Middle market companies are navigating an increasingly volatile landscape marked by supply chain disruptions and unpredictable trade policies. In 2024 alone, global supply chain disruptions surged by 38%, driven by factors such as factory fires, labor unrest, and extreme weather events. Simultaneously, the imposition of draconian tariffs in an on-again, off-again trade war has significantly impacted trade dynamics, contributing to a 0.3% contraction in the U.S. economy in the first quarter of 2025.
At JACO Advisory Group and DWH, we understand that while these challenges are daunting, they also present opportunities for companies that prepare strategically. This first blog in our four-part series explores how scenario planning can help you manage these uncertainties — and thrive despite them.
1. Understanding the Risk Landscape
Leadership should assess the risk landscape in all areas of their business. This includes disruptions within their supply chain as well as the impact of tariffs and trade policy volatility.
2. The Imperative of Scenario Planning
Scenario planning enables companies to anticipate potential future events and develop strategic responses. For middle market firms, this approach is crucial due to:
- Resource Constraints: Limited financial and human resources necessitate proactive planning to mitigate risks.
- Operational Flexibility: Smaller organizational structures allow for quicker implementation of strategic pivots.
By envisioning various scenarios, companies can identify vulnerabilities and opportunities, ensuring preparedness for a range of possible futures.
3. Implementing Scenario Planning: A Step-by-Step Guide
Identify Key Uncertainties:
- Tariff escalations and shifts in trade policy.
- Supply chain vulnerabilities, including single-source dependencies.
- Geopolitical tensions and regulatory changes.
Develop Scenario Narratives to address Key Uncertainties:
- Scenario A: “Trade War Escalation” – Prolonged high tariffs and retaliatory measures.
- Scenario B: “Supply Chain Diversification” – Shift towards nearshoring and multiple sourcing strategies.
- Scenario C: “Technological Disruption” – Rapid adoption of automation and digital supply chain solutions.
Analyze Business Impacts:
- Assess financial implications, including cost structures and revenue streams.
- Evaluate operational capacities and supply chain resilience.
- Consider customer satisfaction and market positioning.
Develop Strategic Responses:
- Diversify supplier base to mitigate risks associated with single-source dependencies.
- Invest in digital technologies to enhance supply chain visibility and agility.
- Engage in proactive stakeholder communication to manage expectations and maintain trust.
4. Financial Resilience Through Cash Flow Forecasting
Robust cash flow forecasting is essential for effective scenario planning. Companies should:
- Integrate Scenario Variables: Model cash flows under different scenarios to understand potential financial outcomes.
- Monitor Liquidity: Regularly assess cash reserves and access to credit to ensure operational continuity in the event of disruptions.
- Adjust Financial Strategies: Align budgeting and investment decisions with scenario analyses to maintain financial health.
5. Proactive Stakeholder Communication
Effective communication with customers and lenders is vital during periods of uncertainty.
A. Customer Communication
- Transparency: Provide clear information about potential delays or changes in service.
- Flexibility: Offer alternative solutions or products to meet customer needs.
- Engagement: Maintain regular contact to reinforce trust and loyalty.
B. Lender Communication
- Regular Updates: Share scenario analyses and financial forecasts to keep lenders informed and up-to-date.
- Collaborative Planning: Work with financial partners to develop contingency plans and secure necessary funding.
- Risk Mitigation: Demonstrate proactive risk management to reassure lenders of the company’s stability.
C. Institutionalizing a Scenario Planning Culture
To embed scenario planning into organizational culture:
- Integrate into Strategic Planning: Make scenario analysis a regular component of strategic decision-making processes.
- Cross-Functional Collaboration: Engage various departments to provide diverse perspectives and insights.
- Continuous Monitoring: Regularly update scenarios and strategies in response to evolving external conditions.
Conclusion: Building Resilience in the Face of Uncertainty
In an era marked by supply chain disruptions and volatile trade policies, middle market companies must adopt proactive strategies to navigate uncertainty. Scenario planning, combined with robust financial forecasting and effective stakeholder communication, enables these firms to anticipate challenges and capitalize on opportunities, thereby ensuring long-term resilience and success.
At JACO Advisory Group and DWH, we specialize in helping middle-market companies navigate uncertainty through scenario planning, robust financial forecasting, and stakeholder engagement. Not sure where to start? Give us a call. Our initial consultation is complimentary and confidential.
Schedule a Strategy Call →
For tailored guidance, visit www.jacoadvisorygroup.com or www.dwhcorp.com.
Note: The data and scenarios presented are based on information available as of May 2025 and are subject to change as global conditions evolve.
JACO’s advisors play a crucial role in this journey, ensuring companies like yours move beyond reactive management to craft strategies that unlock your full potential. They empower you to lead with clarity, confidence, and purpose, guiding you every step of the way.
About Jeff
Jeff has over 30 years of strategic planning, business development, and business transformation leadership experience. Having worked with mid-market, closely-held and family-owned businesses his entire career Jeff has a unique understanding of how these enterprises operate and the challenges they face.
He is passionate about working with business leaders to build strong cultures while developing and executing strategies that deliver exceptional results that benefit all the company’s stakeholders. Jeff’s hands-on approach to working with companies begins with a commonsense approach to strategy development.
With extensive experience in organizational turnaround and growth Jeff follows a defined process (disciplined, focused, intentional) to guide clients from strategy to execution. His experience covers a multitude of industries, with an in-depth understanding of automotive manufacturing.
Jeff holds a Master’s in Business Administration from the Capital University School of Management and earned a Bachelor of Arts in Business Administration and Management from Ohio Dominican University.
