Planning for the worst
Bad things happen. It’s a fact of life. But with a little preparation, businesses can mitigate some of the impact.
There are some estimates that 80 per cent of businesses with no business continuity plan fold in the aftermath of a major disaster. And while this could be something along the lines of a national emergency such as a terrorist attack or health epidemic, it could just as easily be something closer to home, for example the incapacity of a key member of the business. Or it could be something as simple – yet damaging – as a strike leaving you out of contact with your customers.
Putting a plan in place can not only help you arrange procedures for dealing with emergencies; it also provides a step-by-step guide for individuals to follow when they may be finding it difficult to make decisions – giving them a route to follow will help them work through the crisis.
“By developing a simple plan, a business continuity plan, you can protect your business to ensure that no matter what disaster strikes you are prepared and “Business as usual” is the only thing your customers and suppliers see,” says Colin Ive from SME Continuity.
Your first step, according to the Contingency Planning and Disaster Recovery Guide, is to prepare a list of all the potentially serious events that could happen. This doesn’t necessarily mean listing all the disasters that could befall you, but looking at the issues that would affect your business. So instead of listing swine flu, ebola or any other illness, the list would include something along the lines of staff shortages or key person unavailability.
For each potential issue, you need to come up with a process to follow – the key people involved, any suppliers that need to be contacted, a list of contractors who may be able to support you and, vitally, any insurance policies you can claim on.
While business insurance won’t be able to completely prevent any effects of a disaster, it can help to mitigate any costs you may incur. Key Man Insurance can provide a cash injection into a business in the event of the untimely death or incapacity of a specified member of staff. The funds can be used to offset any loss of revenue caused by that person’s absence, or to recruit or train a new person in that position.
If your business is hit hard, and has to stop trading for a short period, Business Interruption insurance can help to tide you over. It’s a short term solution for a few weeks and is there specifically for if you have to stop trading due to factors outside your control – it doesn’t cover a downturn in trading conditions.
If the emergency is a bit closer to home, public liability insurance and employers’ liability insurance will protect you from claims for issues that arise on your premises. We live in a culture of litigation and if an injury or damage could be found to be your responsibility, then expect a hefty bill.
Having been supported by various organisations at some stage during my failed restaurant business adventure on the Wirral, I thought you may be interested in the issue detailed below that I intend raising in relevant publications, blogs, letter pages etc over the next few weeks.
I feel that business failure is an area which needs serious attention especially in the current climate and, having spoken to other business failures who have felt ‘abandoned’, I do not believe mine is a one-off ‘sob story’. I hope to take my experiences and offer them positively both as ‘worst-case scenario’ advice for pre-start ups and as moral support for post-failures, two aspects of the business life-cycle that are sorely lacking, in my humble opinion.
From Business Link to NHS Shrink
Where are the business support agencies at the end of a dream?
When Small to Medium Enterprises succeed, agencies that provide ‘free’ start-up help and advice will bask in reflected glory, deriving kudos from having enabled those businesses to survive and thrive, and putting pictures and stories in their newsletters, on their websites and in local papers. Where, then, are those (salaried?) positive-thinking ‘shamans’ of business support agencies when SMEs fail? “Better to have tried and failed,” I don’t doubt – but better still to have avoided any ‘free’ help, support and advice at the beginning from totally-unaccountable agencies who, under the current arrangement, certainly won’t be there at the end.
When dwindling coffers become less than empty, entrepreneurs fall prey to rapacious insolvency practitioners and unscrupulous debt solution agents; faced with Kafkaesque nightmares of welfare benefit claims, CAB waiting rooms, – and, in the worst cases, calls to Samaritans, and the vagaries, waiting lists and delays of health service Liaison Psychiatry – all we have to rely on is ourselves (if we can avoid total despair) and our true family and friends.
We who end up saddled with debt, broken relationships, vulturesque offers etc., can, in our rational moments, put it down to naïve decisions as a risk-taker. However, we are not merely rational creatures, and we need balanced advice and support at the beginning, i.e. from both sides – including a ‘devil’s advocate’ with real-world experience of worst-case scenarios and the effect on things other than the infamous ‘bottom line’.
Such a devil’s advocate is missing in practice, whereas it urgently needs to become not only a requirement but also an integral part of all business start-up advice.
The agencies involved in the promotion and provision of so-called ‘free’ services to support and kick-start our dreams of enterprise – agencies that contribute to our initial enthusiasm by pumping us with advice and information (and in some cases, even finance & grants) to keep us positive – should be required to demonstrate that their interest in our participation means more than just another slice of government pie.
Perhaps publishing detailed accounts of each stage of their involvement in our stories of business failure – were these agencies ever prepared to disclose, without being prompted, just what they didn’t do, say or tell us – might go some way towards helping others avoid great pain and despair.
Until then, however, advice and support agencies will continue to distance themselves from business failure; when Small to Medium Enterprises fail, friends and fellows, those agencies that provided ‘free’ start-up help and advice no longer want anything to do with us.
Sadly, in the current climate too many businesses are focused on surviving and don’t have time or resources to put continuity plans in place. I noticed two more businesses disappear from our local High Street in the last week alone.