. But it’s just not. And the longer you do it, you know, you kind of have this one to develop this one, two punch where you kind of go for it with your plan a, but you’ve got your plan B to handle the scenarios that aren’t quite as positive.
