Business continuity - protecting your hard work
What are the potential threats to the ongoing continuity of your business? And what can you do to reduce or manage their impact on your business?
Business Continuity is a hot topic at the moment, and not without good reason it seems. Here’s our personal experience just in the last 2 months:
- A Client being diagnosed with operable cancer
- Another Client being hospitalised with scarlet fever
- An all day power failure (half a city wide!)
- And if the TVOne documentary is to be believed…Bird Flu, Swine Flu, Flu! is not a case of if, but when.
So what is Business Continuity?
Simply put, business continuity means the continued operation of your business irrespective of what is going on in or around it. While the objective is to continue operating profitably, there may be some instances where to just continue operating is sufficient. For example, where insurance can cover losses or overhead expenses or where cash reserves can cover shortfalls. This would only be suitable in situations where the business would return to acceptable profitability within an acceptable time period.
What can you do to ensure your Business Continuity?
An effective business continuity system comprises of four areas:
- Regularly identifying potentially significant threats to the business
- Taking action to eliminate or reduce the chance of the threat occurring
- Putting in place initiatives to minimise the potential impact of the threat on the business
- Developing contingency plans of how to continue operating while the threat is occurring
Business continuity is a vast and complex area and will be different for each business. The best way to illustrate the four areas of a business continuity system is with a specific example. In this case we have chosen the loss of a key person in the business.
1. Regularly identifying potentially significant threats to the business
A fairly universal threat to business continuity is the loss of a key person in the business, especially for SME’s. The loss can be for any number of reasons: illness, disability, death, and additionally in the case of employees, moving towns, going to another job, or setting up their own business. It is important to identify the effect on the business (loss of a key person) as well as the ways in which that threat can occur (illness, disability, another job etc). Also consider the likelihood of the threat occurring. Where possible find out factual data on this as it influences how much effort you need to put into preparation. For example, statistically what proportion of people will have a serious illness that lasts longer than a month? All this information helps in developing the next areas of your business continuity system.
2. Taking action to eliminate or reduce the chance of the threat occurring
The action you take to eliminate or reduce the chance of the threat occurring depends on what you have identified in area one. For example, you can reduce the chance of illness, disability and death for you and your employees. Healthy eating, exercising regularly, minimising stress, not smoking and regular check ups are all simple ways to reduce threats to our health. Having a safe work environment and fostering safe work habits will also help. In respect to a key employee leaving for another job or to setup their own business, you can ensure you understand and endeavour to meet their work/career needs (within reason). All these actions will help reduce the chance of the threat occurring.
3. Putting in place initiatives to minimise the potential impact of the threat on the business
Not all threats can be eliminated or reduced; therefore it is essential to implement ways minimise the potential impact of the threat on the business. A good example is the scenario of an employee moving towns. Open communication and an honest working relationship could mean longer notice of their intention and therefore more time to prepare. Another example of minimising the impact of losing a key person is to develop your staff and business systems to reduce the overall reliance on any one person. Insurance is another effective way of minimising the impact of a threat on your business. You can get ‘key person’ insurance where the insurance covers the salary of someone coming in to cover the key person unable to work. You can also have insurance cover for overhead expenses. The specifics are situational and it is important to speak to a specialist, like an insurance broker. The main point is you can take steps now to reduce the potential impact of the threat on the business, should it occur.
4. Developing contingency plans of how to continue to operate while the threat is occurring
And lastly, following on from area three, is developing a specific plan of what you would do to continue operating if the threat does occur. For example you may have key person insurance to cover the costs, but where and how would you find, and induct, the right person? Or in the case of multiple illnesses like the bird flu how would you continue to operate? Would you need to continue operating? At what capacity? Your plans need to clearly address how you would continue operating while the threat is occurring. It is also important to communicate your plans to the appropriate people, and decide how and when they’ll be activated.
Stay Strong!
Nothing lasts forever, your goal is to continue operating in a way that keeps you strong and ready for when times are better again (this is the difference between continuity planning and crisis management). In fact the statistics are encouraging. We are far more likely to survive our main threats (like health) than perish from them, and therefore it is essential to protect what we are creating for the longer term.
So how can you identify potential significant threats?
It is not possible to list every potential significant threat, as they vary from business to business. Here are some common ones:
- Loss of a key person or persons - temporary or permanent
Loss of data/information (or access to) – temporary or permanent
- Failure of a key operating resource, such as power or machinery
- A significant increase in a main operating cost, such as petrol or interest rates
- Loss of a major Client or Clients (for a variety of reasons)
- Government driven changes, e.g. new legislation or funding changes
- Major Environmental or Economic changes
- A natural disaster such as earthquake, tsunami or pandemic
Things you can try to identify any other risks to your business are:
- Assess the inputs vital to your business e.g., staff, customers, resources, cash
- Brainstorm with your staff – ask “what would be the biggest thing that would stop you from doing your job?”
- Read about what’s going on
- Talk to other businesses about what they are doing or have done
Where you can go to for further help
There are a number of resources available to you:
Remember, Business Continuity is all about ensuring the successful continuation of your hard work. As the saying goes plan for the worst and expect the best. Just remember to keep it within reason as you still have a business to run!
First published in the September 2006 HerBusiness magazine.
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