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Risk Management Planning

When you run a small business it’s easy to get caught up in the grand vision of what’s possible. After all, business ownership is one of the greatest forms of creative expression. Many of us are so passionate about our businesses we’re unaware of how naturally compelling we are to others, and often completely unaware that we are selling ourselves. Our ability to see the cup half full is critical to maintain our momentum and enthusiasm. But looking at the glass half-empty is equally important if we are to build the business of our ultimate plan. In this first of a two-part blog, I’ll help you understand why worst-case scenario (WCS) questions give you power as a business owner. Evaluating responses to worst-case scenarios manages your risks and increases your chances of success. WCS questions are the backbone of risk management planning.

Use worst-case scenario questions to manage risk

The worst-case scenario question is critical to every independent chef as a risk management tool.

Harnessing the power of the WCS question can more instrumental in establishing a chef’s success than a brilliant business idea. In fact, businesses that ignore the dark side and focus only on the upside can really suffer from their narrow vision. Risk management planning comes from asking WCS questions. 

Risk management planning increases your chance of success

How I learned the power of the WCS question the hard way.

In 2008, my husband and I bought a restaurant – you can probably tell from the date this is going to turn out badly. We were focused on everything going right. We were fired up and ready to go. We didn’t ask the worst-case scenario question. Our advisors didn’t ask. Our bank didn’t ask. We found out the hard way.

After work on December 13, 2008, we picked out our Christmas tree. We drove home in separate cars. My husband, the restaurant’s chef, and our nine-year old son led the way in the truck with the tree. I followed closely behind with our four-year old daughter. And then the worst-case scenario happened.

I watched a vehicle approaching from the opposite direction slide in the snow and hit my husband’s truck head-on.

WCS #1 = car accident and medical bills depleted our cash reserves.

WCS #2 = my husband and son were injured in the accident. I added “caregiver” to my list of responsibilities.

WCS #3 = the chef was injured and unable to perform his duties during the busiest time of year.

Egad. That was a whopper that weighed heavily on our family for the next five years. And, yep, we lost the restaurant to boot.

How does the worst-case scenario question apply to risk management planning?

Plan for the worst-case scenario

A single-minded focus on the ultimate mission can be deadly.

January 28, 1986, just 73 seconds after liftoff, the NASA space shuttle Challenger exploded killing all seven passengers aboard. The event shocked the world and scarred our national pride. If you’re too young to remember, the event was a national celebration and PR extravaganza. The United States was to be the first country to put a civilian into space, teacher Christie McAuliffe. NASA failed to anticipate the worst-case scenario and it tragically played itself out on live TV with the nation’s school children watching.

You will NOT be able to anticipate every worst case scenario.

In 2009, we did not anticipate a national recession. However, we may have been able to weather the recession if we had prepared for other worst-case scenarios. The recession was the nail in the coffin for our restaurant, but it wasn’t the real problem.

Some things are in your control if you examine the possibilities of worst case scenarios.

We had not considered or prepared for a cash flow crisis or an injured key employee before buying the restaurant. The restaurant’s failure was our responsibility. We did not consider a single worst-case scenario or put cash reserves in place for “what if” situations.

Only now do I understand why asking WCS questions matter and how the answers can help every small business owner.

Why the WCS question matters now and how to apply it to business.

Many individuals and companies incorporate the WCS question as an integral part of their thinking and planning. When we go camping my husband always says, “it’s easier to stay warm than it is to get warm.” This adage comes from experience. The worst-case scenario is that it could get cold. Solution? Bring a jacket; problem solved!

NASA operates differently since the tragedy in 1986. They benefit from their new best practices of examining every worst-case scenario. Luckily, chef, you don’t have to learn the hard way.

Uncertainty is part of our everyday lives and practically no one can anticipate a national emergency. In 2020 the coronavirus highlighted uncertainty more than ever. This doesn’t mean we don’t move forward with our dreams and plans. It just means as small business owners we must incorporate WCS thinking into the mix to reduce preventable risks.

Here are three areas where you should apply the WCS equation to your business.

Risk management planning begins with evaluating worst-case scenarios
  1. When you plan to cook for clients

We train every chef to go through a premortem exercise before they leave for a client’s house. A chef who asks, “what’s the worst-case scenario?”, a dozen times before leaving can solve most problems before they happen. Here are examples.

WCS Q: What happens if they don’t have a thermometer? A: Throw one in your pocket.

WCS Q: What if the kitchen doesn’t have a cast-iron skillet? A: Bring one to the jobsite.

WCS Q: What if there’s no lighting out by the barbecue at night? A: Grab a headlamp! 

2. When you’re dealing with money

If you’re about to make a sizable purchase the WCS question is crucial. Smart chefs will create a budget. The smartest chefs will evaluate the budget with all the unknown factors possible. They will ask WCS questions that represent extra time, money, and unforeseeable scenarios that can’t be anticipated.

3. Anytime you have an idea that can’t fail

We all sell ourselves on our best ideas. It’s human nature to hold a belief and then seek evidence to support it. So, if you’re hatching a brilliant idea, save yourself heartache by engaging in the WCS dance. When you build in “what ifs,” you increase your chances of success.

Reducing your chances of failure increases your chances of success.

Risk management plan is serious

When chefs formalize this way of doing business it’s called a risk management plan. Fancy, right? In part two of this blog we’ll look at scenarios that are serious. We will examine methods chefs can use to reduce their risks and increase their chances of success.

Many people think looking at the dark side is negative. I beg to differ. I’m a glass half-full kind of gal. But looking at the glass half-empty is part of the reason I can be so positive. Using the worst-case scenario exercise in life and in business just makes good sense. It’s one of the most valuable questions very few people ask. Chef, now you know. Reducing your chances of failure increases your chances of success when you harness the power of asking valuable WCS questions.