What is a business continuity plan?

As a small business owner, things can always happen that are out of your control. In the case of a threat that disrupts your operations, it’s good to have a plan in place. A business continuity plan can help you deal with these potential threats. But what is a business continuity plan, and how can you prepare one?

This guide will discuss business continuity plans, including: 

• What is a business continuity plan?
• Why is business continuity planning important?
• How can you put one together for your business?

A business continuity plan is when you prepare for potential disasters, disruptions, or threats to your business to avoid irreversible impact. Potential threats could include natural disasters, floods, fires, and cyber attacks. The plan outlines systems and procedures so you can prevent and recover from them. This will help you quickly resume or maintain business operations. 

It’s easy to confuse a business continuity plan with a disaster recovery plan, but they’re not the same thing. Disaster recovery plans typically focus on recovering IT infrastructure rather than the daily functions. 

Keep in mind that business continuity plans may not be as effective for worldwide disasters, like pandemics. This is because everyone is being affected rather than just your business or area. Still, you can consider these larger disasters. For example, if you work in a shop or office, you may want to outline how you’ll transition to working from home. 

You may wonder why a continuity plan is important to your small business. Since you’re working on a smaller scale, disruptions can significantly impact profitability and cash flow. But, a plan helps you recover from a natural disaster or cyberattack, so you’ll still be able to help customers and earn profits. 

Though you may have insurance to cover threats to your business, it may not be enough. Say your shop floods. Contents insurance may cover stock, property, or equipment losses, but you will no longer have somewhere to sell your goods. This can impact your daily earnings until you renovate the shop. 

But, with a business continuity plan, you may temporarily transfer your operations to online sales. Planning for all possibilities will allow you to assess these situations and decide how to react to them before they happen.

Aside from helping you remain profitable in the case of a threat, planning can strengthen your business value. With this plan, you’ll have a solid structural backbone. This can look appealing to potential investors because your business will be less risky to fund.   

Now that you know what a business continuity plan is and why it matters to small businesses, you may wonder how to create one for yourself. We’ll cover a few steps to get started.

The first step is to assess your current daily operations. What do you need to run your business each day? If you’re aware of your operations, you can better understand how a disaster will impact them. 

You can also outline potential disasters your business could face to prepare for all eventualities. If your area is at risk of floods, that would be something to consider. If you keep critical business data on internet servers, a cyber attack could be something to plan for. 

The next step is to do an impact analysis or a breakdown of how threats will impact your small business. Go through each threat to see what it will affect specifically. Then, determine how this will impact your overall profitability. 

For example, say you run a graphic design business from home and lose electricity due to a storm. This would impact your ability to communicate with clients and work on your projects. 

Then, analyse the impact of these situations in more detail by looking at your business finances. Consult your cash flow and income statements to see how much money you typically bring in each week. If you couldn’t offer services for a week, how much would this impact your cash flow? Aside from hurting your profits, these threats may also affect your ability to pay business expenses. 

Once you determine the impact of these threats, you can plan how to recover. Focus on where your operations will be heavily impacted and consider what you’ll need to bounce back. 

For example, if you run a bakery it burns down, how will you continue to sell baked goods? If you transition to baking from home, you may need a stock of baking supplies and tools waiting for you. Plus, consider how you’ll market this transition to customers. This temporary recovery might also require permits or legal paperwork. 

Outline a procedure and back this procedure up with research. This way, you will know how to react and avoid any mistakes that could impact your recovery. The more detailed your plan, the better you’ll be able to follow it. 

Try to organise your plan so it’s ready to go. Print out and save a document that outlines all procedures to reference it when necessary. Then, get anything you’ll need for the plan. This way, you won’t scramble to follow through with it, which can slow down your recovery. 

The final step in creating your business continuity plan is to run a test. If possible, walk yourself through the plan to be sure everything runs smoothly. 

Practising your procedures will help you avoid panicking later. It can also help you figure out what to tweak beforehand. Once you’re comfortable with the plan, you can be confident in your business safeguards.

Keeping track of and understanding your business finances will help you prepare your business continuity plan. But, financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.