Expect the best, plan for the worst and prepare to be surprised ~ Denis Waitly
The implications of any potential change will differ from business to business. To assess implications for your business, there are a number of questions you may consider. Naturally, these would include what is the likelihood of change and what is the likely pace of change.
There are also questions that are more particular to your business.
First, how would your business respond to a change and how quickly could you adapt? Will the change require a modification to business practices? Even small changes can have significant consequences, which upon inspection can generally be easily identified. Will the change affect all your competitors in a market? A change that affects all competitors equally may result in offsetting changes in competition and prices. A change that more significantly affects just your business will be of greater consequence.
The nature of change is also important.
Some changes, such as a change in the cost of a key input, may be quickly absorbed by the market and passed on in a change in price to consumers. Modification to business practices may be absorbed more slowly and provide advantages to those who adapt earlier.
Is the market growing?
Changes that occur in a growing market will generally be of lesser significance. For example, a negative shock may simply slow the rate of new competition in a growing market but cause some existing businesses to exit in a steady or declining market. How will changes in costs affect your business? Consider the impact of a large change in the cost of a key input such as fuel or labor. The implications for you might be small if the change affects all competitors equally, however you might be more or less dependent on these inputs than others. Differences between how you and your competitors operate are a key source of risk and opportunity.
It is important to recognize that, despite your best efforts, there will be events that you simply do not expect, or that could not have been foreseen. Such events are often described as black swans.
Let me explain what a black swan id if you are not familiar with the term. Before black swans were discovered in Western Australia, the commonly held view was that all swans were white. It wasn’t so, but no one outside of Australia could have known. Black swans are unexpected events (outside the realm of regular expectations) that have a significant impact.
These include events such as the September 11, 2001 attacks, the dissolution of the Soviet Union, the 2011 tsunami in Japan and the recent Christchurch earthquakes.
While you cannot predict all possibilities, you can consider how to prepare your business to be resilient to sudden shocks.
For any change, will the change: involve a change in business practice? Provide time to adapt? Affect the entire industry?
There will be changes which you will not expect so your goal should be to ensure that your business is resilient.