Have you prepared a business contingency plan_

But What If? Here’s Why You Need a Business Contingency Plan

More...

We’re always taught to reach for the stars and push towards our dreams. But what happens if...

Do you have a backup plan?

As a business owner, you’ve developed many strategies to get to where you are now: Marketing, Sales, Operational, Strategic, Financial, but have you developed the back-up plan? More commonly known as the ‘oh sh*t!’ plan.

What you need is a business contingency plan.

Businesses, more importantly, SMEs are required to be nimble and adapt to the ever-changing business landscape, especially from the economic fallout of COVID-19. Those who didn’t "pivot" (yes we are tired of this word too!) during the initial wave may be wondering whether they'll continue to face large financial setbacks.

To counteract more roadblocks going forward, it’s vital for businesses to get serious about contingency plans.

What is a business contingency plan?

This is a strategy your business could follow in the case of an unexpected occurrence that severely disrupts your workflow. They ensure your organisation is ready for whatever life throws at it.

Besides a global pandemic, contingency plans are important to have in place in case of injury of yourself or key employees, natural disasters, data breaches, major network failures, or sudden financial pitfalls. They don’t necessarily need to be negative. Technically these plans could come into play if you suddenly find yourself with an influx of money and don’t know what to do with it.

We can dream right?

But more often than not, you need a business contingency plan in order to make a quick move to save your business. Not to be mistaken with Crisis Management - which is the reactive element of what to do during an emergency - these plans are proactive and should be put in place before to help you recover swiftly after the incident.

How do I create a business contingency plan?

The crux of creating a good back up is to consider Murphy’s Law: Anything that can go wrong will go wrong. Once you understand where the potential threats are coming from (do you rely financially on a certain investor? Does your service need a specific product to operate?), then you’ll be able to address what other options your business has. What it will take to reinvent your business model in case something disrupts your ‘business as normal.’

To create a business contingency plan for your business, follow this 5-step framework.

KEY ELEMENTS OF A BUSINESS CONTIGENCY PLAN


Identify Business-Critical Functions

Do a little research into your organisation to both identify and prioritise the things your business can’t survive without. Is it certain staff members, IT systems, mechanical equipment, and other physical assets?

Then, analyse these business-critical functions and determine how much downtime is acceptable before it starts impacting your output. 




valuation-exit-strategy

Identify Key Risks

Next, figure out what risks threaten your critical functions. Rely on the experiences of your team from IT to C-Suite to gain an extensive overview of what these risks could pose. This is unique to your business, but could encompass technology failure, floods, fires, or work and safety issues. While you can prepare for the end of the world, large natural disasters and global pandemics such as COVID-19 are (hopefully) rare. You’re more likely to need to prepare for a cyberattack, extended power failure, or an event that prohibits your employees from making it into the office.

You may also consider bringing in an external expert specialising in risk assessment to help paint a clear picture. 

selling-your-business

Identify Essential Workers

Who in your business would be the member you would turn to in a snap to lead? Who is trained in first aid or great at fixing IT issues in a pinch? Or has the nous and leadership to take the business forward. Identify those key employees and build them into your crisis management plan.

Lay out who will cover certain essential tasks in case of disruption and exactly how the reporting line will change. This way there is no miscommunication when you need everyone to be on the same page.

Exit Advisory

Develop Action Plan

It’s common for Australian emergency management agencies to promote the PPRR mode. The Prevention, Preparedness, Response, and Recovery model is a holistic approach to risk management. If you use this as part of your business contingency plan, it will save you time and money in the face of setback or disaster.

Prevention - Take actions to reduce the likelihood of the key risks you identified, or the damage it will cause. This could include beefing up your cybersecurity to ensure your servers are safe from foreign attacks.

Preparedness - Determine what you can do before an incident happens to ensure your business will be able to quickly bounce back. If you’re worried about cyber threats or a technology blackout, make sure you have backups of your data, your website, and anything else you need to operate both in the cloud and on protected servers.

Response - Actions you can take to minimise the impact of the incident on your business. Have employees set up to access your servers from home in case it’s not safe or viable to come to the office.

Recovery - Take actions after the incident to speed up recovery times. Learn from what happened and build it into your new plan going forward.

Exit Advisory

Document Everything

Put everything together in an operational guide and communicate your business contingency plan to the team. Walk them through the scenarios step-by-step and discuss how you would speak to customers, suppliers, and each other as the events unfold.

Which channels would you use? Social? Email? The phone? Make sure employees know what they’re responsible for in order to keep the business operating, even if it’s in a limited capacity.

Putting all your processes in one place also has the added benefit of onboarding new employees much easier. If all your processes are written down, along with who your major suppliers are, and the roles and responsibilities of each team member, then you’re prepping them to succeed in your business, as well as empowering them to take over the reins in case of an emergency. 

Now you need to maintain it. 

Business contingency plans are not a one-off. They should constantly be evolving and adapting as the landscape does. No one likes to think of their business at risk, but if it’s one thing that COVID-19 has taught us, is that we should be prepared for the inevitable ‘what if’ that will befall our business. 

And once you’ve laid a strong contingency plan in place, you can rest with peace of mind, knowing you’re better prepared for what comes your way.

Future-Proof your business 

Forward thinking business owners plan strategically. They prepare for trends impacting their business and industry.


Here's how we help:


  • Discovery - understand where are you now
  • Strategic Planning - know where you want to be
  • Advisory Services - your pathway to get there 
  • Advisory Board - your inner circle of experts that offer ongoing strategic direction  

Speak to an Expert on our team to understand more

At Exit Advisory Group we help entrepreneurs maximise company value and exit at the top of their game.

We do this by giving business owners the tools and strategies to design more profitable, efficient and enjoyable businesses to own - that are also less dependent on them. When they choose to exit, they are in the best position to unlock the wealth in their business and be rewarded for their hard work.


www.exitadvisory.com.au

ask@exitadvisory.com.au

1300 133 540

Exit Planning | Maximising Company Value | Business Sales

Follow us on:


If you liked this article we'd love you to share it!