How will your business respond when faced with an unexpected situation? With a business continuity plan, you’ll know exactly what steps to take. Leading a small business is a challenging endeavor. According to an article published by Entrepreneur, 20% of small businesses fail within their first year of operation. And a staggering 50% fail within five years.
There are many potential issues for these failures, ranging from cash flow problems to leadership challenges. But one of the key issues revolves around a company’s ability to deal with the unexpected. When a situation doesn’t play out in your favor, how does your business respond? If you don’t have an answer, you place yourself at risk of adding to the above statistics. The good news is that a business continuity plan is the ideal leadership tool that will help you prepare for the unexpected.
What Is a Business Continuity Plan?
Business continuity plans are a set of predefined protocols and strategies that define how your business will respond in the case of a disaster or emergency. Think of it as a collection of backup plans that tell you exactly what you need to do when the worst happens. A business continuity plan should encompass every aspect of your organization, from your tech departments to what happens with human resources and your key assets. It should also contain a list of protocols that define how you respond in the event of any of the following situations:
- Natural disasters
- Equipment failures
- Financial or cash flow issues
- Man-made disasters
The goal of any business continuity plan is to ensure the high availability of required resources, thus enabling continuous operation and disaster recovery following an emergency. They’re important because failure to plan can prove extremely costly. According to figures shared by IBM, infrastructure failures cost businesses an average of $100,000 per hour. A good business continuity plan mitigates these costs by minimizing the effects of these failures on the business.
The Five Steps for Building a Business Continuity Plan
1) Perform In-Depth Risk Assessments
Start by creating a list of every possible risk that your business may face. The list should include risks related to all of the following areas:
- Trends and Market Movements
- Business Infrastructure
Once you have completed your list, work through it to prioritize the risks based on their likelihood of impacting your business. For example, a company based in an area that’s prone to natural disasters, such as hurricanes, may place a higher priority on this risk than they would issues related to stakeholders. Your prioritized list tells you which issues to focus on first when creating your business continuity plan.
2) Identify Critical Functions and Create Recovery Plans
Once you understand the risks, it’s time to focus on the impact that those risks coming to fruition might have on the business. To do this, create a list of critical functions your business needs to be able to undertake to deliver its products or services. Then, examine how each potential risk could impact each function.
When you find a function that would get affected by one of the risks, build a recovery plan for that function. This plan may involve creating backups of crucial data, enabling employees to work from home, or maintaining a secondary location or backup hardware stock. Repeat this process for each critical function, identifying the level of risk it faces and what you need to have in place to ensure swift recovery of the function in the event of an incident.
3) Define Emergency Roles
Your employees are just as important in your response to an emergency as your recovery plans. And often, it’s the rapid action of your people that enables you to put your plans in place. With this in mind, spend some time assigning roles to key staff members for each potential situation you’ve identified. Define who will act as an emergency coordinator and what they will need to do in this position.
In some cases, preparing for emergencies may require you to train staff members or obtain specific licenses. Your plan may also include protocols for staff relocation, especially if your business has several locations. The main point here is that your people need to know what they have to do when an emergency situation occurs in your company.
4) Document Your Plan
No plan can be effective if it resides solely in the leader’s head. As such, you must document your business continuity plan so that others can access and follow it when needed. Make sure to store the plan in a secure off-site location, as this reduces the risk of the plan being lost or damaged in the event of a disaster.
5) Test the Business Continuity Plan Regularly
No situation is static and new issues will appear that cause you to revisit your business continuity plan. That’s why it’s important to ensure that the plan remains consistent with the current risks and capacity of the business at all times. It’s worth creating an emergency preparedness team that revisits the business continuity plan regularly. You should also test the business continuity plan for its consistency whenever a significant change occurs in your industry, such as the introduction of new regulations. Perform regular tests to identify gaps in the plan.
A Business Continuity Plan Protects Your Business
Business leadership involves more than the ability to build and inspire teams. You also need to focus on protecting your business so that your teams are capable of doing what you need them to do in any situation. That’s what a business continuity plan allows you to do.
A good business continuity plan defines every protocol to follow in the event of an emergency. By building one, you put yourself in a better position to lead your business through any crisis.
Of course, building a plan is not simple, especially for smaller businesses that have limited resources. If you’d like help with building yours or wish to discuss any other aspect of business leadership, contact Universal Data to schedule a meeting.