What happens to your business if a disaster hits? The purpose of developing a Business Continuity Plan, is to ensure the continuation of your business during and following any critical incident. If your normal operational capability is disrupted, your plan will ensure that the financial impacts upon your business are minimal. Read on to find six tips for developing a disaster preparedness plan for your business.
1. Organize your finances
Even with the best plan in place, in the event of a disaster it is likely that your business will suffer some financial damage. For this reason, it is important to research loans or fixed deposit amounts before disaster hits. With this research, you can ensure that you receive the best interest rate available and be back on your feet quickly. Have you ever been hit with a disaster and need a debt consolidation loan? Try latitudefinancial.com.au.
2. Conduct a Business Impact Analysis (BIA)
A business impact analysis (BIA) predicts the consequences of disruption to business functions and processes, and is vital in developing a business continuity plan. The planning stages involve gathering information needed to develop recovery strategies, identify time-sensitive and critical business functions, and prioritize the order of events for restoration of the business.
Your BIA should identify both the operational and financial impacts from a disruption of business processes. Some impacts to consider in your plan include:
- Lost income and sales
- Increased expenses
- Contractual penalties
- Regulatory fines
- Customer dissatisfaction
The BIA should therefore compare the costs of possible recovery strategies in order to minimize further financial strain on the business.
3. Gather the resources required to support recovery
Minimizing the financial implications of a disaster on your business involves recovering from the interruption as quickly and seamlessly as possible. Recovery of critical or time-sensitive processes to your business requires resources. It is important to consider in advance these necessary resources and alternatives should they become unavailable. Important resources include:
- Office space
- Production facilities
It is important to therefore estimate the resources that will be needed in the days and weeks following a disaster.
4. Finalize your recovery strategies
Recovery strategies are alternate means to restore business operations to a minimum level following a disaster. Your strategies may involve:
- Entering into a partnership or reciprocal agreement with another business
- Displacing other functions within the company
- Relocation of operations to an alternate site
- Using external suppliers
- Prioritization of production—by profit margin or customer relationship
- Relocation of existing inventory
As part of your disaster plan, you need to determine what types of insurance are available, and put in place the insurance that will best protect your business needs. It is important that your policy covers all foreseeable threats to your business. Adequate insurance cover should include both business interruption and general property insurance. If you live in an area that is prone to floods or other natural disasters, it is important to take this into consideration when choosing the right policy.
6. Invest in employee training
In the event of a disaster, your employees are vital to ensuring the continued operation of your business. Therefore adequate training in multiple areas of the business is imperative to reduce key person risk. Informing your employees of the disaster management plan and training them accordingly, ensures that there is minimal disruptions to your business activities. Consulting with your key employees throughout the planning process is also beneficial, as they will have the best idea of what functions and processes are most important for the continuity of the business.
Developing a disaster preparedness plan is an important step in ensuring the continuation of your business in the event of an unforeseen disaster. Taking the time to plan early gives you the peace of mind that your business can withstand any surprising incidents.
Bio: Laura Costello is in her final year of a Bachelor of Law/International Relations at Latrobe University. She is passionate about the law, the power of social media, and the ability to translate her knowledge of both common and complex topics to readers across a variety of mediums, in a way that is easy to understand.