Are You Prepared for Business Disruption?
In today’s world of increasing natural, man-made and technological disasters, it isn’t difficult to envision an incident that could jeopardize your company’s ability to deliver its products and services to your customers. What if you have a fire, a key supplier disruption, severe weather, computer virus, power outage, etc.? According to a 2013 report by the Small Business Majority, an estimated 25% of small- to mid-sized businesses don’t reopen following a major disaster.
You may have business interruption insurance but this is only part of the solution. Insurance can help finance the recovery, but when facing a disruption it is important to know what recovery actions you need to take to restore essential operations (and when you need to take them). If you don’t take the appropriate actions in the right order and at the right time, business survival statistics are not in your favor.
Small businesses are especially vulnerable to disruptions because most of their operations are physically concentrated. The value of having a business continuity plan is directly proportional to the degree your operations could be impacted by a single incident. Of the 60,000 to 100,000 small businesses negatively affected by Hurricane Sandy, up to 30% are estimated to have failed as a direct result of the storm.
The time to develop a business continuity plan is now and not when you need it under the stress and urgency of a real crisis. The consequences of not having pre-defined actions and strategies to deal with disruptions could mean ineffective crisis decision-making, loss of productivity, loss of key staff, decreased revenues, lost customers – and potentially the loss of your business. This outcome is a high price to pay when you compare it against the cost of developing a plan.
Fortunately, it is not as difficult to develop a business continuity plan as it may initially seem. Many of the plan development “best practices” that apply to large organizations are inappropriate, overly complex, cost inefficient, and not necessary for small and medium sized business.
At a minimum, there are three planning steps you should take now:
- Identify essential operations, how long you can go without performing them, and what you would do to recover them in the event of a disruption.
- Create a company-wide contact list for emergency notification and communication.
- Establish a method to ensure your management team can talk to each other during a crisis (established conference call line that never expires, a primary and backup place to meet if you are unable to talk by phone, etc.). Good things happen when management can make informed decisions together.
Since the process of developing a business continuity plan requires an evaluation of existing strategy, operations and supporting processes, it generally also results in better long-range planning and day-to-day benefits such as process efficiency improvements and opportunities to reduce costs. Keep in mind that doing something is better than doing nothing. Take some time to develop a business continuity plan and be prepared. Don’t let a disaster drive you out of business.
If you would like to discuss how to develop a business continuity plan for your company, contact Patrick Darcey, CIC at Provider Group. Patrick can be reached at 781-444-0347, or email@example.com.