How will your business respond when faced with an unexpected situation? With a business continuity plan, you'll know what steps to take.
How will your business respond when faced with an unexpected situation? With a business continuity plan, you'll know what steps to take.
Leading a small business is a challenging endeavor. According to a January 2021 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 various reasons for these failures, ranging from cash flow issues to leadership challenges. But one of the problems 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 risk adding to the above statistics. The good news is that a business continuity plan (BCP) is the ideal leadership tool that will help you prepare for the unexpected.
What is a BCP
BCPs are a set of predefined protocols and strategies that define how your business will respond in the case of an emergency. It is a collection of backup plans that tell you precisely what you need to do when the worst happens. A BCP should encompass every aspect of your organization, from your tech departments to what happens with human resources and your critical 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 BCP is to ensure the high availability of required resources, thus enabling continuous operation and disaster recovery following an emergency. They're essential because failure to plan can be costly. According to figures shared by IBM, infrastructure failures cost businesses an average of $100,000 per hour. A good BCP mitigates these costs by minimizing the effects of these failures on the company.
The Five Steps for Building a BCP
Now that you understand the importance of having a BCP, it's time to create one for your business. Follow these steps to ensure your BCP is as comprehensive as possible.
#1 – Perform In-Depth Risk Assessment
Start by creating a list of every possible risk that your business may face. This list should include risks related to all of the following areas:
· Industry
· Geographical
· Trends and Market Movements
· Stakeholders
· Employees
· 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 prone to natural disasters, such as earthquakes or floods, 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 BCP.
#2 - Identify Critical Functions and Create Recovery Plans for Each
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 the critical functions your business needs to undertake to deliver its products or services. Then, examine how each potential risk could impact each function. When you find a function affected by one of the risks, build a recovery plan for that function. This plan may involve creating backups of critical 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 during 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 reallocation, especially if your business has several locations.
Your associates need to know what they have to do when an emergency occurs in your business.
#4 - Document Your Plan
No plan can be effective if it resides solely in the leader's head. After all, one of the identified issues may be the leader's loss to an accident or something else. As such, you must document your BCP so that others can access and follow it when needed. Store the BCP in a secure off-site location; this reduces the risk of the plan being lost or damaged in a disaster.
#5 - Test the BCP Regularly
No situation is static, and new issues will appear that cause you to revisit your BCP. That's why it's crucial to ensure that the BCP 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 BCP regularly. You should also test the BCP for its consistency whenever a significant change occurs in your industry, such as introducing 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. It would be best to focus on protecting your business so that your teams can do what you need them to do in any situation. That's what a BCP allows you to do. A good BCP 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 BCP is not simple, especially for smaller businesses that have limited resources. If you'd like help with building yours, please schedule a consultation with our team today.
