Recursos para la COVID-19

How to Create a Business Continuity Plan

You’ll want to be prepared and have a plan in place to protect your business, your employees and your customers so that you’re ready to respond when disaster strikes. The best place to start is creating a business continuity plan.
Sydney Cohen, Content Strategist

Whether it’s a natural disaster, a forced shut down, or shortages in your supply chain, unexpected events can have major impacts on your business. You’ll want to be prepared and have a plan in place to protect your business, your employees and your customers so that you’re ready to respond when disaster strikes. The best place to start is creating a business continuity plan.

Why create a business continuity plan?

Disasters can have a major impact on supply chains, revenue, your employees, and the way your business operates. Although you can’t prevent disasters from happening, you can be prepared to make sure your business can endure any challenges that come its way.

Additionally, creating a business continuity plan also ensures that you, the business owner, aren’t alone in picking up the pieces when disaster strikes. Putting your plan in writing, assembling a team, and effectively communicating this plan means all parties can jump into action the second a disaster hits, saving critical time and energy.

Steps to writing a business continuity plan

1. Determine risks to your business.

Your goal in writing this plan isn’t to predict the future. Your goal is to discover vulnerabilities and dependencies that could be disrupted and what impacts (financial and otherwise) you can expect to see.

However, if there are specific disasters that your line of business, your geographic location, or your supply chain see often, you should certainly take those into consideration when putting together your business continuity plan. If they happen often enough, you may want to develop a plan specifically for those scenarios.

2. List your areas of focus.

Once you’ve determined the biggest threats to your business, you’ll want to organize your plan by areas of focus that are critical to your business. Some of those could include:

  • Supply chain
  • Finances
  • Physical location
  • Shipping and logistics
  • Workforce
  • Regulatory changes
  • Customers

This plan should be very specific to your business so be sure to include any other details that are imperative to keeping your business operational.

3. Determine the duration of time.

Before you start creating your plan, you should decide the amount of time you want your plan to cover. You can decide this based on disasters relevant to your business, your fiscal cycle, or seasonality for your business. There is no right amount of time for a business continuity plan to cover. This decision is specific to your business.

4. Create a plan for each area of focus.

For each area of focus for your business, you’ll want to develop a backup plan. Here is a format you can follow and questions you can ask yourself to get started:

Supply chain: Here you’ll want to list what specific supplies you need to maintain operations for the set duration of time you decided on for your plan. You’ll also need to list vendors for these items and contact information for each. Here’s an example of what this could look like:

Item Amount Vendor Contact Info Backup Vendor Contact Info
Flour 100 lbs. California Flour Co. 1-800-123-4567 Nevada Flour Co. 1-900-765-4321

Some questions about supply chain you can ask yourself to guide this process:

  • If I am completely wiped out of my current supply of this item, how fast could I get more?
  • What happens when I have a surplus of this item, and what is the financial impact?
  • If I can’t get any of this item, what substitution could I make?

Finances: Here you will detail all your business’s financial assets and determine their liquidity in case of an emergency. You should also gather all the line items you fund and what your predicted cost is for a given period of time (i.e., payroll, rent, utilities, raw goods, etc.).

Given your financial assets and your itemized list of expenses, you can determine where you can make cuts and areas you will continue to fund. Then assess how long you can remain operational given these actions. In this section you can also list all financial contacts and who should be contacted for what during an emergency.

Some questions about finances you can ask yourself to guide this process:

  • What is my business’s burn rate per day?
  • Given my business’s burn rate and balance sheet, how many days can I remain operational before I have to worry?
  • What nice-to-have expenses could I cut?
  • If I need to borrow money or apply for a grant, do I have the right systems in place and contacts to do that?

Physical location: Here you’ll want to list all physical locations where work happens. This includes offices, storage spaces, and brick-and-mortar locations. Your plan should include backup plans should you have to shut down any of these locations and any subsequent changes in logistics for goods or employees.

Some questions about physical locations you can ask yourself to guide this process:

  • If any of my spaces are destroyed, what is the plan for transitioning to an alternative space?
  • What financial impact can I anticipate to make this change?
  • What impact will this have on the amount of supply I could keep on hand?
  • What impact will this have for my employees?

Shipping and logistics: Here you will detail backup plans for your current shipping and logistics flows if they are disrupted by a disaster. Additionally, you’ll also want to detail a scenario where shipping or delivery is your main means of distribution if your brick-and-mortar establishment isn’t operational.

Some questions about shipping and logistics you can ask yourself to guide this process:

  • Can my shipping process handle being my main source of distribution?
  • If shipping or other logistical operations are shut down, what would the financial impact be?

Workforce: Here you will detail plans to keep employees safe, ensure they have the resources they need to do their jobs, and how you will communicate changes to them. Your plan should also include workforce planning. If the emergency requires you to quickly hire more employees, what is your plan to do so? Conversely, you will need to lay out a plan for when you might not need as many employees.

Some questions about your workforce you can ask yourself to guide this process:

  • What equipment should I have on hand to protect my employees while they work during a disaster?
  • What procedures and policies would need to change?
  • Have my employees practiced drills for an onsite emergency?
  • What is the best form of communication to get in touch with employees quickly?

Regulatory changes: Here you will document a plan for handling any new laws and regulations that get rolled out during an emergency.

Some questions about regulatory changes you can ask yourself to guide this process:

  • How will I know what laws change?
  • How can I communicate changes to employees quickly?
  • Do I have the infrastructure in place to quickly change procedures and policies when I need to?

Customers: Here you will write a plan of action to communicate to your customers any changes due to disaster. You’ll want to make sure customers know where they can find you, how your services may have changed, or any changes you’re making to keep them safe.

Some questions about customers you can ask yourself to guide this process:

  • What policy or procedural changes have you made that customers will notice?
  • Will you be able to meet customer expectations during a disaster? If not, how can you manage expectations?
  • What form of communication is the best for quickly getting in touch with customers?

Assembling a disaster management team

Once you have your business continuity plan written, you’ll want to assemble a team to help you carry it out. Determine who is the best fit to cover each area of focus. The people on your disaster management team don’t necessarily have to be employees. For example, if your accountant is the best person to cover your finances, then be sure to put them on your disaster management team.

Once you’ve decided on your group, you’ll need to communicate responsibilities to each person and ensure they’re fully on board with carrying out the responsibilities assigned to them. After they’ve accepted, document their name, contact information, and area of focus in your business continuity plan. Here is an example of what that looks like:

Name Area of Focus Contact
Michael Smith Supply Chain 1-800-987-6543

Then you’ll need to distribute copies of this plan to everyone on your disaster management team. To make sure no one loses the plan, make physical copies and email a copy to everyone as well.

To keep this plan up to date and fresh in everyone’s mind, plan to have regular meetings about your business continuity plan to go over each area of focus and update when needed.

You can’t predict the future but the best way to protect your business, your employees, and your customers is to always be prepared. With a good plan in place, the right team, and regular discussions about your plan, you’ll be ready in case of emergency.

Sydney is Content Manager for Square Payroll. She writes about hiring, tax compliance, management, and of course payroll.