A Guide to Business Continuity Planning

Small businesses and small business owners face many challenges in order to compete successfully with large corporations. Corporations not only have more capital and resources to spend on exposure and production but also toward disaster recovery and long-term planning.

Having a crisis continuity plan for your business, and taking advantage of unique small business resources, can mean the difference between rising to meet market challenges, or capsizing. Below, we’ll be addressing what exactly is a business continuity plan, what they should cover, and how to institute one for your business.

What Is Business Continuity?

The term “business continuity” refers to the strategic, intentional efforts put in place by an organization or business that will keep them afloat in case of emergency or disaster. Having a business continuity plan can help protect your essential business functions, employee salaries and benefits, and facilitate repairs in the case of physical property or equipment damage. Small businesses can use and benefit from some of the tools and strategies that larger corporations employ when disaster strikes. This allows them to stay profitable, so that disaster doesn’t have to equate to bankruptcy.

Importance of Business Continuity

Having a small business doesn’t mean you make a small impact. Employees, vendors, and even your customers rely on you and your business in their everyday lives. This is why it is important to have a continuity plan, to protect your business, as well as the livelihood and experience of all the people that your business serves.

Another reason it’s important to have a business continuity plan is, in many cases, you can’t predict when disaster will strike or what effects disaster may have on your business. A preemptive continuity plan can give you a sense of security, and foster the long-term success of your business.

Business Continuity vs. Disaster Recovery Plan

Business continuity plans and disaster recovery plans are closely related, but not the same thing. Business continuity is a proposed plan of action, covering all business proceedings and potential what-if scenarios, as well as a gathering of important documents.

Disaster recovery is a subset of business continuity that deals in minimizing the necessary downtime a business has to take in the event of a disaster. There are some federal documents detailing disaster preparedness and emergency management legislation that can serve as reference points for your disaster planning and recovery efforts.

Business Impact Analysis (BIA)

Business impact analysis (BIA) aims to predict how an organization will be affected by disruptions to their supply chain or business model. The goal of BIA is to estimate the financial and operational impact of some of the following factors:

• Drops in sales;
• Delays in sales or income;
• Unavailability or delay in production or production materials;
• Increased expenses, such as overtime, delayed shipping, or damage coverage;
• Customer dissatisfaction or defection;

A business impact analysis report can help you identify which areas are more likely to be affected by a disaster and how. You can use the Federal Emergency Management Agency’s (FEMA) BIA questionnaire to begin your business impact analysis.

Business Continuity and Risk Management

When making your business continuity plan, you will need to address different types of disasters and the risks that each poses to your business proceedings. Some disaster scenarios include:

• Natural disasters: Floods, earthquakes, forest fires, and other weather-related phenomena can be the cause of serious infrastructure and equipment damage, which may stall or completely stop your workflow. Having disaster insurance on your building or equipment as a part of your continuity plan is a great way to prepare for natural disasters.
• Accidental disasters: The mishandling of equipment or substances can lead to accidents like explosion or combustion, gas leaks, fires, or product spoilage. These disasters can be costly to clean up and may lead to an unsafe working environment. To mitigate accidental disasters, you must have proper safety tools on hand, and hold comprehensive training when new equipment or products are introduced.
• Global disasters: Political upheaval, pandemics, or changes in shipping or travel regulations can be some of the hardest disasters to predict, and cause total standstills in business. While you may not be able to plan ahead for these disasters, increasing consumer feedback opportunities and improving communication with employees and suppliers is a great way to manage the needs of customers and employees during unpredictable times. It is also a good time to invest in your distance tools, such as your website, online shopping tools (if you have them), and chat or helplines.
• Technological disasters: Power and internet outages and equipment delay or malfunction can also cause business and supply chain disruptions. You should have a plan in place for temporary and longer outages — this can include having back-up power sources, modified hours, or supplies and resources to conduct business manually.

Implementing a Business Continuity Plan

We’ve talked about the factors that go into a business continuity plan, but what does a business continuity plan actually look like in practice? Note that each plan should be specific to your business and your area, but there are a few things that every business owner can do to get started:

• Have a map of all your facilities that details exits and location of safety resources, such as fire extinguishers and first aid kits;
• Make a list of the names of all personnel, contact information for management personnel, security passcodes, and relevant online or device login data;
• Create a manual detailing usual business proceedings, including opening and closing procedures, till and safe management, communication services such as phone and fax details, and local emergency service contact information;
• Make a list of all vendors’ (and back-up vendors) contact information, drop-off schedules, and business hours;
• Draft scripts for correspondence with customers, both in the event of an in-person emergency, and an online informational statement;
• Scan all important documents — selling permits, leases or building titles, employee waivers — and store them in an accessible and safe place;
• Invest in cybersecurity and data protection;
• Train employees on how to evacuate or close the building in response to an emergency.;
• Invest in insurance for vital equipment that can’t be easily repaired, replaced, or relocated.

