No two businesses are exactly the same, yet there are certain problems that all business owners will eventually face. The most ubiquitous of these is also one of the more frustrating: Things change, and more than likely, things change for the worst at the most inappropriate time. But the wise business owner not only accepts that there will be radical changes to business over time but embraces the probability of it by preparing. That is why it is essential that you create a business continuity plan, also known as a BCP for your business.
What is a Business Continuity Plan?
In the simplest terms, a BCP is a strategy for how a business will react and recover from a specific risk. These risks can run the gamut from relatively minor inconveniences, such as high absentee rates, to major disasters like dealing with a company-wide data loss. An up-to-date and effective BCP can keep a company functioning and profitable even when the worst occurs.
How Do You Build a Better Business Continuity Plan?
If your company does not already have a BCP in place, you need to start thinking about putting one together. There are four main steps you need to go through to build the ideal BCP. These steps are: business impact analysis, recovery strategies, plan development and testing.
Business impact analysis, or BIA, is the important first step for building your BCP. The goal of a BIA is to gather information about the effects a disruption may have on a business's current processes and functions. This is usually done by asking the staff to fill in a specially designed BIA questionnaire. Once the company receives the completed questionnaires, it then needs to identify the potential for financial and operational losses.
Recovery strategies help to minimize losses after a business disruption by identifying resources which are necessary to regain a company's minimum acceptable operational levels. These resources may include in-house staff, outside consultants, alternative facilities and equipment, technology and the training necessary to optimize these resources.
Plan development takes the recovery strategies and puts them into an actionable framework. This includes putting together a well-structured recovery team, developing relocation plans, creating procedures for IT recovery and manual workarounds, and defining and creating testing and assessment procedures.
Testing and exercises verify the effectiveness of a BCP through company-wide evaluations. This can include both large-scale testing, as well as smaller individual evaluations. After completing the initial testing, a business has the opportunity to improve the way it will respond to a risk in the future by organizing and conducting training. This training will help the members of your continuity team to fill in any knowledge gaps and provide them with more confidence. Your business should also revise the original BCP plan with new procedures based on the results of your testing.
Creating a business continuity plan is complex, If you don't have the time or ability to write a BCP on your own, it makes sense to speak with a financial advisor who can help.
5th Street Advisors is an SEC registered investment advisor. The content in this message is provided for informational purposes and should not be relied upon as recommendations or financial planning advice. All investing is subject to risk, including the possible loss of your entire investment.