All businesses—big and small—have threats that present risks to their business and its success. What you choose to plan for ahead of time as it relates to potential risks to your business can greatly impact your successes. And just because you may not have as much money to budget for potential risks and business continuity as a larger corporation, doesn’t make planning for risk a non-issue.
Regardless of your budget, make sure you have the following five areas assessed and planned out in order to be proactive about your own potential business risks:
1. Assess all potential risks
It may sound simple, but take a moment to think about what could happen that would affect business continuity. These risks could be anything from natural disasters (floods, hurricanes, tornadoes) to password leaks or power outages. Rather than think about these risks from the standpoint of “if” they happen, think about them as in “when” they will happen. Assuming you’ll encounter some type of risk situation will better prepare you for how to handle them when they occur.
Looking for help or need fresh ideas? Check out these common small business risks provided by NSW as a way to get started.
2. Establish points of contact
Make sure your contact information for vendors, clients and other important connections are up to date. Think about an instance where your supply chain might be compromised or an instance where you’d need to contact your customers as an entire group. Do you have systems in place for that?
In the case of suppliers and vendors, gather pertinent contact names, phone numbers, email addresses and information such as “what would happen when…” in a master file. You will also want to set up a back-up list of vendors and supplies in the event you are ever unable to get a hold of or retain the services from any current vendors.
In the case of clients and customers, utilize a database that is easy to search and update as needed. Consider implementing an email marketing service such as Constant Contact or MailChimp—anything that you’d be able to easily upload and send out a mass communication email—as a way to connect with your customers should you need to make them aware of a negative situation.
3. Set up emergency files and resource documents
Don’t treat your critical business documents like your desk (we know—YOU know where everything is in the pile, but what happens if someone else needs to find it?) Gather anything from legal documents and insurance forms to service contracts and licenses and store them in multiple places—physically and electronically.
Ideas for setting up and storing your emergency files and resource documents:
- Utilize back-up hard drives for critical computer files and documents (and set to back up these files on a regular, ongoing basis)
- Research a critical document restoration company in your area (have their number on file in case you would need their help in restoring documents damaged by flood, mold, fire, etc.)
- Purchase a fire and water-proof safe and keep copies of all critical documents inside. Make sure there is more than one person who knows the access code.
- Make extra copies of critical documents and store a set off-site; one set should remain at the business for easy access, the other in another location in case of fire or a natural disaster.
4. Decide on insurance or additional budget needs
Depending on the cost of the business, you can determine how much money you are willing to spend on managing the risks—that includes whether or not you choose to take out insurance to cover some of these potential risks.
Some risks may cause such little damage that it would be easier and cheaper for your business to recover from the risk once it occurs. On the other hand, other risks may have you incurring such high costs that it makes more sense to buy insurance as a precaution instead.
Figure out the true risk of each potential instance, the cost you could incur and then make a sound decision on whether or not to purchase insurance, create a risk preparedness fund, or forgo budgeting that particular instance all together.
5. Document everything in a business continuity plan
The key with this final step is to think in simple terms. The last thing you want to do is create more work for yourself or compile a 250-page document that no one will have time to read (or remember). As Mike Minzes states in “Small Business Disaster Preparedness,” the three most important components of a business continuity plan are: A realistic assessment of risks, alternatives to sustaining the business after a disaster/during the recovery, and local support resources. Once you’ve worked through steps 1 through 4 above, you should have most of what you need to compile this plan.
The Business Continuity Planners Association (BCPA) is a long-standing UMSA member and is an invaluable resource in your planning efforts. You can reach them at www.bcpa.org.
What are your thoughts on small business risk planning? Do you think there is enough time dedicated to setting up small business continuity plans? Are there other factors you would consider or add to our list?