The (not so) Secret Weapon for Crisis Management
Although we can never be 100% prepared for a sudden disaster or global emergency, businesses of any size need a Business Continuity Plan ready for when the chaos arrives. Whether it’s a global pandemic, cyberattack, utility failure, or supply chain disruption; having a business continuity plan in place is essential so that your business can respond quickly and efficiently to prevent financial loss.
A Business Continuity Plan is a strategy or list of steps a company takes to mitigate a disruption to business flow—the plan outlines procedures and resources needed to stay afloat and to get back on track as soon as possible. Although business continuity plans differ from company to company, a successful plan always includes elements like risk assessments, recovery strategies, staff and client communications, and staff continuity measures.
Here are some of the top benefits of investing in a thorough business continuity plan:
1. Assess risks before they happen
A business continuity plan helps identify and mitigate risks before they become catastrophic. By assessing threats that can impact your company (even small businesses), you can work to develop strategies and solutions that prevent these threats from growing huge. Let’s say you work with sensitive client data, for example. Identify the risks of a cyber security breach (a threat that almost all companies face) and then you can implement stronger security measures that reduce the likelihood of the risk occurring— whether it’s enforcing multi-factor authentication, conducting cybersecurity training, or installing new protective software. A calculated approach to risk management is crucial.
2. Minimize revenue loss
Businesses that rely on complex supply chains and long-term client relationships are at high risk in the face of emergency, since halting operations leads to severe financial repercussions if not properly addressed.
Interruptions and delays to crucial product flows in supply chains, service and delivery, manufacturing, or otherwise, have a big impact on revenue, and potentially both negative and long-term effects on client relationships. A business continuity plan aimed at ensuring that critical functions of your business still run relatively smoothly if disaster strikes, and help you maintain financial stability.
3. Protect and retain employees
Crises directly impact your staff. Employees need to know that their safety is your top priority, and that their jobs are secure during unstable times. Establishing and communicating a plan that details staffing support maintains a stronger sense of trust and loyalty towards the company and improves recruitment strategies if prospective employees know that their job is protected.
In economic downturns, employees worry about their hours being reduced, or about being laid off. One component of a business continuity plan could include ways the company preserves salaries and cuts back spending in other areas to ensure employee security.
As salaries are typically the largest expense component, looking at gross margins after cost of sales is essential for a good continuity plan. Don’t forget to ask your employees for their ideas to contribute to the business continuity plan – they may have solutions that you have not thought about.
Part of protecting your employees is direct and frequent communication during a crisis. Employee communication is key to a successful crisis communication plan.
4. Maintain client trust
Your business’ reputation and your client relationships are extremely valuable assets. A strong business continuity plan demonstrates to clients and shareholders that you are a trustworthy and reliable partner. Maintaining client trust and confidence can be done in several ways; one essential aspect of a business continuity plan is setting up clear communication goals.
Clients want to know what is happening, how it affects them, and what the timeline is for resolution. Clear communications highlighting your ability to maintain operations even during challenging circumstances is also a great public relations strategy.
5. Ensure regulatory compliance
Adhering to regulatory laws is critical to the success of your business in any industry. Ecommerce and finance companies have strict data protection guidelines when dealing with sensitive financial material. Healthcare operations need to be aligned with local health regulations, and restaurants and food providers must follow safe food handling guidelines. Scope out the regulations and guidelines that apply to your business.
6. Cash flow planning
Comfortable reserves of cash buffers your business against both surprises and crises and gives you the ability to carry forward your staff. Having cash in hand means that you can shift to new sources of stock and to different supply chain solutions, and perhaps give you the option to hire additional staff to help to handle the crisis.
Never mind the peace of mind that a healthy cash reserve gives you when your taxes are due to be paid, planning your business cycles to build extra cash reserves, and investing that cash where it can be easily redeemed in a crisis will ensure that your business thrives.
Surprisingly the process of building your business continuity plan often reveals opportunities to streamline your operations and perhaps realize some cost savings right up front.
Whether you are at the beginning stages of your entrepreneurial journey or are running an established business; a business continuity plan is a vital component that ensures your company remains resilient and adaptable in the face of adversity.
Need help taking the first few steps to safeguard your company? Contact Guildstreet today- the first call is always free!