Crisis Communication Plan

In the case of an emergency, or other business-halting crisis, you as the business owner will need to decide how the situation will be handled. Your crisis communication plan should cover who is in charge of enforcing emergency protocol should an event arise, and what the responsibilities of each employee are in such events.

Crisis communication can also include customer interaction protocol and emergency service information. Appointing an internal emergency response team or individual to communicate with you and other employees in the event of an emergency is a great way to improve your crisis communication pathways.

Business Continuity Planning Safeguard Considerations

Putting safeguards in place to protect the sensitive information in your business continuity plan is a key part of responsible crisis management. These safeguards can include investing in information storage and security measures, insurance for your assets, or even opening a new business credit card specifically for emergencies.

Cloud-Based Backup

Cloud-based backup drives can be a great resource to protect and store important digital documents. Storing documents on the cloud ensures that if your business’s main computer is damaged, your information is not lost. Cloud backup services also often offer industry-standard encryption, with varying degrees of personalization. There are many cloud backup services available to business owners and private citizens alike.

Business Insurance Coverage

Investing in insurance to protect your assets can help you not only replace or repair damages, but supplement lost income due to business disruptions. Your standard business owner’s policy often comes with three types of coverage: general liability, commercial property, and business interruption.

Business interruption insurance is designed to cover the lost revenue you would have earned during periods of shut down. This can help pay rent or building mortgages, salaries, and loan payments that could otherwise further impact your ability to recover. Talk to your insurance provider, or view your policy to see if your current coverage suits your continuity needs.

Disaster Assistance Loans

If your emergency fund doesn’t cover your expenses, there are several options for small business owners to get disaster assistance loans. The U.S. Small Business Association has loan opportunities for physical damage and economic hardships caused by a disaster.

If you don’t believe you qualify for such assistance or don’t need long-term assistance, you could also get a working capital loan, designed to offset small or short-term costs. It is important to note that most secured business loans require collateral — this could be equipment, property, or other assets owned by you.

If you don’t want to put up collateral or have none due to a disaster, you can apply for an unsecured business loan. Generally, you need to have a high business credit score to be approved for this type of loan, and you can expect to pay a higher APR.

Install Cyber Security Software

As mentioned above, cyber security is an important part of your business continuity plan, not only to protect your information but your customer’s information. Investing in high-quality cyber security software allows you to take credit card information in a safer, more secure manner. This opens up the possibility for an increased online shopping presence, should shopping in-store be impossible or inadvisable.

Testing Your Business Continuity Plan

Once you have your business continuity plan in place, including disaster recovery or crisis management, you should take some time aside to test different aspects of this plan. Running these tests is important for a few reasons. First, it allows you to check up on automated systems to make sure they are running as intended. Second, running field tests ensures that when an emergency does arise, your employees are ready. Here are a few scenarios in which you can test your business continuity plan:

• Fire and evacuation drills: Running fire and evacuation drills allows you to train and monitor the performance of your emergency response team, to ensure they know the proper protocol. These drills also allow other employees to practice customer interaction in an emergency situation, as well as lockdown their role or exit path.
• Data recovery systems: Testing your data recovery systems will allow you to measure what type of obstacles you may run into, should a large portion of your data go missing or become damaged. Learning to use these systems efficiently can minimize the amount of data you’re at risk of losing in an emergency.
• Alarm and equipment checks: Periodically running alarms to ensure they are still working properly and doing an audit of any emergency equipment —  such as flashlights, back-up generators, and medical supplies — can help you be certain that you will be properly prepared in the case of a crisis.

Resources for Business Continuity

Your plan should be specified to the needs of your individual business and location, and therefore it is always a good idea to check with your local regulatory boards and community associations. Below are some resources that can help you build, regulate, and inform your business continuity plan:

• Department of Homeland Security: The Homeland Security website, Ready.gov, has a lot of great information about preparing yourself and your business for several different types of disaster situations, as well as recovery tips.
• State, county, or city emergency offices: Many states have emergency management offices that you can contact for resources or preparation opportunities. Here is a list of state emergency management offices across the country.
• Professional consultation services: Professional business consulting firms can offer you resources for all parts of your business continuity and disaster recovery plan. You can purchase individual resources, such as classes or checklists, or long-term consultation and preparation services.
• Fellow business owner associations: Your fellow business owners can be a great resource when preparing your crisis management plans, and recovering from a disaster. You can join existing local business associations in your community, or create your own with your neighbors.