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What is a business continuity plan and why you need one

a photo of a life preserver meant to represent the role of a business continuity plan

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The purpose of this post is to explain why every company needs a business continuity plan. We’re all very well acquainted with pivoting quickly and operating responsively these days. Sudden disruptions are part of business, as the past 18 months have proven time and time again. Much like the human body, your business is a living organism and is susceptible to changes in the environment. Extreme weather, supply chain issues, and malware attacks are all serious maladies that can befall your day-to-day operations.

Fortunately, as an owner or operator, there are several things you can do ahead of time to prepare. These things will help your business get through a sudden emergency or disaster. When done well, they’ll also help mitigate any potential losses. Just think about the last year and a half. What would it have been like if you’d had a documented plan in place to handle things like a labor shortage, pandemic, crazy weather, or e-comm going offline? It’s much easier to solve a problem when you’ve proactively thought about it beforehand than when you’re scrambling to put out a fire.

Keep reading to learn more about business continuity plans and how to start creating your own. It’s not as difficult as you might think!

What is a business continuity plan? 

A business continuity plan is a roadmap for how to operate in times of disaster. There are multiple steps in a continuity plan. Together, these steps will help your business overcome disruptions, thereby keeping your workforce and customers happy.

Why should you have a business continuity plan?

It’s hard to stay afloat in turbulent water without a life vest. Similarly, your business will eventually have a sink-or-swim moment. When that happens, you’ll want to have a good process (emergency life vest) in place to ensure survival and success. From supply chain disruptions to data center failures, it’s important to have a plan. Even if it’s just a plan for keeping your head above water.

Of course, the better your plan, the less likely you are to suffer losses. Losses can take many forms. Financial losses are often the most obvious, but your reputation can also suffer. If you handle a disaster poorly, your customers and employees can lose faith in you and ultimately turn elsewhere. A good business continuity plan will help buffer your business against all types of losses.

Understanding the business continuity planning lifecycle

There are multiple phases of a business continuity plan. Each of the following phases are vital. If you fail to properly plan, it can greatly decrease your rate of success when experiencing a service disruption.

When working through these steps, focus on essential processes and systems first. Prioritize your efforts and delegate the work.

Step 1: Analysis

In the analysis phase, the goal is to identify areas of your business that are susceptible to disruptions. For example, do you rely on a third party payroll service? What is the minimum you require from that service in order for your business to function? Do you have a plan for moving forward if that service suddenly became unavailable?

Make sure to discuss these areas with your leadership team. Involve the stakeholders who are most knowledgeable in each area. You should leave no stone unturned. Make sure to assess any active threats and run through possible impact scenarios.

Ready.gov has worksheets that you can pass out to your team to collect useful details for this analysis.

Step 2: Recovery Strategies

After identifying areas of concern, the next step is to design your fail-safes and manual workarounds. These are the backup processes and systems you’ll put in place to mitigate the impacts of a disaster. During this phase, you should also establish a command structure for your business. Make sure to share it with your team. When a crisis strikes, everyone should know exactly who to turn to for what.

Step 3: Implementation

This is the phase in which theory becomes practice. You should pilot and test your backup processes and systems before rolling them out to all locations. Your management team should be trained and in the loop. This phase may also involve acquiring new software or backup services needed to protect the business from disruptions.

Step 4: Testing and acceptance of the business continuity plan

After the initial implementation, it’s important to test and roll out the plan at your remaining locations. Make sure everyone has the tools and information they need to succeed in the event of a service disruption. Do you have buy-in from your managers? Do they understand what’s expected of them?

Step 5: Maintenance

Much like tuning your car, it’s important to maintain your disaster plans. Have there been any changes that might affect your continuity chain? If you find that a particular piece is no longer viable, you now only need to follow the above steps for that individual item and not the whole process. Things to think about include changes to vendors, distributors, and your workforce.

This is a good time to consider stakeholder feedback, as well.

Examples of emergency management reported in 2021

Some of the most notable examples of recent business disruptions are listed below. These examples can serve as good lessons as you come up with your own recovery strategies. They also help reinforce the importance of having a good business continuity plan.

Neiman Marcus data breach

In September, Neiman Marcus, a large big box retailer of luxury goods, reported a major data breach that affected more than 4.6 million customers. Hackers were able to obtain personal data from customers’ online accounts, including credit card numbers, gift cards, and login info. When it learned of the breach, Neiman Marcus was still recovering from Chapter 11 bankruptcy. It also wasn’t the first time they’d been hit by a cyber attack. The incident is a good reminder that disasters can sometimes happen in succession and from multiple angles.

Kronos ransomware outage

Unfortunately, vendors of all sizes can be taken offline by ransomware. Ultimate Kronos Group (UKG), one of the globe’s largest workforce management software companies, was targeted in a ransomware attack just weeks before Christmas. The resulting outage not only affected small businesses but enterprise customers with thousands of employees. These businesses didn’t know whether the system would be back online in weeks or months. In the meantime, they were instructed to turn to their business continuity plans to get through the holidays. The incident is a good reminder of why it’s important to have a business continuity plan.

(If you were affected by the outage and are currently looking for a stopgap, we have some tips in our article on choosing a Kronos replacement.)

H-E-B’s flexible supply chain

If you’re looking for a prime example of a company that continuously rises to the challenge in the grocery world, it would be the San Antonio based grocery chain H-E-B. During the pandemic while many grocers were struggling with limited supply, H-E-B kept the shelves stocked and protected its frontline workers. Their secret? Preparedness and a flexible, responsive supply chain. Because H-E-B had an emergency preparedness plan, they were able to react swiftly in ways that other grocers couldn’t.

Practical business disruption prevention – it’s better to be safe than sorry

Business continuity planning can seem difficult – overwhelming, even. It requires time and multiple stakeholders to sketch out a thorough plan. But just like making sure your first aid kits are stocked, it’s a necessary investment. And that’s really what a business continuity plan is: an investment. You invest the time and effort up front to ensure the least amount of pain later. By having a plan in place, you’ll protect your business from avoidable losses and prevent the competition from getting the upper hand.

For more help on creating a business continuity plan, check out the SHRM website. They list several tools and samples that can make planning easier for you and your team.

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