Contingency Planning: A must for small business
September 30, 2013
Having a business contingency plan is essential with a small business, which can face even more potential emergencies than big businesses. Here’s how entrepreneurs can perform contingency planning for their small businesses.
Contingency planning for larger businesses generally deals with unexpected events that affect the financial health, professional image, or market share of the company – things like floods, supplier disruptions, or even a large unexpected order. Large firms have bank accounts that, combined with a solid contingency plan, can facilitate quick recovery.
Small business owners need to prepare for these same events, while also making plans to deal with emergencies like owner hospitalizations, staff maternity leaves, and other possible crises. How can an entrepreneur or small business owner create a small business contingency plan?
The particulars of your plan will be unique, but by following these steps you’ll be on your way to having a thorough business contingency plan in place.
- Identify the main risks to your small business. Is hurricane season an issue where you are? Would a data breach be catastrophic? Are several of your staff potential maternity or paternity leave candidates? These are all things small business owners should prepare for.
- Pinpoint operation essentials. Decide what’s absolutely necessary for your small business to start operating again if a disaster or illness forced you to close. Then take steps to ensure that those resources are available quickly if needed.
- Establish employee roles and responsibilities. Entrepreneurs should identify team members and staff, what they do now, and what they’re capable of doing if necessary in case of an unexpected event. Then, make a step-by-step list of actions to take post-event. This will make it infinitely easier for staff to pick up in your absence.
- Secure insurance to cover your potential risks. A good start is general liability insurance. If you offer professional services, you’ll also want to consider a professional liability insurance policy. Having the proper type of insurance to cover your risks will go a long ways toward getting your small business up and running again if disaster strikes.
- Backup data to avoid losing it. Every business is in the data business now, even if that data is just your client databases and online tax filing records. Losing data almost always causes huge problems for small businesses, so make sure you’re backing up your data with an automated system that requires little oversight. Creating a small business disaster plan is important in order to prepare for potential storms and necessary office closures.
- Review and revise your contingency plan bi-annually. Go over and update the plan every six months to account for staff changes, economic factors, and other issues pertinent to your business.
Although business contingency plans are unique to each small business, they are undoubtedly necessary for all small businesses to make an easier recovery in case of any potential crises.
Tell us! How will your business prepare for possible business risks?