What will you do when disaster strikes your business? Everyone expects life to return to normal, but for many business owners, the reality is much more devastating. According to the U.S. Department of Labor, it is estimated that over 40% of businesses never reopen following a catastrophic event. Of those that remain, approximately 25% will close within two years. In large part, this is because many businesses have not created and implemented a Business Continuity Plan (BCP).
How prepared are you for a disaster? What are your critical functions? Are the critical parts of your business able to function in the event of a catastrophe? How will they be restored? A written BCP that answers these and other important questions will help ensure you are prepared to survive during unexpected interruptions to your business. A BCP is a comprehensive plan for the continuation of critical business operations after a disaster. Critical means essential. The purpose of the plan is to minimize decision-making during an incident and makes recovery more effective. According to a study by Touche Ross, companies without a BCP have a survival rate of less than 10%. Yet it is estimated only 35% of small businesses have a BCP.
When a business crisis occurs, the last thing you want to do is panic. The second-to-last thing you want to do is be unprepared. Crises typically arise without warning. While you shouldn't start every day expecting the worst, you should be relatively prepared for anything to happen. A business crisis can cost your company a lot of money and ruin your reputation if you aren't proactively prepared to handle one. Customers aren't very forgiving, especially when a crisis is influenced by accidents within the company or other preventable mistakes. If you want your company to be able to maintain its business continuity in the face of a crisis, then you'll need to come up with a plan to uphold its essential functions.
Business Continuity Types
1. Operational
Operational continuity means that the systems and processes your business relies on are able to continue functioning without disruption. As these processes are critical to business operations, it's important to have a plan in place in case disruption occurs so you can minimize the loss of revenue.
2. Technological
Organizations that rely on technology to run want to ensure the integrity and continuity of those systems. For example, while the functionality of Google Drive is not within your realm of control, there are many internal systems that you'll want to maintain and mitigate, like maybe having an offline file storage system to access important documents.
3. Economic
Economic continuity means that your business is still able to continue being profitable during possible disruptions. Every business has its ups and downs, so one thing you'll want to do is future-proof your organization for negative scenarios that can hit the bottom line.
4. Workforce
Workforce continuity means that you'll always have enough staff, and the right staff, to handle the work that comes through your doors, especially during times of crisis.
5. Safety
Workforce continuity goes beyond planning the right roles and staffing the right people to fill them. In order for them to show up every day and perform well, they must feel safe to do so. This involves creating a comfortable work environment, and ensuring that, even during a crisis, people have the tools they need to succeed and feel supported in the workplace.
6. Environmental
Environmental continuity means that your team is able to operate effectively and safely in their work environment. This can mean considering possible threats to your physical office or headquarters, and coming up with plans of action if these issues occur.
7. Security
You want your employees to be safe. You also want your employees and business assets to be secure as well. Security breaches can cause major harm to your operations, safety, and reputation. Continuity in this realm means prioritizing employee security and safety of important business information, and plans of action if the information were to become compromised.
8. Reputation
Customer satisfaction and a good reputation can fuel your flywheel and result in increased revenue. The flip side of this coin, however, is that a tarnished reputation can cause great harm. Reputation continuity means continuously monitoring conversations about your brand or business, prioritizing customer satisfaction, and coming up with action plans for rectifying situations if your reputation is called into question.
Importance of Business Continuity Plan
A business continuity plan is important because regular operations will need to continue in the event of a crisis -- and sometimes, especially during a crisis. Having a business continuity plan in case of each type of crisis will be helpful to maintaining your operations.
The Five Phases of Developing and Maintaining a Business Continuity Plan
Phase 1: Initiation
Pull together a team of people who are aware of the different operational aspects of your business to evaluate what potential events create the greatest threats to your organization. Here in Florida, it is easy to fall into thinking of disasters as natural events like a hurricane or flood; But hazards also include technological events such as cyber-attack, utility outage, or a fire.
Phase 2: Business Impact Analysis (BIA)
BIA is a systematic process of gathering and analyzing information about critical business functions to determine the most important elements of your business with the greatest risk potential. Don’t waste time or resources if there is little or no impact on business operations. Remember that key employees and management succession are important subjects of a BCP (Does your business have a policy that prevents key employees from traveling together? What happens if a key leader is incapacitated and not able to respond in the event of a disaster?).
The essential part of the BIA phase is that you ask the right questions. Creating a BCP may seem overwhelming, but there are a number of tools available to assist in the process. Find a good checklist and use it. BKS-Partners has created a comprehensive hurricane preparedness website were you can find resources and other tools to help you with this process.
Phase 3: Develop Recovery Strategies
Communication is key during and after a disaster. In an effective BCP, people come first. It is essential to have a functional means of communication with employees, vendors, and customers.
Determine the business impact of a function or process first, and then develop recovery capability for it. Your objective in this phase is to identify the people, facilities, and assets that are required to achieve the four “R’s” which are: Response, Resumption, Recovery, and Restoration.
Phase 4: Implementation
An effective BCP must be written and communicated to all employees on an ongoing basis.
Phase 5: Test and Monitor
Risk is not static. Personnel changes, potential threats, and critical business functions will change over time. A BCP must be validated through testing or practical application and must be kept up-to-date.
The Business Continuity Plan and Insurance
Risk is not static. Personnel changes, potential threats, and critical business functions will change over time. A BCP must be validated through testing or practical application and must be kept up-to-date.
Be Intentional
Remember, it is always better to be intentional rather than random. That is how you achieve business success. The same is true for business survival following a catastrophe. One of the greatest risks you face in this or any other area of your business is complacency. Never forget that others are depending on your survival and continued success after a catastrophe—employees, their families, your customers, suppliers and vendors, and even the community. Now is the time to prepare. Are you ready?
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