The world is no longer certain. From the impact of the COVID-19 pandemic to the Russia-Ukraine conflict, much of the world just isn’t the same. These situations don't just impact social life; they affect the global economic situation and way of livelihood — and they create business uncertainty.
Unfortunately, harsh times will always exist in various forms, so companies should always prepare for grim forecasts. The best news is that companies that learn to handle business uncertainty better will emerge stronger when the situation softens.
How to deal with business uncertainty
This article provides tips to help businesses navigate an economic downturn. Read along to learn more. Here’s what we’ll cover:
- Reignite your vision and purpose
- Know your level of uncertainty
- Revisit your business plan
- Be transparent with your team
- Stay on top of numbers
- Develop a risk management plan
- Have an open mind
- Invest in your staff
- Focus on quality control
- Be creative in your marketing
Let's get started!
Reignite your vision and purpose
Times of uncertainty in business can easily erode your vision and purpose. However, this is the time to remind yourself why your business exists and why you should strive to remain on course.
Going through uncertain times is hard, but it can be much harder if you forget your vision and purpose. As such, this is the time to remind yourself where you are going and why you shouldn't give up.
The purpose of your business is what will keep you going when everything else seems not to make sense. Take time to think about your products or services and what they mean for your customers, partners, and stakeholders.
Remembering that your business exists to serve people, and its nonexistence would mean a gap in their lives, you will be inspired to keep going. Businesses don't just exist to make money (of course, that's the primary reason, but it isn't enough reason to help navigate a challenging moment).
Reminding yourself of your vision and purpose will give you hope and clarity, and the confidence can guide decision making and will help keep your business afloat.
Know your level of uncertainty
Not all business uncertainty is equal. To navigate your current situation, entrepreneurs need to know their uncertainty level. After all, you can't effectively fight and conquer an enemy you don't know. This is true in business as in real battles in wars.
Business uncertainty is categorized into four levels. Understanding these categories can help businesses better identify their challenges, their cause, and the best way to handle them. Understanding your current situation is key when creating a plan to help navigate uncertain times.
To better understand your current business situation, let's look at the four levels of business uncertainty:
Level one: the possible outcome is predictable
Level-one business uncertainty is the easiest to deal with. With this level, you can predict the possible outcomes based on the current business environment.
In other words, level one uncertainty means only a few predictable outcomes are possible. For instance, if you are in the automotive industry and consider partnering with an SEO agency to increase your business visibility, you can predict that you will experience an increase in traffic through good SEO. That's a possible outcome.
Below are the characteristics of level-one business uncertainty:
- You can predict the possible outcome accurately
- The uncertainty depends on your routine decision making that involve a certain level of risk
- The market is relatively stable
For example, suppose you want to add a new product to your store, and information from other businesses offering the same product shows positive results. In that case, you can easily predict that the new product will thrive. This is a good example of level-one uncertainty.
Level two: no discrete possibilities
Level two business uncertainty means there's no discrete outcome. Navigating this level is harder than level one because no single outcome can be predicted accurately — only probabilities.
In this level of uncertainty, the best you can do is list the possible outcomes and wait for what actually happens.
Characteristics of level two uncertainty include:
- Predicting a competitor strategy is hard
- You need plans that could result in a probability
- The need for multiple business plans
For example, if we use the same example as level one uncertainty. Your research could show that your new product will thrive but fail to give an accurate outcome because your competitors are also launching new products.
In such a scenario, it could be difficult to predict a discrete outcome because, despite the new opportunities, many unknown factors are involved.
Level three: No predictable outcome or probabilities
The level-three situation is more challenging to deal with than level one and level two. In this scenario, you cannot predict a possible outcome or assign a probability to an outcome.
Level three uncertainty could mean that the market is unstable or there's no way to determine the size of the customer demand. For example, you could be planning to launch a new product but don't know whether there's enough demand to ensure the success of the product.
While you can ask about the product market from other businesses, sometimes you can't get reliable information, and your only option is to take the risk. Of course, this doesn't mean that you're doomed to endure worst-case scenarios. It only means that the situation doesn't present predictable outcomes.
Level 4: True uncertainty
No predictions can be made in level four uncertainty, meaning the future is uncertain.
This situation is rare and happens when unexpected social, political, or environmental factors disrupt the market.
For example, suppose you plan to launch a new product, but the world is affected by a pandemic like COVID-19 that disrupts businesses and markets worldwide. You won't be able to predict how your new product and its pricing will be received in such uncertain moments.
Revisit your business plan
Readjusting your business plan is key during business uncertainties. Revisit your business plan and adjust your strategies accordingly.
Start by evaluating your customers and researching your competitors to get insights into the current market situations. Once you get this information, use it to build a flexible business model.
For example, you can create multiple business plans based on various possible outcomes. Depending on your business, a flexible business model could include the following:
- Possible outcome and well-laid strategies
- Alternative planning structures
- Alternative funding sources
You might consider testing different business plans to see which is more effective. For example, suppose you are testing various ways to market a business that focuses on customer demand. In that case, you could test different marketing strategies to see which could be more effective when the customer demand is at its lowest.
For instance, suppose you're comparing SEO and PPC. Testing the strengths and weaknesses of each strategy will help determine what strategy is best during uncertainty.
