As your business grows, budgets and projections are needed for understanding your financial viability, but it’s also important to consider ‘worst case scenarios’ that could disrupt your operations. This is why business continuity planning is invaluable, particularly as we navigate ‘the new normal’.
While it’s difficult to predict every scenario (the last two years have certainly shown that) taking practical steps toward mitigating disruption can provide a multitude of benefits for your business, as well as giving you a better night’s sleep.
Business continuity planning essentially involves taking an in-depth look at how the business can prepare for, mitigate and continue to operate through an unplanned event or prolonged disruption.
While no one could have imagined the length and breadth of disruption COVID would bring, with the benefit of this hindsight, moving forward being better prepared for a natural disaster, cybersecurity attack or any other situation outside of your control, should be central to your ongoing long-term planning and business success.
Your future plan should outline contingencies for:
- Business processes – how and where your business will maintain operations.
- Assets – the safeguarding of equipment and devices essential to running the business.
- Human resources – guidelines for team members to follow in terms of staffing, hours and working from home arrangements.
- Business partners – communicating with suppliers, contractors and centres of influence you regularly deal with.
- Media response – who will respond to media enquiries if the incident, such as a breach of confidential records, is of public interest.
Aside from planning for major external threats, it’s also worth considering how your business will weather a sudden drop in revenue; for example, if a major client leaves or a key supply chain dries up.
Usually, the steps taken to address business anxieties around ‘worst case scenario’ situations are overall good business practice, which you may find should have been in place all along.
FIVE proactive measures
As the pandemic has so dramatically illustrated, prevention is a far better option than relying on a cure. There are five key measures businesses should have in place at all times for enabling action without delay. They are:
- Preserve cash: Monitor your cashflow and ensure you have an appropriate cash stash that will enable you to continue trading. Scenarios could include suddenly losing a major client or customer, a fire or flood that interrupts operations or having to defend legal claim against you.
- Protect assets: If you haven’t done so for a while, then it might be time to review your business structures to ensure they are adequate for your business now and into the future. While protecting your business assets is important, so too is distancing your personal financial affairs from your business.
- Shore up access to funding: Whether you need it or not, access to funding, such as a line of credit or pre-approval for finance, will help to ensure you can ‘trade out’ of difficulties.
- Reassure employees and stakeholders: Preventing the rumour mill from starting is important. Difficulties will quickly become public, so it’s important to explain your business continuity plan to your employees and provide clear information necessary for managing expectations. Equally, meet with key stakeholders and suppliers to articulate your immediate to medium terms actions and re-negotiate terms as required.
- Collaborate with management and advice team: Ensure your senior staff are on the same page and notify your accountant, lawyer and insurer to address immediate corrective actions and proactive business development strategies.
If your business does not have a business continuity plan, consider it an important agenda item for your next management team meeting. Depending on the size of your organisation, you might consider creating a business continuity planning committee (that includes your accountant) to oversee the development of a shared planning document.
Involve team members from different areas of the business and with varying experience levels, as this will foster clear insight for broader understanding of the risks to your business.
There is almost always a way to pivot or rebound from business disruption, however you’ll likely need advice to make the most of opportunities and efficiencies necessary to fast track your recovery.
If you’re in any doubt about your next steps, we invite you to take advantage of what we call our ‘professional sounding board’ service. It provides opportunity to explore ideas and to talk through different scenarios and opportunities. For more information on good business practices for the new normal, please give us a call.
Core Business Accountants specialise in business advice for growing and mature family-owned and small and medium-sized businesses. If you need business advice about any of the above topics, please get in touch with us on (07) 5438 8088, email email@example.com or visit www.corebusiness.com.au.