Is Your Continuity Plan Crisis-Ready?
May 9, 2022 •Oak Street Funding
What did March 2020, teach you about your continuity plan? If there was ever an event that forced business owners to see the importance of continuity planning, it was the pandemic.
Continuity planning is a critical and powerful business tool
Continuity planning may seem like an unattainable luxury to business owners who spend nearly all of their time focused on getting through the challenges of each new day. However, having a thorough continuity plan is a key step in ensuring the business will still operate in the face of disruption. Just as important, the work that goes into developing a continuity plan may give owners fresh insight into their organizations -- insight that can inspire significant improvements.
Recent history emphasizes need for continuity planning
Continuity planning has always been important, and for proof, one only has to look around at the effects of the COVID pandemic. Think back to how other businesses in your community reacted to everything from quarantines to mask mandates. Some businesses couldn’t handle the disruption to normal operations and permanently closed their doors. Others quickly adapted to the new environment and survived or even thrived.
Cyberthreats call for continuity planning
Still not convinced? Then consider what would happen if your company were impacted by one of today’s biggest threats: a cyber attack. If you discovered your company’s data had been breached or that ransomware had locked up your computers, could you keep your doors open for long? Developing a thorough continuity plan and implementing elements such as stricter cybersecurity and better cyber insurance coverage may dramatically increase your company’s ability to survive serious threats such as these and disasters such as severe weather and wildfires, both of which are reportedly on the increase.
What is the primary goal of business continuity planning?
Some owners might react to the concept of continuity planning by saying, “I’m not worried, because we have good insurance.” While insurance is definitely important and a necessary component of most continuity plans, it won’t take care of all the problems. Suppose your office suffers a devastating fire. Insurance will help you rebuild, but it probably cannot recreate the business you lost when you and your team weren’t available. It may not cover the wages of your employees while your business was shut down.
Sound continuity planning addresses issues like physical losses but also goes beyond them to consider measures that overcome disruptions. For example, insurance planning is about receiving funds to rebuild your office. Continuity planning also addresses what you’ll need to do to get the business up and running in an alternate location -- and what that location may be -- so the interruption to your business is minimal.
What is the biggest difference between disaster planning and business continuity planning?
Some businesses have disaster recovery plans, but those are usually limited to restoring their computers and other IT equipment through planned backups. While a true business continuity plan includes disaster-recovery steps, it goes beyond them to address every aspect involved in running a business, from the role of staff, to facility needs, to relationships with other companies, to communicating with clients and other key stakeholders.
A continuity plan spells out the needs your business may face in a catastrophic or disruptive event, along with processes and procedures to keep you operating and minimize the effects of the disruption. With the right continuity plan, you’ll be able to get back to normal operations more quickly.
What are the four steps of the business continuity planning process?
Business continuity plans vary as much as the companies creating them, but most sound plans are built around these four steps:
- Identification. What are the risks that could endanger your company? How could your risks also make your team, your customers, and your suppliers vulnerable? What would a flood do to your operations? What about a terror attack in your community? Consider which risks are most likely to happen and take a deep dive into how those risks would affect you.
- Understanding. Examine your business closely to see which clients or business relationships are most important to how your company does business. Study processes to gauge their impact on what you do and think about what would happen if they became impossible. Use what you learn to determine who and what you address first when a catastrophe occurs.
- Seatbelts. You probably don’t think much about the seatbelts in your car. With any luck at all, you’ll never need to count on them to save your life. But if the worst happens, they’re there. Similarly, you can’t eliminate risk, but you can mitigate it in many ways, from loss control strategies to creating off-site data backups. They’re the seatbelts protecting your business when bad things happen.
- Proving. Foolish companies invest time and money in creating continuity plans, then put them on dusty shelves. Continuity planning never stops, because our world is constantly changing. That’s why it’s important to review and test your continuity plan at least once a year, because you’ll discover changes that need to be made -- and may even come up with better ideas.
What is the benefit of business continuity planning?
A well-designed continuity plan does more than simply allow you to reopen your doors more quickly. It can give your business a substantial competitive advantage by providing the opportunity to study every aspect of your operations and look for ways to improve. It can help you identify potential weaknesses you can address before disaster strikes. It allows you to examine your relationships with key partners and how problems with their companies might affect yours. In addition, it makes it easier to plan for potential financial risks.
Most of all, if you’re forced to implement your plan and you execute it flawlessly, it can strengthen the confidence of your clients and others in your market, which will enhance your reputation. And, if the catastrophic event affects your entire community — such as in the case of a hurricane or similar storm — it can place your business in a leadership role.
Developing business continuity strategies takes time and isn’t necessarily enjoyable, but if your business ever faces a disaster or other significant interruption, having a plan in place will minimize the disruption’s impact and get you back to normal far more quickly.
Disclaimer: Please note, Oak Street Funding does not provide legal or tax advice. This blog is for informational purposes only. It is not a statement of fact or recommendation, does not constitute an offer for a loan, professional or legal or tax advice or legal opinion and should not be used as a substitute for obtaining valuation services or professional, legal or tax advice.
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