"Many small business owners don't like to think that that the worst might happen to their business," says Jo Eccles, business adviser at the national business organisation, The Forum of Private Business, "but when it does it can have devastating consequences."
A reported one in five companies suffers a major disruption every five years and 92% of those affected by fire or flood never recover. As Jo explains, if there is one valuable lesson we should take away from recent events, the best thing you can do to protect your business is be prepared.
"Trusting to luck simply isn't an option. All too often crisis management and contingency planning are seen as the reserve of large multinationals but planning for a crisis and making sure that you have contingency plans in place to keep your small business going is essential and could be the difference between make or break should the worst happen."
What is a crisis?
A crisis is a situation beyond the scope of everyday business, which threatens the operation, safety and reputation of your company. The exact nature may depend on your business's circumstances, but could include natural disasters such as storm and flood damage, theft or vandalism, fire, power cuts, fuel shortages, IT failure and industrial action.
Your crisis management planning process should start by assessing the likelihood of particular crises occurring to your business and possible frequency. You can do this by grading the probability of a crisis occurring on a scale, i.e. one to five or high to low. You should then assess each risk's possible impact on your business to decide how you deal with it. It is also important to consider how your customers would be affected by a crisis. Would they be likely to look for alternative suppliers? If you have service level agreements, would you be able to keep to them and what would happen if you couldn't?
Why you need a crisis plan?
Failure to plan could be disastrous for your business, resulting in a significant loss in customers, income or maybe putting you out of business altogether.
A crisis management plan sets out what your immediate response will be. It should be clear and easy-to-understand and include the following:
- The people involved and what their role is
- Methods for identifying crises
- Methods for involving management
- Lines of communication
- Mechanisms for reporting
- Process for decision-making
- Equipment, facilities and occupation of crisis management centre
- Levels of control and authority
- Business continuity planning
A good business continuity plan should set out how you are going to recover and help to minimise disruption to your business, suppliers and customers.
Key elements of a plan should include:
- The key business functions you need to get operating as quickly as possible and the resources you'll need.
- The roles of individuals – ensure all employees are aware of what they have to do and provide training if necessary.
- Details of those you'll need to notify in an emergency such as the emergency services, insurers, customers, suppliers, utility companies, etc.
- Details of companies you may require such as glaziers, locksmiths, plumbers, electricians, and IT specialists.
- Maps of your premises' layout to help emergency services, showing fire escapes and safety equipment.
- An appointed spokesperson to handle questions from customers, suppliers and the media.
Arrange the plan in checklist form to ensure that key steps are followed and make sure hard copies of the plan are kept safe at your home, at your bank and at the homes of other staff.
Test, test and test again!
Think about the things that would cause most disruption and that are most likely to happen to your business. Then make sure that your plan covers each of the risks. Ask yourself the following questions:
- Does it set out each employee's role?
- Have you set out the right steps to take?
- Is the order of the plan correct so that priority actions will take place immediately after the incident?
Remember that no plans are set in stone and you should regularly review and update your plan to reflect your business's changing circumstances, such as new premises or changes in staff. Ensure that all contact details are also correct.
Consider the steps you can take to minimise the impact
Once you've identified the key risks your business faces, you need to take steps to protect your business against them and prevent them from happening in the first place.
These can include:
- Practice good electrical and gas safety, and install fire and burglar alarms. This helps to protect premises against fire, vandalism and theft.
- If you use vital pieces of equipment, you may want to take out cover that includes maintenance and emergency call-out.
- Install anti-virus software, back up data and ensure that maintenance agreements are in place for your IT systems.
- Try not to be dependent on a few staff for key skills by getting them to train other people.
To find out more about business continuity planning and how the Forum can help you prepare for the bad times as well as the good visit www.fpb.org.
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