If coronavirus has taught us one thing, it’s that the unexpected can happen. While a global pandemic is a rare and extreme example, countless ‘worst case’ scenarios could occur, including floods, fires, cyber hacks, IT issues and crime, to name just a few.
In such events, it’s easy to be taken by surprise and panic. However, businesses need to be adaptable if they want to survive. If not, unexpected circumstances run the risk of entirely derailing your operations and leading to disruption, debt and foreclosure.
A business continuity plan is a tool that enables you to be prepared when something goes wrong. It acts as a guide to how you should continue to operate while limiting the negative consequences and promoting resilience.
In this guide, we explain what a business continuity plan is and how you can create one.
What is a business continuity plan?
A business continuity plan is a strategy that highlights how you will run your business in the event of an emergency. It can cover a wide range of scenarios, but the focus should be on what you will do to keep all your functions working. It should cover the whole scope of your business, including all departments, processes, assets and finances.
A typical continuity plan should cover off the following:
- The key business areas – outlining the structure of your business and the areas that may be impacted.
- Your critical functions – the aspects of your business that must continue running in any circumstances, as these will be the ones you need to safeguard as a priority.
- Any dependencies – for example, if one business function goes down, will it have ramifications for another?
- Maximum downtimes – how long any given function can be down without causing greater damage to your business.
- How you will maintain operations – your specific action plan for keeping things running.
Essentially, it is a document that will tell you exactly how you should operate in the face of a disaster, incorporating your various functions and dependencies to ensure that damage is minimised and appropriate action is taken. With it, you have a safety net to fall back on if the worst happens.
Why does it matter?
While it’s hoped that you never have to use your continuity plan, having one ready is essential.
When we talk about a ‘disaster’, it isn’t just reserved for natural phenomena or pandemics. A disaster could be something as simple as an IT outage or a data breach. For example, a report showed that 93% of companies who faced a significant data concern without a recovery plan went out of business within the year. This is compared to 96% of companies with a plan who survived ransomware attacks.
When a crisis does occur, whatever it may be, you will likely have a lot to consider. Having a plan can prevent you from having to think on your feet and lift some of the load off. It will also stop any strategy from being affected by emotion or lack of time in the heat of the moment, ensuring you have a thought-out, sensible strategy that has been made ahead of time.
The aim of a continuity plan is both damage limitation and how quickly you can get back to normal. An emergency can destroy businesses that cannot overcome the challenge. By having appropriate contingencies across all areas and functions, you can minimise the impact. This will also reduce the effects on your results, such as loss of sales and profit.
By enabling you to carry on operating, a continuity plan can also help you to generate demand and receive revenue, even in trying circumstances.
Finally, it’s natural to panic when something unexpected happens. However, with the forward-thinking of a continuity plan, you can reassure your staff and stakeholders that you’re prepared to weather the storm.
Our top tips for creating a continuity plan
Once you have understood the need for a continuity plan in every kind of business, it’s time to start preparing yours. It can be hard to strategise for an event that seems unlikely to happen but doing so is critical for your preparedness. Below, we’ve listed some of our top tips to help.
Consider all scenarios
Countless situations could occur to your business, and it’s impossible to predict which ones will happen. Due to this, your continuity plan needs to work for several scenarios.
Depending on the context, the action you take could vary. For example, the process you put in place for an IT systems crash is probably not the same as you would for a flood. However, there will still be shared priorities between the two: limiting damage and finding alternative solutions for your operations.
Although considering the different possibilities will help form your contingency plan and test out its application, you can’t account for everything that may or may not happen to your business.
Ultimately, you need to identify the requirements for any given situation and create a plan that works for all. This will enable you to be ready, regardless of what happens.
Think about the financial implications
In an emergency, once you’ve made sure your staff and customers are safe, your next biggest concern is likely the financial implications. The purpose of damage limitation is to prevent loss to a business, whether that’s profit loss, loss of assets or reduced cash flow. All of these can seriously affect your bottom line.
When creating your continuity plan, consider the financial impact in each possible scenario. This will help you understand the potential effect of an emergency to seek to mitigate the risk.
Beyond this, you will also need to look at the cost implications of the contingency plans you are proposing. Essentially, you want the money spent safeguarding your business to balance out against the potential money you could lose in a crisis. This will help you to refine what solutions you put in place, including any financial support you can utilise to ease the strain.
In some instances, you may also need to have a certain level of cash reserves to protect yourself. Knowing roughly what this figure is through your planning will enable you to build up those reserves over time.
Hold a brainstorming session
There’s a lot to consider when crafting a continuity plan. As such, it’s more than a one-person job.
When creating your plan, consider holding a brainstorming session with key players from across the business. This could include your executive team, department heads or other stakeholders. This will give perspective from different areas, helping you to understand the consequences on various functions if an emergency happened.
Write down any ideas given during the session. You can then go away and look at them all until you refine them into a strategy that accounts for every aspect of your operations and the multiple scenarios that could take place.
Communicate with your team
Finally, once you have finalised your plan, make sure you circulate it across your workforce and stakeholders. This will keep everyone aligned so that, when disaster strikes, all staff are aware of the processes to follow and their role within them.
Having a written document saved somewhere safe is also advisable so that it can be referred to when appropriate. It’s worth having both an electronic and physical copy so that it can be accessed in any context, including an IT outage.
If something does happen, it may be advisable to re-refer staff to the continuity plan to refresh their minds and encourage the correct protocol.
Conclusion
Nobody wants a crisis to take place, but that doesn’t mean it won’t ever happen. The point of a continuity plan is that it considers various scenarios – no matter how obscure or unlikely they seem – and determines how your business will react. If the worst does occur and uncertainty kicks in, having one will be a godsend.
By taking time to create a continuity plan in advance, with a complete understanding of your functions, departments and the potential ramifications, you can ensure you are prepared for any challenge that emerges. This will not only reduce the impact on your business, but it will offer peace of mind that you can survive any obstacle and avoid financial ruin.
If you need support in creating contingencies for your venture, we can help. Our expert advisors have worked with companies to overcome a wide range of barriers, so we know what works when you’re facing uncertain times.
We can also take you through the financial options open to businesses in emergency situations, so you can understand their position within your plan and get a much-needed boost to cash flow when it’s required.