Every business needs a contingency plan. This will allow you and your business to identify potential risks that could occur to your business and outline the steps and actions that you and your team will then be taking in order to allow your business to overcome them and keep moving.
The risks that you might consider can include pandemics, natural disasters, how to manage without a key person in the business, not being able to access supplies, a change in your competitors or a new competitor, or even needing legal criminal defense support for you or a member of your team or many other scenarios.
Every single time you put together a contingency plan, you need to know the nitty-gritty information that will make a difference to your business. For example, if you decide to move your business abroad as a backup plan to your business income going down, you need to know everything about the location you’re heading to, the tax implications, and whether you need a legal entity identifier or not. There are so many things that you have to consider here, and your business needs should be put first always. A backup plan is just a smart decision to make to be sure you can always be protected!
A contingency plan is your fallback for when things don’t go to plan.
Of course, in the ideal world, your business would not need a contingency plan and disasters would not occur. This is not the case, however. Disasters can strike at any time as shown recently with the Covid-19 pandemic and cause chaos and cause businesses to suffer. You should expect at one point or another that some kind of unexpected event will strike.
That is why it is so important for your business to have its own contingency plans and solutions. Similar to when you initially made a plan and completed the preparations to launch your business, making a contingency plan will ensure that when the tough times hit your business can continue to succeed.
What Is A Business’s Contingency Plan
Having a business contingency plan is basically a plan and strategy that you can formulate that will outline and provide the steps that you and your team would need to follow in the event of something unexpected impacting the business.
Without having a contingency plan in place you are running the risk of your business in for form of lost productivity, potential damage, and unnecessary costs. Based on previous businesses, it has been shown that a contingency plan can be the difference between a business or organization being able to continue operating versus having to close down and shut completely.
Whilst you may feel that your time is better spent working on to the ongoing success of your business now and investing your energy there, having a contingency plan will only aid this in the future. It may take some time now but in the long run, it is the difference between the future success of your business.
When Should You Create A Contingency Plan
There is no correct time. It is important however to continue to review your contingency plans and adapt them as situations and circumstances change.
When you have a business whether it is new or established you will want to consider and create contingencies immediately. There is no time like the present if you haven’t got a plan in place.
It is then worth reviewing your contingency plans yearly, or even throughout the year. When making plans on your future strategies it is worth considering at that time what risks may become present and how you can prepare to overcome them.
How To Create A Contingency Plan
When it comes to contingency planning there is no right or wrong way to do it, however, if you want to create a strong plan that will cover and protect your business from a wide range of unknown situations here are some ideas that you should consider.
What Are The Major Risks
Each business is different, so it is important to consider and reflect on the type of business you run, what your sell or service, and the customers you have. Based on these areas you need to consider what events would cause an impact on your business, employees, technologies, or equipment you use.
If you have employees or a team working within your business it is always a good idea to hold meetings with them. They will be able to offer a different perspective and view and could present risks that you hadn’t considered. Remember multiple heads are better than one.
Which Risks Are Most Likely To Happen
Once you have identified and created a list of potential risks that your business could face, it is important to prioritize them.
Of course, you hope that they never happen, but realistically which ones are more likely to happen than others. Based on that you will be able to assess what the implications would be to your business if they did happen. Then the ones that carry the highest chances of occurring and will cause the most damage and chaos should be ranked at the top of your list.
Create A Plan For Each Risk
It is important as every risk will be different and will bring its own hurdles to overcome that for each risk, an individual contingency plan is made.
You will want to start with the highest priority risks as these have been identified to be most likely to happen and will carry the greatest disruption and then work down the list.
Share The Plan And Make Changes
It’s great that you now have created a contingency plan. However, this plan won’t be of any use to your business if you are the only person aware of what steps are required in the event of one of the risks becoming reality.
Once created make sure it is accessible to those members of your team that would also need to be able to access it. It is also, worthwhile discussing this with your team so you can then go ahead and answer any questions they may have or ease any concerns.
By sharing this you may find that new insight and ideas are shared, so be open to going back and making amendments and changes to your plan.
It is important to remember that now you have created a contingency plan that this will continue to be a document that will require continual updating and changing. As your business continues to change and develop so with the risks that your business may face in the future, so it is worth going back over it on a semi-regular basis.