5 Best Reasons Small & Medium Businesses Need a Business Continuity Plan

The consequences of disruptions in normal business processes can be devastating. From minor disruptions like a power outage, planned IT maintenance, and office relocation – to cyberattacks, breaches, viruses, or ransomware. – or a worldwide pandemic.

They can cause business setbacks, job loss, loss in revenue, and many more. All the more reason why all businesses need to have a business continuity plan in place to mitigate against and prevent the damage that could be caused by the disruptions.

It’s really hard to see a business that does not experience disruptions or downtime at all. Some surveys showed only about 3 percent of small businesses as ones that do not experience any downtime on a year-to-year basis.

Disruptions in business can cost small and medium business a lot. Reports show that on annual basis, about;

• 15% of SME suffers $1 to $10,000 loss
• 25% of SME suffers $10,001 to $50,000 loss
• 22% suffers $50,001 to $100,000 loss
• 19% suffers $100,001 to $150,000 loss
• 9% suffers $150,001 to $200,000 loss

While 4% suffer more than $200,000 loss during downtime.

Business continuity can be defined as an organization’s ability to maintain and ensure operations, processes, and core business functions are not severely impacted before, during, and after a disruption.

It isn’t like a disaster recovery method where business hardware or data can be recovered. It is more like a business plan that ensures business and business functions don’t stop in the event of a disruption.

The planning involves creating a system of prevention and recovery from potential threats to an organization. It ensures that personnel and the company’s assets are well protected and are able to recover and function quickly in case of any disruption. There’s a reason why it’s called planning; it’s generally devised in advance with input from key organization’s stakeholders and personnel.

Business continuity plan is a pre-drafted or pre-determined protocol for how a company will overcome a business disruption caused by emergency. The outline can contain a series of checklist of risk-mitigating actions to take; it usually involves an outline of procedures to prevent damage, minimize loss, maintain productivity, and recovery methods when disruptions happen. It addresses both natural and human disasters that could possibly strike a business or bring operations to a halt.

Some organizations don’t believe in the “make hay while the sun shines” proverb, and this underestimation often makes their business suffer in case of any disaster. The importance of a business continuity plan is, however, vital and beneficial, especially to SMBs. Here are some reasons why SMBs would need a business continuity plan.

As a business owner, you shouldn’t presume your employees will know how to react when a disaster happens. As a matter of fact, some employees do not know. It doesn’t even matter how skilled or the kind of expertise these employees have. However, a business continuity plan will have an outline containing instructions and directions on how to ensure every person knows their role or what to do in case of any disruption.

While insurance of business may be good as it covers the organization in case of any damages, it isn’t really enough to cover all the damages from a typical disaster. The effects of a disaster aren’t about material loss or structural damages only, and those are the things that insurance cover.

Disaster, most times, causes loss of revenue, bad company’s reputation, loss of business prospects, and many more, all of which insurance may not be able to cover. This is why a business continuity plan is so important to mitigate risks and minimize damages.

Technology and its applications are the order of the day. Virtually all businesses today use some technology to transact daily. They use technology to do lots of things like storing data, processing, communicating, and collaborating in-house and with customers.

Now, imagine a disruption in the process, and the kind of effect it will have on the whole business. However, the use of a business continuity plan will curb against this disruption, failures, or attacks.

SMBs Need to Maintain Customers Trust

Maintaining customers’ trust and retention is vital in any business, not to talk of a small and medium business. You need to find a way to continually serve your clients and customers, and deliver value and protect the integrity of your business.

The fact is, if you don’t respond to your customers and keep them updated in times of crisis, chances are you are going to lose their trust, and they may not have that utmost trust in the services you provide again.

Every business owner needs to know that a significant part of their brand’s reputation depends on the end quality of products and services. If they are inconsistent in any way, customers or clients take note. This is why a business continuity plan is of utmost importance, as it ensures customers’ retention, and also strengthens trust.

Maintaining customers’ trust and retention is vital in any business, not to talk of small and medium businesses. You need to find a way to continually serve your clients and customers, deliver value and protect the integrity of your business.

The fact is, if you don’t respond to your customers and keep them updated in times of crisis, chances are you are going to lose their trust, and they may not have that utmost trust in the services you provide again.

Every business owner needs to know that a significant part of their brand’s reputation depends on the end quality of products and services. If they are inconsistent in any way, customers or clients take note. This is why a business continuity plan is of utmost importance, as it ensures customers retention, and also strengthens trust.

Of course, the business must go on. The chances of a business surviving after a huge disaster is very low, and this is why you must not wait until a disaster happens before devising your business continuity plan.

If not for any reason, but for the continuity of the business amid any major event, you’d need a business continuity plan. Business continuity allows organizations to enable seamless workforce productivity during any business disruption, whether planned or unplanned.

A typical business continuity plan comprises five main components. These components ensure efficiency and keep a business in a good place in case of any disaster.

• Planning and Organizing

Before devising a business continuity plan, it’s important to put a management committee that involves the relevant stakeholders and personnel with a strong understanding of the business and its functions. This group of people will be the ones to oversee all the necessary and planning, ensuring everything is set and ready when the time comes.

• Risk Assessment

Risk assessment, in this sense, involves the process of identifying and analyzing potential events that may negatively affect the business. It can also be an evaluation of how long the business will be able to survive downtime.

Risk assessment helps to identify the most critical of the internal and external processes. With it, stakeholders and people involved in decision-making can make informed decisions about continuity when the need arises.

Risk assessment for a BCP also involves identifying the processes and assets that are most valuable to a business. This, in turn, ensures the business can make decisions based on a list of priorities. The services that generate the most revenue should be considered when prioritizing.

• Response and Recovery

After planning, organizing, and risk assessment, the next step is for the stakeholders and everyone involved in the earlier processes to put the business continuity plan together. This is where the main documentation and outlines are done. It involves putting together all the actions or roles every unit or personnel will play in ensuring the business services remain functional at any time of disruption or disaster.

An effective risk assessment will tell you all the possible potential threats and risks that may impact the business. This gives the business the chance to put the recovery processes in place. After recovery processes are the necessary responses. A good recovery and response plan will have as many measures as possible in order to prevent damages.

• Necessary Training

As mentioned earlier, a business shouldn’t presume its employees will know how to react when a disaster happens. As a matter of fact, some employees do not have the knowledge to perform some role if a disaster happens. Remember, their expertise most times will likely be in the services the company is rendering and not about recovery in times of disaster.

No matter how thorough your strategy is, without the right capabilities to implement it, it’s a waste of time. This is why it is vital to train them on the response strategies available for the business in case of any emergencies.

Customized orientation for each department in an organization can communicate the importance of business continuity plans as it pertains to everyone’s roles in each department. Plus, the backup systems or actions they’ll participate in when work gets disrupted.

The HR department can help document the business continuity plan in writing and make it available for staff and the heads to access and review.  IT department can help to review and maintain emergency IT asset needs, like software and application management, as well as emergency data restoration.

The training gives every person the opportunity, knowledge, and capabilities needed to perform their roles effectively when it comes to business continuity. To ensure this training will yield results when the time arises, you can recreate a disaster scenario.

This way, you get to run exercises and tests on employees’ actions and responses, to prepare them for when the time comes.