I’ve stopped growing. How could I have seen it coming?

Dear Aunty B,

My board met last week and for the first time in years I am south of my targets (Greenland south actually.)

My board, which has two external directors, wanted a full explanation and told me I should be doing better risk management. They also want me to keep the existing budget until the end of the year (we are calendar) so that I can get the business back on track.

My problem is that not only did I not see any of this coming but I can’t see it getting any better in the short term. I want to update the budget so I have a better idea of where we are going.

Greg,
Melbourne

Dear Greg,

What? You don’t know how to look into the future? You didn’t predict ABC, Allco, the sub-prime, rising interest rates, Centro, Sam Newman’s prostate cancer… What’s wrong with you? Crystal ball needs cleaning?

Look, from one entrepreneur to another, I feel for you. Entrepreneurs all over the country are being clobbered by nasty boards demanding to know why they are not seers and didn’t see the downturn coming.

If there is anyone out there who is on track to meet end of year targets – and does – they should be canonised.

Having said that, you should have risk management strategies in place to cope and make changes to ensure you don’t travel backwards.

This is a time to look backwards and forwards. Understand what’s happened, get hold of a risk management plan and make sure you have contingency plans for finance falling through, suppliers not paying and all the other nasties that emerge out of nowhere as the economy slows. And have a good look at your top management team. Have they got the resilience to dig in and the foresight to back your vision and seize new growth opportunities?

By the way, your board is making a big mistake insisting you stick to the original budget. The variance will blow out like a balloon, giving you an even greater deviation from the budget.

You certainly do not want to update it continually, but it needs to be revised as business conditions change otherwise you are making decisions based on old assumptions.

Oh and Greenland is north – even if you are standing on your head.