Contingency planning: A must for small businesses
In a small business, a minor emergency can turn into a big one if you don’t have a plan to deal with it. Contingency planning may be even more important for small businesses than it is for large ones. Here’s how to plan for the unexpected.
Contingency planning involves considering the external forces that could negatively impact your business and developing a plan to address them if they happen. These forces could be natural disasters like a hurricane or flood, economic issues like supply disruptions or tariffs, damage to your reputation from a defective product or negative publicity, or a host of other issues.
6 steps to create a contingency plan for your small business
1. Identify the risks that are specific to your business. Do you handle sensitive customer information? You may be at risk for a data breach. Do you provide advice to customers? You could be at risk for a negligence suit.
2. Determine which operations are essential. If there is an emergency, which functions are necessary to keep your business up and running? This might include your phone lines, internet, or other technology services. Have a backup plan to keep these resources available.
3. Establish employee roles and responsibilities. Know which employees can do what in the event of an emergency. If a key staff member (including you) cannot get into the office, know who can step in and fill that role. Decide who will be responsible for reporting an emergency and notifying the appropriate parties.
4. Insure your business against potential risks. A general liability policy will protect you against claims that you are responsible for an injury or property damage. A business owners’ policy will also protect your tools and equipment. Professional liability coverage will protect you if you provide professional services. Having the right kind of insurance will protect you against the specific risks your company faces.
Related: Business insurance 101
5. Safeguard your data. Make sure your company and customer data is backed up to the cloud. Having a current backup offsite will protect you if your computer equipment is damaged or if you suffer a data breach or cyber attack. Train your employees to avoid malware and phishing schemes.
6. Review and revise your plan twice a year. Update the plan to reflect staff changes, economic factors, and other issues that are relevant to your business.
You can’t plan for every possible scenario, but identifying possible risks and planning for ways to address them will make it easier to recover from a crisis or emergency.
For even more ways to make sure your business is protected against the unexpected, learn more about the various types of business insurance to protect everything you’ve built.