Creating a Strategic (Emergency) Contingency Plan

None of us likes to think of the worst case scenario, but if the bizarre weather the East Coast has faced haven't taught us the need to plan, nothing will. Hurricane and floods affecting the ENTIRE state of NJ? Pre-Halloween blizzards taking out power? The following is a cross-post from Bolts of Lightening in OED's Community site. Read on and prepare BEFORE winter settles in with its snow, winds, ice, HVAC system chaos, and inevitable electrical issues that often ensue.

It's the kind of situation that none of us like to think about--a fire burns the headquarters or a flood damages inventory and closes Main Street. But it's the kind of situation every small business needs to be prepared for. We only need turn on the evening news on television to be reminded of the devastating consequences of fires, tornadoes, floods, and hurricanes.

The best way to prepare is to create a strategic contingency plan that will keep the business operating, even if only on a reduced basis, until the damage can be repaired or the business otherwise restored. Such a contingency plan need not be very complicated or involved. But it should answer certain key questions, among them the following:

· What are the most important elements to keeping this business operating?
For some businesses, like food or hardware stores, it is a matter of having inventory available as quickly as possible. For other businesses, like professional service firms, it is a matter of being able to get the professionals together to service clients. Whatever the most important elements are for your business, figure out what you would do if a natural disaster interrupted operations. Talk to your suppliers about what they would do, and with your key employees for their car phone numbers or addresses of close relatives.

· Where would we operate?
If your store or office were damaged, you need another place to set up operations. This might be in the owner's house, or it could be in a warehouse the company owns. The important thing here is to consider the options, and prioritize them if you have more than one choice.

·How would we communicate with each other?
In a flood or hurricane, especially, electricity and even telephone communication can be knocked out. Make sure you know everyone's home phone number and all employees' current addresses. Involve several people in the company in drawing up the contingency plan so that they are alert to the importance of communicating information about new location and hours of operation during an emergency.

· Do we have backup copies of important records?
In order for the business to be able to carry on in an alternative location, it should have access to its records. Consider what would happen if the records were destroyed or damaged by fire or flood. In today's age of computers, it is reasonably easy to have backup records of customer and supplier lists, provided someone is charged with regularly updating files. Old paper records should be regularly moved to an offsite location; this increases the odds they will be available in an emergency.

· Do we have all the insurance we require?
As just one example, you may want to be sure you have insurance covering you for loss of business time. This could provide critical cash to enable you to re-start operations.

The key issue in putting together such a strategic plan is anticipation. The key questions raised boil down to this: What do you need to continue operations, and how would you ensure that what you need is readily available?

Business Interruption

John Walters of 1-2-1 Business Consulting makes us stop and think about what would happen if our businesses, well, stopped. John outlines some excellent challenges to think through in advance and provides guidance to implement a plan BEFORE it is needed.

Have you ever stopped to think about how you would be able to operate your business in the event of an unscheduled break in critical services and or resources, and how you would be financially impacted by such an outage? The outage could be a few hours, days, weeks or months and could be related to a loss of power, machine failure, employee absence, and the list goes on and on.

For sure most businesses rely heavily on utilities, whether it be for direct production and or heating or lighting. Do you have an interruptible power supply? Have you a back up generator, and, if so, when did you last test it to ensure that it is in good working order?
Utilities, is a fairly obvious cause of business interruption, but there are a number of other areas that may be less obvious.

How about a computer hardware failure? With the advent of technology, most businesses use computers to schedule and to invoice. How long could you operate your business without computers?

What about the loss of data? Larger businesses have disaster recovery plans, and often business interruption insurance, but even they tend to suffer in the short term. There’s usually a delay to activate the service and several days before “normal” business is resumed.

What about Key employees that are unexpectedly absent from the business? This is of particular concern to the small business.

The point is that there are many potential causes for an outage, and that you are unable to protect yourself without first understanding the risk, the likelihood of the occurrence and completing an thorough evaluation of risk /reward. When you equip yourselves with the facts, you are then able to make an informed decision as to what, if any, steps you will take to mitigate the risk.

In summary, you should use the following guidelines to prepare a business interruption strategy for your business.

1.Make a list of the potential causes of an outage for your business.

2.Identify how long you could operate safely without said resources.

3.Identify the likely occurrence of the interruption to the service (High, Medium Low)

4.Indentify the financial impact of the outage. It may be helpful to think about this as a time range that you will be without resources.

5.List the steps that you could take to mitigate the risk of the outage.

6.Identify the cost of the risk mitigation.

7.Determine what steps, if any, you will take.

With the above information you are in a position to develop your business continuity strategy. Should you require any additional support then please take contact with 121 directly. They have the experience and are there for you.

For more planning steps before disaster (or just run of the mill annoyances) occur, check in with John, and visit OED's Online Community.