Crafting Effective Contingency Plans: Ensuring Business Resilience
This is a very personal post today. I have a nasty cold and I’m out of the game for a few days. The Guildstreet team are amazing and luckily with their help Guildstreet seems to almost run itself. We are a team and we can take up the slack for each other if someone is down sick or on vacation. Well, that isn’t actually luck – it’s planning - and it got me thinking. What does every business absolutely need to keep running when something unexpected happens?
1. A contingency plan
That covers every risk that you and your staff can think of. Start with a brainstorming session – a brainstorming session talking about risks can be both hilarious and super practical. Even if you are a solopreneur, engage other entrepreneurs in your brainstorming session. Engaging many minds always generates better ideas. From the information that you gathered in that brainstorming session, build up a robust contingency plan. A contingency plan doesn’t have to be fancy or complicated.
We’ve learned at Guildstreet what to do when someone is sick, when a flood keeps us from the office, when a pandemic slows everything down and stops our clients from doing business, when a downtown electrical rebuild shuts down our power. Those are just a few small experiences we’ve had. I’m sure that everyone reading this can think of many more!
Putting together a contingency plan and an action plan to deal with the contingency is the best way to be prepared to keep your business operating. Think about the level of cash that you will need to keep your business going, where to find backup people, and how to protect your business from cyber-attacks. What are the tasks and processes that can be put on the back burner when necessary. Do you have critical employee insurance and business interruption insurance? Your business is unique so it’s smart to work out what you need to do to keep it operating and the resources that you need to implement your contingency plan.
2. Cash in the bank to keep operating
Or to hire temporary help if a key person is not available for a while. You’ve read a lot on our blog about Cash Flow forecasting and planning. It’s easy to take your cash flow for granted until something unexpected happens. Don’t kid yourself – the unexpected always happens.
We are now all wiser – the pandemic and the inflation aftermath taught us a lot about the benefits of having extra available cash to ride out the storm. Having sufficient cash in the bank and planning to make sure that there is always enough cash available is critical. Many businesses fail solely because of cash flow problems. Just knowing when and where your cash comes from – your revenue inflows - and timing your expense outflows helps make your business secure and powerful.
3. A communication plan
So, what if I got sick during the early days of Guildstreet and there was no one to take up my work? What if you need to step back from your business during your startup period? Effective communication is key. If your customers know what is going on they will likely continue to support your business. And it’s not just your customers. Make sure that all stakeholders, including employees if you have them, customers, suppliers, and investors, are informed about your situation and the steps you are taking to address it. People are great if you openly tell them what is going on.
4. Build flexibility into your plan
This is where learning to be resilient is important. Be prepared to adapt to changing circumstances. You know that everything changes and will keep changing! Engage your team and train them to be prepared to execute the contingency plan. Test and review your plans. Monitor your business environment for emerging risks - without being paranoid - and keep your plan up to date.
Contingency planning is vital for entrepreneurs. By proactively identifying potential threats and developing actionable strategies to mitigate them, you can enhance your business resilience and increase your chances of long-term success.
Remember that effective contingency planning lies in preparedness, adaptability, and clear communication. And get your flu shots!
If you need help with cash flow planning and contingency planning, please contact Guildstreet at info@guildstreet.ca. We also have connections to experts in the Guildstreet network who can help you with emergency communications.
By Keren Houlgate