Business continuity planning is an essential piece of business planning. Continuity plans are created to ensure that the company is capable of continuing delivery of products or services at pre-defined acceptable levels following a “disruptive incident or circumstance.”
A disruptive incident or circumstance includes a wide range of potential threats to a company — natural disasters, death or disability of a key employee or owner/founder, major incident involving the company that will become public, even a pandemic.
One significant takeaway from COVID is companies were forced to be resilient. Throughout 2020 and 2021, there were a lot of unknowns and few knowns. Our ability to act swiftly and responsibly was tested. Some companies not only survived but came out stronger. Others were damaged significantly, and many shut their doors.
From our observations, the companies that came out stronger had similar characteristics:
- Written business plan with assigned responsibilities, accountabilities with completion dates;
- Clearly defined vision, mission and value statements;
- Company culture that valued its people, inside and outside the company; and
So, what does all of this have to do with business continuity planning? While these companies may or may not have had a formal business continuity plan, they did have some of the key elements of such a plan that allowed the company to act swiftly and responsibly — consistent with past practices.
Business continuity planning is a process that involves leaders within an organization. This is a team event. It’s a combination of business and disaster recovery planning that assumes the founder/owner is not available to lead the charge.
The leadership team identifies potential threats to the company’s ability to withstand an unexpected, disruptive incident. Once the threats are identified, then the leadership team ascertains possible mitigation strategies and immediate action items.
Mitigation strategies can include key-man life insurance, cyber security insurance coverage, multi-location cloud-based routine backup protocol, on-site first aid and CPR training, and a policy that certain key employees are not allowed to be on the same air flight, to name just a few.
Here are items to review as part of the discovery and identification of potential threats:
- Bank loan agreements — it’s important to understand the covenants, guaranty, security.
- Company organizational documents — it’s important to understand authority parameters.
- Organizational chart — it’s important to identify key positions.
- Key customer contracts — it’s important to understand restrictive, default, assignment, performance and payment provisions.
- Key supplier agreements — it’s important to understand guaranty, credit limit and payment provisions.
- Insurance policies — it’s good practice for businesses to review their policies annually with their professional to ensure they have appropriate coverage.
- Lease agreement — it’s important to understand guaranty, terms and conditions.
Here are items to consider in a business continuity plan:
- Letter from founder/owner to employees and family — to communicate that a plan has been created to address the situation; that the owner has taken the time to ensure the business will continue to operate smoothly going forward; and that the owner has confidence in the leadership team or named successor to carry the company through this situation.
- List of trusted advisors and contact information.
- Action item list that details who will be contacted, by whom from within the company and what will be the communication. This includes external communication to key company relationships, such as customers, suppliers and banks. This also includes filing insurance claims for cyber security, fire or key man.
- Business continuity details:
- Name of the person who will lead and manage in the interim period;
- Strategy for long term reassignment of key employee or founder/owner responsibilities;
- Disaster recovery plan that includes established ad hoc meeting protocols and internal and external communications (public relations, image, customer perspective);
- Founder death or disability plan that may include the named owner, buy-sell agreement, business valuation, who will facilitate sale/transfer, employee stay bonuses, and internal and external communication;
- Secured protocol to retrieve passwords; and
- Protocol to protect data, processes, confidential materials, intellectual property, etc.
Having a written business continuity plan gives the leadership team and founder/owner peace of mind. And, in the event it is necessary to deploy the plan, people will lead with confidence. While it’s not possible to identify and plan for every possible threat, the process of developing the business continuity plan strengthens the team’s ability to work collaboratively on difficult topics. But this is not a stagnant document; it requires continual updating and review because change today is happening as such a fast pace. What looked benign yesterday could be catastrophic unaddressed.
This process will mirror how people will respond in the throes of an unexpected incident. And a company may find its people will pull together especially when they have the same shared vision, mission and values.
Diane Thomas is president of Premier Sales, Inc., a business sales, merger and acquisitions firm located in Scottsdale, Arizona. For more than 30 years, Premier Sales’ client-centric focus and creative win-win mentality has produced extraordinary results with one of the highest industry success rates.
Speak Your Mind
You must be logged in to post a comment.