Why Are Business Continuity Plans So Important to the Small Business Owner?

Most small business owners do not understand the importance of business continuity plans to their business.

Some business owners don't even know what a business continuity strategy or plan is: business continuity plans are to be used for continuing or re-opening your business after a disaster strikes.

However, sadly the news over the past few years has been full of major disasters. How would you feel if you were a small business owner in New Orleans, USA during Hurricane Katrina, or a small business owner near the beaches in Phuket, Thailand when the Tsunami hit in 2004, or in New York City on 9/11, 2001 when terrorists struck, or a small business owner in Wenchuan, May 2008 when a 7.8 Richter scale earthquake devastated southwest China?

These natural and man-made disasters are terrifying and challenging to deal with on a personal level and even more on a business level (where the responsibility is more broad reaching than family; to employees, customers, suppliers and other stakeholders).

As a small business owner, you not only have to be concerned about the safety of your staff, your suppliers, your customers and your business (as well as being concerned on a personal level) but you must be concerned about returning to work and re-opening for business after the disaster.

--------Some Business Disaster Question Examples----------

If you have a physical building location, is it standing? Is it damaged or structurally sound?

If you have employees, are they okay? Can they get to work? If not, how can you help them?

Are your suppliers able to continue operations? Do they have any of your orders in process, in transit, or trapped or destroyed by the disaster?

Are your customers okay? Are their businesses okay? Can they reach you (in person, by phone, by internet)?

The potential impact of disaster on your small business can make a tragic situation even more difficult. For everyone.

In case of disaster, you must have a strategic plan ready to enact; make your business continuity plan part of your business plan outline checklist.

First, assume you will have communications issues for the first 48 hours.

Government emergency plans usually state that they would take over available communications lines for emergency response. Immediately after a disaster, it is likely that business continuity services from various levels of government will be limited. Ensure that you make it the role of human resources staff (if you do not have a human resources department or specialist, then it must be up to you) to brief your key people on your plan), and that plan is reviewed at minimum on a yearly basis with those people. Your people need to know what the plan is so that they will act on it as soon as possible.

Make sure that your business continuity plans include the following:

1. Business Continuity Plans - Your Communications Plan:

• How will you contact all key stakeholders?Build a first responders plan: who will you contact, who will you ask them to contact (develop a phone tree). Phone (make sure that all employees know a number to call someplace across the country – for example develop a reciprocal agreement to help another company on the east coast in case of disaster and they will help you on the west coast – help could mean having someone who is far away from the disaster take messages and give messages via a 1-800 number); internet (e.g. blogs); website; newspapers; television; email; these are just some options to consider.

• Consider asking your telephone service provider to re-route all calls to your numbers (main office, sales, estimating, shipping, warehouse, toll free, fax, dial-in to the system network, etc.) to a recovery location, to a 'friendly' location (the east coast/west coast example directly above), or to a recorded message.

• What will you communicate? Is it a return to work at the existing location in 5 days? Or a temporary recovery location – provide the address and directions to get there.

  Or? This is dynamic and can only be decided at the time of the disaster but recognize that your communication must tell your audience fully what they will need to know and how they will need to act.

2. Business Continuity Plans - A physical assets and property checklist.

• Then, in case of disaster pull that checklist and review the physical assets (building, equipment, infrastructure – power, roads to and from the business, phones, internet) for impact. The building you operate in might need a structural review. Keep a list of professional engineering contacts with the checklist; contact people on that list as soon as possible. Also keep a list of all your equipment and your capital expenditures invested in your equipment (in case you need to replace or repair or claim through your insurance). The goal is to minimize the disruption or interruption of business.

• Assume that the space you are presently operating in is not salvageable – have a list of alternative spaces that you could try to access and use – a recovery location. Think about suppliers' space; large warehouses; families; competitors.
• Also try to consider space that is outside of the disaster area as long as that location can still serve your customers and your employees (consider this a temporary move for the first six months).

