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Disaster Scenario Planning

Managing your business risk during adverse economic and national emergency events, such as the Coronavirus pandemic or Global Financial Crisis (GFC), can be extremely challenging due to uncertainty and circumstances out of your control.  Renowned businessman and author Stephen Covey wrote that we must “take control of that which you can control.” Using a structured Disaster Scenario Planning tool will guide you through creating a survival plan for your business, applying different approaches depending on the nature and severity of the crisis. It will also identify areas for improvement on existing processes and procedures.

The overarching framework of a Disaster Scenario Planning tool is a three step approach – NOWWHEREWHO. This method helps you focus on where your business is NOW, WHERE you want your business to be in a designated time in the future (i.e., 1 – 3 years), and HOW you will get there through defined strategies and actions. Let’s break down each step.

Step 1.  Conduct a NOW analysis

The first step to creating a business survival plan is understanding the current situation and environment of your  business and the crisis, including:

  • key issues and opportunities
  • significant challenges the business currently faces
  • concerns about the current crisis and how it may impact your business
  • potential to make changes to your business or capitalize on emerging opportunities

Step 2. Conduct a WHERE analysis using scenario planning

Start with your current vision of where you want your business to be in 12 to 36 months. Next, implement the information you gathered from the challenges, concerns, and opportunities sections of the NOW analysis. 

Work through a scenario planning process to identify potential LOW, MEDIUM, and HIGH severity of scenarios that could occur in light of the current crisis. 

Step 3. Create a HOW plan for each of the three levels of scenario severity (low, medium and high)

This step is where you create strategies and actions that bridge the gap between NOW and WHERE. When planning for a crisis, especially one where there is a high level of uncertainty, it’s important to create and test your strategies according to the various severity of scenarios. For instance, a crisis may initially have a relatively low impact on your business; however, it could escalate over time. You need to ensure your strategies and actions will adapt to the severity of the crisis.

We suggest focusing 20% of your preparation on the NOW (current situation), 20% vetting out the WHERE (the vision), and 60% developing the HOW.

At Price Kong, we do more than taxes. We regularly advise clients on their business practices, including Disaster Scenario Planning preparation. If you need assistance with creating a plan that will ensure your business endures any crisis, please feel free to contact John Terry at [email protected] or 602.776.6366.

About the Author

John Terry, a CPA with 20 years of experience, began serving the cannabis industry in 2016. At the time, he was the interim Controller for one of the largest multi-state cannabis operators, headquartered in Tempe, Arizona, and spent the following fourteen months almost exclusively studying and learning the industry inside and out. Prior to that position, John spend fourteen years in “Big-4” public accounting, and two years as Corporate Controller of a large publicly-traded media company. He has designed custom accounting processes and industry specific work-arounds to effectively apply and scale stringent public company controls and reporting to cannabis businesses.
John has helped dozens of cannabis businesses improve their accounting and reporting. He authored a series of articles published in the January, February, and March 2019 issues of Marijuana Venture Magazine, focused on industry-specific tips and tricks every cannabis business owner should know.

Scott Mitchem

JOHN TERRY, CPA

Senior Consulting Manager

[email protected]

(602) 776-6366