Benefits Of Having A Business Continuity Plan

26 May

Benefits Of Having A Business Continuity Plan

There is a limitless list of things that can go wrong, and severely affect your business.

To ensure that your business remains unaffected by events that lead to the disturbance or failure of your business, a Business Continuity Plan is required. Many successful businesses recognize the significance and benefits of Business Continuity planning.

What Is A Business Continuity Plan?

A Business Continuity Plan creates a road map that your management and staff can depend on to minimize or eliminate losses in disastrous situations. It is very important to develop a plan for every possible mechanism that can go wrong or problem that can arise. Without a well-defined plan, you expose your business to higher chances of disruption, and eventually failure. It virtually costs nothing to produce, especially for small businesses.

Why Is Developing A Business Continuity Plan Important?

Having a Business Continuity Plan can help you obtain more business and neutralize a catastrophe. Without a Business Continuity Plan, you are left with nothing to fall back on and will not have any accurate records to provide to the insurances and the IRS (if they audit you). To make things worse, the cost to fix the disruption of your business is high. Your business would lose revenues plus extra miscellaneous expenses. Most of the times, insurance does not cover all costs and cannot replace customers that defect to the competition. IT IS VERY IMPORTANT TO PROTECT YOUR REPUTATION AND MARKET SHARES!

What Are Some Eventualities That Can Threaten Your Business?

Severe weather
Supply disruptions caused by:
- Bad weather in port cities or at distribution terminals
- Transportation strikes
- High fuel prices or fuel shortages
Key Staff Depletion (i.e. severe seasonal illness)
Denial of access to your premises:
- Fires
- Hazardous waste spills
- Gas leaks
- Flooding
Natural catastrophes
Man-made catastrophes
Utility disruption:
- Electric
- Telephone
- Gas
- Internet
Computer hardware crash
Key production equipment malfunction

What Are The Essential Steps To Develop A Business Continuity Plan?

Size up your risks and conduct a business impact analysis to identify time-sensitive or critical business functions and processes, and the resources that support them.

Potential risks that impacts your business’ ability to deliver products and services must be evaluated. With a financial analysis of the evaluations, you will be able to plan steps that are most applicable to your business to renovate your business. Some ways to conduct a business impact analysis are to:

Develop a questionnaire
Conduct workshop to instruct business function and process managers how to complete the BIA
Receive completed BIA questionnaire forms
Review BIA
Conduct follow-up interviews to validate information and fill in gaps
Document internal key personnel and backups
Identify who can telecommunicate
Document external contacts
Document crucial documents and equipment
Identify contingency equipment options
Identify your contingency location
Make a how-to list that lists the responsibilities and the person in charge
Make a how-to list that lists each person and their responsibilities

The following worksheets should be completed by a valued manager with sufficient knowledge of the business:

Operational & Financial Impacts Worksheet

Worksheet should contain:

The operational and financial impacts resulting from the loss of individual business functions and process
The point in time when loss of a function or process would result in the identified business impacts
- The Business Continuity Resource Requirements Worksheet

Worksheet should contain resources such as:

Employees
Office Space, furniture, and equipment
Technology (Computers, peripherals, communication equipment, software, and data)
Vital Records (Electronic and hard copy)
Production Facilities, machinery, and equipment
Inventory including raw materials, finished goods and goods in production
Utilities (power, natural gas, water, sewer, telephone, internet)
Third party services
- Identify, document, and implement to recover critical business functions and processes

Contingent upon the size of the company and the resources available, there may be many recovery strategies that can be explored. Recovery strategies entail resources such as: People, Facilities, Equipment, Materials and Information Technology. A thorough analysis of the resources required to execute recovery strategies should be conducted to identify gaps. For a traditional small business, some manufacturing strategies include, but are not limited to:

Shifting production from one facility to another
Increasing manufacturing output at operational facilities
Retooling production from one item to another
Prioritizing of production – by profit margin or custom relationship
Maintaining higher raw materials or finished goods inventory
Reallocating existing inventory, repurchase or buyback of inventory
Limiting orders
Contracting with third parties
Purchasing business interruption insurance
Arranging alternatives, organize a business continuity team, and generate a business continuity plan to manage business disruptions

When thinking about who will be affected by your business, you need to keep several variables in mind. Have a sufficient and detailed list of the contact information of your top customers and clientele, so you can personally contact them about the situation at hand, and reassure them that you are well on your way to restoring operations. Also, you need to determine which employees are beneficial to the functioning and recovery of your business, and organize an emergency contact list to help speed up the recovery process of your business. A very simple and efficient method is to create and utilize an extensive checklist that covers every aspect your business. This checklist should include, but is not limited to:

Contact information of everyone who is connected to your business (employees, vendors, customers, insurance agents, etc.)
Complete inventory list (computers, software production equipment, etc.)
Insurance Policies
Conduct training for the business continuity team and testing and exercises to evaluate recovery strategies and the plan. You must ask yourself while training:
- Are my computers and servers FULLY backed up?
- Are everyone’s cell phones backed up?
- Are my mission-critical documents online? (I.e. shared calendars, task lists, shared/private contacts, web meetings, etc.)
MAKE SURE EVERYONE COMMUNICATES WITH EACH OTHER

Note:

Information Technology (IT) includes many components such as networks, servers, and computers. Therefore, backup strategies for information technology should be developed so your business can produce efficiently, be technologically restored at a rapid rate, and meet the needs of the business.

Please see Article Importance Of Having A Company Backup Plan for more information.

Glossary

Business Continuity Plan: Identifies an organization’s exposure to internal and external threats and synthesizes hard and soft assets to provide effective prevention and recovery for the organization, while maintaining competitive advantage and value system integrity.
Information Technology (IT): The branch of engineering that deals with the use of computers and telecommunications to retrieve and store and transmit information.

Benefits Of Having A Business Continuity Plan