If the last few months have shown us anything, it’s that even the most successful businesses can have trouble surviving in times of uncertainty. No matter how much time we invest in planning, there will always be situations beyond our control as we have seen with the recent pandemic. Unforeseen events happen and as business owners, we need to have a process and plan in place for how to respond. This plan, called a contingency plan, is a blueprint for how to deal with unforeseen events in your business.
Although I am pleased to see that many business owners did respond on the fly to the pandemic by identifying new revenue streams or changing their business models, there were many more who either had to close their doors, or struggled to find solid footing with their business. As the economy begins to open up, this is an ideal time to create a contingency plan that will help you prepare, and stay in business and even grow during the next unexpected event.
I’ve outlined below some of the key aspects of contingency planning which I feel are essential for every business owner to review as part of the preparation for business as usual.
Consider your resources
If you modified, adapted your business, or introduced new revenue streams on the fly as a result of the pandemic, your contingency planning will be a review or formalization of the process. If you did not change your business operations during the pandemic, this will be the first time you are looking at your resources as it relates to a crisis.
Review what contingency options to consider based on your resources. This would include what technology you need; equipment, people and skill requirements. Consider what modifications were made in terms of staff working from home, hours of operation, technology requirements, etc. Consider wage subsidies, government loans, staffing requirements, office leasing, and all the external resources you need to keep your business running if faced with a second wave or another disaster.
Make note of what resources are essential and those you can put on pause or redirect to keep your business operating. This is the foundation of your contingency plan.
Weigh the risks and rewards
In capturing the resources required to run your business, you’ll need to review the risks and rewards of each. For example, consider if placing most of your staff on COVID pay is a good plan or if it can impact your business in a negative way. Take a look at the risk and reward of your staff working from home. Did working from home prove to be a good opportunity for your employees and should you change your employment policy to allow staff to work from home on an ongoing basis? If one of your resources is your office space, weigh in on the pros and cons and relevancy of having an office for your business. If your business deals with customer data, weigh the risks and rewards of ensuring that the data is safe and secure. Identify both internal and external threats including human, operational, financial, environmental, political, procedural, technical or project-based threats. When weighing rewards, consider profitability, expenses and opportunities for growth. When determining what options are best for your business, keep in mind the following questions:
- What are your business goals?
- What is the probability of each of these scenarios?
- How is my profitability affected by each of these resources?
- How might changes in government resources (funding) impact my decision?
Developing a contingency plan is essential to ensure you know exactly what needs to be done if a disaster occurs, but it is also an excellent process to take your business through as a matter of better defining and evaluating your current operations. I highly recommend using your experience of the last few months to guide you as you now know firsthand the implications an unforeseen event can have on your business. Consider working alongside a TAB business advisor and peer group who can help you grow your business by benefiting from their unique expertise and experiences.