When you think of economic disasters, what comes to mind? For many people these days, it’s a global pandemic or an oncoming recession. It’s been over two years since the pandemic began, and small businesses that managed to survive still face challenges. But there are many lessons and innovative ideas that have resulted from negative experiences.
From natural disasters and global pandemics to leaders passing on, unexpected events can disrupt our lives and our livelihoods. Although we may not like thinking about negative events affecting our business, it is important to prepare a business contingency plan. This action plan is a proactive strategy that involves overall business improvements, risk assessments and crisis management.
With the right business continuity practices in place, you can mitigate the potential impact of unforeseen events and continue to grow a healthy business.
Integrate processes that work pre- and post-disaster
One way to prepare before a disaster strikes is to use processes and frameworks in your regular business operations that can be easily carried over in the event of a disaster. Part of the problem with planning for unforeseen events is in the word itself: you can’t see it before it happens. But if you and your team are already accustomed to a certain workflow process that can be used regardless of disaster type, you don’t have to predict what might happen, and you can trust the system will continue to work.
From checklist systems to remote work and transparent communication, focus on ways you can improve your current business. This will help create a smoother transition from pre-disaster to post-disaster.
Create a business that embraces checklists
The print and design company Moo was one of the many businesses hit hard by the COVID pandemic. One thing that helped them get through various staff and business changes was their reliance on checklist systems. Tara McGeachey, former director of global sales strategy at Moo, emphasizes the importance of using checklists, regardless of experience level.
Following the guidance of Atul Gawande’s The Checklist Manifesto, McGeachey and the team at Moo used checklists for everything, from onboarding new employees to monthly sales closing processes and lead assignments. Integrating these checklists and systems into their normal operations prepared the team to step up and fill in for vacant roles when the pandemic led to furloughs and layoffs.
Whichever checklist or process you implement, make sure you practice operating around it on at least a monthly basis, if not in a day-to-day capacity. If you only review it quarterly – or worse, annually – you may find that your team struggles to remember the details of each process. Then when a business setback occurs, your efforts to use the system developed in the event of a disaster may cause more harm than good.
Compile and organize a list of possible business risks
Unforeseen disasters are hard to predict or plan for, but there are many known potential risks that can occur. Prepare for these risks through business contingency planning. Compile a list of possible business risks and disasters that can affect your business. Then use that list to develop clear business contingency plans for significant setbacks.
Organize the risks according to types of contingency plans. These might include environmental disasters, technology failure or breach, PR debacles or personal injury or health setbacks. You can then further organize your lists by severity and likelihood. Conduct a business impact analysis to determine which systems and processes in your business are likely to be affected and to what degree.
If you have an ecommerce company, a data breach is a high likelihood and high severity event. On the other hand, a brief power outage would be a low likelihood and low severity event. Prioritize developing a contingency plan for a data breach or major tech failure that would heavily impact your customers and your financial security.
Outline potential issues your team could face
Once you’ve created lists of potential threats, outline the issues that would manifest as a result of the negative event. To develop an effective business contingency plan, you need to know what issues will arise and how you can solve them. Here are common issues that can occur when disaster strikes and possible solutions to include in your contingency plan:
- Supply chain issues – Designate backup suppliers and maintain a contact sheet for suppliers.
- Lack of co-worker coverage – Hire on-call freelancers or contractors. Create a system in which everyone knows who they are covering for and when.
- Emergency tracking – Develop an agreed-upon communication tool to track employee safety.
- Building infrastructure damage – Create evacuation plans and a checklist to prevent further damage (such as turning off the gas when there’s a wildfire nearby).
- Website failure – Whether due to an unexpected influx of traffic or a faulty server, ensure your website has backup server options or an IT team on-call.
- Data breach – Heighten security measures to protect customer and business information.
- Knowledge gaps – Keep a procedure manual for all operations.
- Burn out – Offer ample PTO. (For example, Steve Pockross, CEO of Verblio, set up a “Last Fridays Off” policy in which the whole office has every last Friday of the month off. The shared time off reduces the stress employees normally feel when they’re the only one taking time off and are missing something at work while they’re gone.)
- Job security concerns – In economic turmoil, your industry might experience a wave of layoffs and financial problems. If possible, maintain transparency about how the business is doing financially to keep people informed and reduce anxiety.
Set up a contingency plan that emphasizes business continuity
An effective business contingency plan takes all of your business needs into account and outlines ways in which you will keep the business running and growing. Whether you use a contingency plan template or start from scratch, here are a few key ways to set up your disaster recovery plan:
- Define the circumstances under which the backup plan should be set in motion.
- Create a general emergency preparedness checklist.
- Develop specific checklists for potential disasters or negative circumstances.
- Delegate immediate tasks to your team for all recovery strategies.
- Decide which team members will have access to critical accounts.
- Compile a list of resources for financial aid (emergency loans).
- Print and maintain a list of emergency contact numbers for all employees.
For example, Lauren Walter is the search and content director for Online Optimism, a digital company headquartered in New Orleans. They were recently impacted by Hurricane Ida, which disrupted their client communication and project management efforts. As a result, they had to standardize their catastrophe communication plan and language both internally and externally.
Collaborate with others on your business contingency plan
Once you’ve set up your course of action, review the backup plan with your team, experts, and stakeholders for final approval. Make sure all employees have access and can contribute to the plan. Not only will it help prevent panic when disaster strikes, but each individual can also provide a unique perspective to improve the plan.
Walter recommends collaborating on the plan with everyone, even those outside of leadership positions, such as your marketing team or your clients. The more people you collaborate with, the more likely you’ll be able to fill any knowledge gaps. For Online Optimism, they realized those who were living in New Orleans during Hurricane Katrina could provide valuable insights from their experiences.
Even after your plan is approved, continue to monitor for new risks and update your contingency plan as needed. As your business evolves in response to the world we live in, your plan should also evolve.
Maintain a “Plan B” brainstorming list
There’s one more list that is useful to keep and refer back to every so often with your team: a “Plan B.” If the world completely shifts, as it did for many during the COVID pandemic, a list of business pivots can help you establish business continuity. Set aside time for your company to brainstorm innovative ideas for the future. Consider how you can expand or adapt and enter into new markets should you have the need or opportunity to do so.
Due to the pandemic, Tomek Młodzki, the CEO at PhotoAiD, had to shut down their in-person photo booths. Luckily, they had already started creating an app version of their photo services. Now, not only was their business going to continue, but it was also going to prove extremely helpful for those who wanted to use virtual services.
Be a supportive leader
Regardless of disaster or setback, one thing that every successful business leader does is support their employees. It’s crucial to protect the mental and physical health of people you hire, work with and pay to run your business. In times of high stress, your employees expect clear guidance and empathy. An effective business leader encourages their employees to take the time they need to process a difficult experience and then empowers them to be leaders themselves.
For McGeachey, who is now the interim CEO at Animalz, this guidance can be as simple and obvious as reminding her leadership team to get enough sleep, drink water, and exercise during a major setback. McGeachey also doesn’t take work or her co-workers for granted, and she regularly expresses her gratitude. All of these actions build the trust and confidence her team needs to handle a disaster.
Your job is to run a successful business. Part of this success is only possible when you establish trust and improve the well-being of your team. As a supportive leader, maintain open and honest communication and work together to build a business contingency plan that will enhance the safety of your business.