Uncertainty Is High. Plan for Four Futures, Not One

When I read a small business survey, I look for the gap between what owners are doing and how they feel about it. This month the gap is wide.

According to the NFIB’s September survey, as reported by The National News Desk, a seasonally adjusted net 31% of small business owners raised their average selling prices. That is well above the historical average of net 14%. Another net 31% plan to raise prices, up 3 points from August.

At the same time, the share of owners who rate the health of their business as good fell from 57% to 48%. NFIB’s uncertainty index rose to 90. Its historical average is 68.

Holly Wade, NFIB’s executive director of research, put it this way: “More are pessimistic about what they’re going to come up against, likely due to inflation and fuel prices.”

A forecast is not a plan when uncertainty is this high

From the outside, it looks like a lot of owners are doing the right things one at a time. They are raising prices. They are watching costs. They are hunting for good people. What’s harder to see in the numbers is a plan that ties those moves together.

When uncertainty sits 22 points above its average, the honest answer to “what will next year look like?” is “we don’t know.” That’s not a failure. It’s information. And it calls for a different tool than a single budget built on a single guess.

Four futures, one afternoon

In the Resilience Protocol we use scenario planning, and it’s simpler than it sounds.

Pick the two uncertainties that would hit you hardest. Not ten. Two. NFIB’s owners have named theirs already: labor was the top problem cited, and inflation was second.
Turn each into a range. Workers: scarce or available. Costs: climbing or easing.
Cross them to get four futures. Scarce workers and rising costs. Scarce workers and easing costs. Available workers and rising costs. Available workers and easing costs.
For each future, plan two things: the workforce we’d need, and where revenue would come from.

That last step is where the value is. In the hardest future, which roles do we protect first? Which customers and products carry us? In the best future, are we ready to hire, or will we be scrambling?

Why this beats guessing

Scenario planning doesn’t predict anything. It’s a model, and as the statistician George Box reminded us, all models are wrong, but some are useful. This one is useful because it moves decisions to a calm moment. When a number turns red in February, you aren’t inventing a response under pressure. You’re opening the page you already wrote.

It also changes the pricing conversation. Many owners in this survey are raising prices because costs forced their hand. If you’ve already mapped a future where costs keep climbing, the price increase stops being a reaction. It becomes a step in the plan, with a date and an owner.

Here’s how I think about it: 10x is the upside question, and scenario planning is the downside question. Most leadership teams I meet have spent time on the first. Very few have spent an afternoon on the second.

Three questions for your next leadership meeting

What two uncertainties would hurt us most in the next 12 months?
In the hardest of our four futures, what’s our headcount and where does revenue come from?
What would we do on the first day we see that future arriving?

If your team answers those together, you’ll walk out with more confidence than any forecast can give you, because you’ll know what you’d do in each case.

The Resilience Protocol walks through the full process, with worksheets: The Resilience Protocol