Another way you can incorporate flexibility into your business strategy is by being ready to pivot. Pivoting in business means reorganizing your business model, branding, and purpose to serve customers better, depending on the current business situation.
Here are a few scenarios to help understand business pivoting:
- A small business changing their marketing approach
- A distillery starting to offer sanitizer products
- Therapists offering virtual services
To better understand business pivoting, think about how many businesses switched to online operations due to the uncertainty brought about by the pandemic. As a business owner, you should be prepared to pivot when faced with uncertainty to survive.
Be transparent with your team
Uncertain times mean you and your staff will be more anxious and on the edge of giving up. Having an assurance voice could help keep your workforce in the loop and less worried.
One way you can achieve this is by being transparent with your staff. Your workforce, just like you, is aware of the economic meltdown, and the best scenario to ensure they remain by your side is to be honest with them.
So, instead of surprising them with salary cuts and layoffs, have a candid conversation with them so they can know you're doing everything possible to salvage the situation.
By giving your staff consistent updates about the steps your business plans to take, they will have more faith in you and may even go out of their way to help you navigate the uncertainty.
Stay on top of numbers
One of the best ways to deal with uncertainty is to stay on top of your finances. That means you should evaluate your financial numbers and other key performance indicators (KPIs) so you can take appropriate measures.
Pay attention to your average monthly qualified leads, conversion rates, total revenue from the sale of goods and services, net income, and profit margin, among other things.
Staying on top of your expenditures, cash flow, and profit estimates will create forecasts that will help predict and plan for your business's financial future.
Develop a risk management plan
Risks are inevitable in business even when the markets are stable. As such, you should create a risk management plan to help you navigate hard times.
A risk management plan highlights all the possible risks your business is likely to face and the level of impact on the business. Once you identify the possible risks and their impact, the next step is applying strategies to help navigate them. Here are the possible ways you can deal with risks:
- Create a strategy to avoid the risks
- Take strategies to minimize the level of impact from risks on your business
- Buy a specific insurance policy based on your industry to transfer part of your risk
- Treat risk as part of your business
As you can see, most of these strategies aim to reduce the negative impact on your business to ensure it remains productive, not to make it disaster-proof.
Have an open mind
The only constant thing is change. And when facing a business uncertainty, the best you can do is face it with an open mind.
Embracing uncertainty means understanding that you cannot solve every situation but can make the best decision based on the current situation.
To navigate uncertain times, you need to be open to varying opinions on how to proceed. That means listening to every argument from your staff and considering their opinions when deciding.
However, listening to different opinions doesn't mean that you should swim with the tide. Sometimes you may be forced to take an unpopular path if that will help manage fear of the unknown.
The thing with uncertainty is that there's no definite solution to a problem. Having an open mind will help you make a decision (and stick to it) that presents the best possible scenario for your business.
Invest in your staff
While most businesses will likely reduce staff budget during uncertainties, sometimes it may not be the best approach. Navigating uncertainty will require new expertise, and sometimes reducing the number of staff will make things more difficult.
The best approach would be to empower your team and train them so you can compete effectively when things start picking up again. Training your team in uncertain times will equip them with the skills to help your business navigate the current hardships and be well-prepared for the future.
Focus on quality control
Business uncertainty is characterized by budget cuts and layoffs. However, this shouldn't be at the expense of the quality of your products or services.
Ignoring quality control to keep your business afloat during uncertain times will not help. In fact, quality control is an anchor to any business, and losing sight of it could mean the start of the collapse of your business.
For instance, if you are in manufacturing, you should review your products to ensure they meet the set standards for quality. Don't let budget limitations blind you to ignoring products that don't meet the quality standards.
If you are in the service industry, don't compromise the quality of your services due to budgetary constraints. Remember that people spending their money on your products or services are also going through uncertainty and would love to get the most out of every dollar they spend.
Remind your staff of the importance of providing high-quality products and services and what it means to your customers or clients. Sometimes you may need to retrain your staff and provide them with the tools to help in their work.
Also, having frequent meetings with your team is crucial so you can analyze the situation together and share suggestions on how to navigate uncertainty without compromising the quality of your products or services.
Be creative in your marketing
Businesses need to adjust and make a lot of considerations to ensure their businesses remain afloat during uncertainty. Unfortunately, this can mean readjusting your marketing budget and re-strategizing.
But marketers need to be careful when reacting to these external economic forces. Ideally, marketers should always keep their eyes on the long-term goal because what may seem right in the prevailing situation may not stand the test of time.
Businesses shouldn't switch off the marketing lights during uncertain times. On the contrary, maintaining your marketing efforts during uncertainties can help your business emerge at the top when things start getting up.
Think about the marketing activities that will help reach a wide audience, like SEO, content marketing, and email newsletters. However, make your customers the focus when creating your marketing campaigns.
Addressing your customers' needs and ensuring your message matches the current geopolitical situation will add a human element to your marketing campaigns. This is another way of telling your customers you are with them in their current situation and are willing to provide the needed assistance.
Another important thing that marketers should do is focus on marketing channels with a higher return on investment (ROI). Allocate most of your marketing budget to channels that deliver results and ensure your messaging is customer-oriented.
Parting shot on business uncertainty
You cannot separate business and uncertainties. However, you should be willing to make tough and conscious decisions to keep your brand on track during an economic downturn. The most important thing is to ensure you don't lose focus on your short-term and long-term goals and stay in touch with your customers.