Crisis Recovery Planning: Preparing for and Responding to Business Disruptions
“Everyone has a plan until they get punched in the mouth.” Mike Tyson famously said this ahead of a fight against Evander Holyfield. And this quote has since been used to describe how preparation and strategy can buckle when they’re met with resistance or calamity.
So, we recommend having a plan for if and when you get punched in the mouth.
That’s the idea behind crisis recovery planning.
Business interruptions aren’t guaranteed to happen to every small business. But they’re common enough — whether by product recall, regulatory action, natural disaster or some other unforeseen event. And the consequences for having not contingencies in place can be dire.
Today, then, we’ll help you start your own crisis recovery plan by providing a few tips on how to prepare for (and respond to) a business disruption.
Preparing for a Business Disruption
First, let’s start with some advice for putting your company in position to handle a business disruption.
- Know what kind of plan you’re putting together. There are two types of plans that businesses put together “just in case.” They’re similar enough that they can often act as one and the same. The two types of plans are business continuity plans (BCPs) and disaster recovery plans (DRPs). The former plan is designed to ensure that, in the event of any type of business interruption, the company can continue operating in at least some sort of capacity (even if limited) until things get back to normal. The latter plan is designed to help a business return to normal operations.
- Identify roles of key personnel. For purposes of a crisis, “key personnel” doesn’t necessarily mean “everyone in the C-suite.” Instead, this means finding people who are capable in vital business functions — IT, cybersecurity, communications, product, etc. — that can both identify potential risks during the planning stages, and can run point when it’s time to implement the plan.
- Figure out communication. One of the most disruptive types of disruptions is in communications. For instance, if your business’s cloud infrastructure is impacted, you might lose access to email, messaging apps and other important communications channels. BCPs and DRPs require establishing and/or identifying backup communication channels — even if it’s as rudimentary as an emergency contact list of personal cell phone numbers — that response teams can use if normal comms are disrupted.
- Create response documents and practice. All plans should be thoroughly documented and stored in multiple secured locations — including physical copies — so they can be accessed by key personnel no matter the nature of the disaster or interruption. And a way to QA these documents is to actually conduct drills based on several scenarios. Running through all of the steps can help pinpoint flaws or missing elements.
- Acquire business interruption insurance. Business interruption insurance, or business income insurance, fills gaps in your business operations, whether it’s a few days, weeks or months. If your company must temporarily close due to certain types of disasters, this insurance will assist in several ways that commercial property insurance can’t.
Responding to a Business Disruption
Now, let’s talk about a few things you should do if you face a business interruption or disaster.
- Assess the damage. It doesn’t matter whether it’s a flood or a cyberattack — the first order of business is determining the extent of the damage. Figuring out what’s lost, disabled or vulnerable will determine which of your plan’s contingencies will go into effect, as well as who to communicate with and how.
- Contact your insurance agent. You should talk to your insurance agent as soon as you’re able. While you should already have a general idea of what kinds of coverage your business has, the agent will be able to help you understand whether your specific issue is completely, partially or not covered. The agent should also be able to send out a response team to assess the damage, as well as help you file a claim.
- Talk to your lenders. Even if you don’t end up needing to borrow a dime or defer a single payment as you respond to a disaster, you should still contact your lenders to let them know the score. This provides your lenders with time to come up with repayment solutions and determine borrowing terms should you need additional financing. That’s information you’ll want sooner rather than later as you figure out your recovery path.
- Communicate clearly. Whether you’re talking to insurers, lenders, business partners or customers, any communications need to be thoughtful, accurate and clear. The worst thing you can do in an already turbulent scenario is cause even more confusion with inaccurate and/or difficult-to-understand messaging.
We Can Help You Make a Crisis Recovery Plan
If you don’t have a business continuity or disaster recovery plan yet, you don’t have to build one alone.
McManamon & Co. offers a wide range of custom services to small and midsize businesses, including consulting for numerous needs. That includes preparing your company for a wide variety of business interruption scenarios. We also offer business interruption claims assistance to thoroughly and objectively address your business interruption losses and claims, and get your business back up and running quickly.
Reach out and find out what we can do for you and your business — call 440.892.8900 or contact us online.
Tags: business interruption, McManamon, small business, small business consulting | Posted in Business interruption, McManamon & Co., small business