How prepared is your business? Are you confident that operations will continue if you are unexpectedly absent? Can your business resume its operations quickly after severe weather or other emergencies strike?
Being prepared means having a plan that addresses any business scenario outside “business as usual.”
“There are too many situations,” says Liana Martino, senior vice president at SunTrust Bank, “where business owners don’t prepare a comprehensive post-disaster contingency plan or give no thought to what would happen to the business if something happens to him or her. A good contingency plan can help mitigate losses and keep a business operating.”
Smart Business talked with Martino about some of the things business owners should consider as they develop contingency plans.
What are some of the reasons a business owner should develop a contingency plan?
We never know what might happen to us. It can be a fatal or incapacitating accident, weather emergencies, fires, vandalism, terrorist attacks. It can be anything that interrupts the normal course of business.
Proper planning will enable your organization to resume business quickly, either by rerouting operations or implementing work-around solutions. These back-up procedures and systems reduce business interruption and associated costs, improve client retention, and can help ease emergency-related hardships for employees.
How do you start the process of setting up a contingency plan?
First, consider and list every possible worst-case scenario that you can imagine. Determine who would be affected by each of those cases and how they would be affected. Now, what do they need to know to continue the business?
Also consider emergencies such as fires that might affect the business while you’re the one that needs to keep things going. Where is information stored? Are there off-site backups? Is there a predetermined command post where key leadership can gather if the office is uninhabitable?
What are some of the things that should be included in your contingency plan?
Develop a playbook outlining action in the various what-if situations. Who is responsible for what? Who is contacted for what information? List names and contact information for all key people, inside and outside the organization. This list should include accountant, attorney, insurance agent, banker, key contacts at major suppliers and customers, family members and key employees.
The plan should include who has various bits of information. Who has which passwords to get into your systems? Who has authority over what situations? Where are various bits of office information located? Information on insurance policies and credit lines also should be included.
Once the playbook is compiled, who should receive copies?
Everyone that has a stake in the ongoing business and will be in a position to make decisions about what to do next should have a copy. Because of the sensitivity of the information, take care in deciding who is involved and what information is included. For example, don’t list passwords for your computers, but do identify who has them and who can change them.
Involve all of those people who will receive a copy of the plan in the process of developing it. If you have separate insurance agents for the business and personal coverage, they should both be involved. The same holds for attorneys, accountants and bankers.
What other things should be considered as you develop your plan?
Is your insurance up to date? Are all contingencies adequately covered? Do you have a buy-sell agreement with partners? Do you have insurance to cover that? If you are the sole owner, do you have any key employees who could continue the business? You may want to give them some stock in the company so they have a vested interest. If your spouse is part of the business, how might that affect the other partners or owners? If your spouse is not involved, how will she or he be compensated for your share of the business?
How will payroll and other expenses be covered until cash flow starts again or insurance payments are made? Do you have a line of credit established that hasn’t already been expended?
Talk about all of these things now while you are able to be involved in the decisions and stage dress rehearsals. Beyond what is discussed above, your insurance agent, attorney, banker or accountant can supply you with forms that will help you get started.
LIANA MARTINO is senior vice president and Business Banking Line of Business manager for SunTrust Bank. Reach her at (813) 224-2254 or Liana.firstname.lastname@example.org.