Are you aware of the term "hockey stick budget"? it's the term used for every increasing financial performance projections for each period.

Typically budgets that consist of "aggressive" sales, profitability and key performance indicators (linear upward projections) are referred to be a Hockey Stick Budget, reflecting the shape of a hockey stick.

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So when there is a natural disaster, an outside shock, an external circumstance and  unforeseen developments "Force Majeure" - like the outbreak of the corona virus - the plans, budgets are all thrown out of the window, i.e the budget becomes hard to realize and new budgets, plans and forecasts have to be prepared.

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Thus, it always wise to have different scenarios when preparing short term and long term budgets, not just constantly upward going hockey sticks.

Plans should reflect: slower growth, lower profitability margins, etc. We need to be prepared for events that could adversely effect our business performance. An example would be to build in snow days (if applicable), labor shortage that could effect a seasonal business, raw material shortage (as in the hockey stick case), competitive pressures, like price cutting off our services and goods.

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In summary, try to be prepared as much as possible to events that could adversely effect your plans and business. Contingency planning.

It's good to be optimistic but in reality life is full of surprises and not always pleasant ones. Being prepared for rainy days or "doom days" scenarios might seem to be a pessimistic approach but, in reality, having contingency plans will benefit your company.

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