  If you set up outside of the disaster area, it will be easier to operate and to transport goods, and people, to and from the temporary location). If necessary, try to help your employees with temporary housing or a temporary move closer to your business: the transportation infrastructure is likely to be down in the hardest hit areas for weeks, if not months.

• Once you have determined what your recovery location is, your plan will need to consider how you will let key contacts know (e.g. how will employees know where to go: use a phone tree – you phone your key 2 employees, you ask them to each phone the next two and so on.)
• Similarly consider alternatives for equipment: borrowing, leasing, buying. What is your most important equipment – list how, where and when can you replace it if necessary?

3. Business Continuity Plans - Contacts:

• An employee list (names, addresses, phone numbers, emails, emergency contacts) – you will need some way to reach them. They will need some way to reach you.

  If you have another company location or affiliate that is located far enough away from each other, provide employees with that location’s phone number and email address – it is more likely that you can make contact there, than at the local disaster site.

• A suppliers list (names, addresses, phone numbers, and emails) and on that list identify what you buy from them.
• A key contacts list: your lawyer, your software provider, your insurance agent, your banker, your property manager or the owner of your building.
• A customer list: with contact names, addresses, phone numbers, emails. Rank customers in order of sales volume – you need to talk to your largest customers first – they will be depending on you.

4. Business Continuity Plans - Operations:

A list of critical business functions that will allow you to resume your business operations (continuity should be written into your business operations plan),

• If you are a manufacturing plant, a disaster could result in your total inability to continue manufacturing until the equipment is replaced and supplies are received.

  However, you could contact ‘friendly’ competitors and have your sales staff work to transfer your customers’ orders to their location while you re-build. You may wish to negotiate an agreement in advance with your competitor. Build a strong and successful network well in advance of disaster.

  While this may be a difficult task for you to face, remember that your customers will greatly appreciate the fact that you were organized enough before, and after, a disaster to keep their best interests upfront. That planning and consideration for your customers will have high value after you become fully operational again.

• If you are a distributor, a disaster could result in your inability to provide service until your inventory is replenished. Make sure you keep a list of all inventory items, the monthly volume of each item and where you purchased them.
• No matter what business you operate you will need a copy of, or access to, your business records. Today those records are typically stored on the business’ management information systems. Keep track of how often you back up, who maintains the back up and where the back up is stored (make sure it is offsite – a number of companies believe it should be stored out-of-city).
• Consider how you will pay employees for the interim. Talk to your banker. Assuming your insurance will cover this business interruption, and ask your bank for a temporary line of credit to move into the business recovery phase quickly. Having a copy of your insurance policy in your business continuity plans book will be useful when talking with your bank.

At some point early in the disaster, typically after the insurance company has attended the scene, you will have to make the decision in terms of continuing your business and determining what it will take to do so. Assess what business continuity services are available to you during your decision making process - often various levels of government will provide some support.

Some businesses may never be able to, or want to, rebuild.

But ensure that before you make that decision, at what would likely be a very emotional time for you, that you sit down and review all the pros and cons in a very rational manner. Build a business case for going ahead: either business recovery or business shutdown.

Once you have built your business continuity strategy, you must keep it current.

One of your business protocols must be that as you hire new employees, add new customers, change or add suppliers, that you update your business continuity plans with the information.

Additionally you need to schedule someone to review the information at least once a year and ideally every quarter. Keep a copy your business continuity plans on a CD and keep that CD in a safe location away from the business. Keep a hard copy of the plan with your insurance agent or your lawyer.

However always ensure that the privacy of the information you have collected in your business continuity plans is protected (make sure that you have a signed confidentiality agreement with those who store your plan offsite for you).

You might want to keep a copy of the business continuity plans (with high level of security) in a login section of your website. Assuming your website host is remote, and that they back up on a regular daily basis, you could access that information from any internet connection.

At the end of the day, if your business was strong before the disaster -- if you had good employees, good customers, good suppliers -- it is possible to transition that business value into a successful 'new' business. Use your business continuity plans to ensure that your business can respond to disaster.

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