Join the Esme team to find out what a business continuity plan is, why your business could need one, as well as tips on what your plan should include.
A downturn in your business could be caused by a number of things and preparing your business for a rocky period can give it the best chance of success. This is where a business continuity plan comes in.
What is a business continuity plan?
Business continuity planning, also known as a BCP, is a system of actions based on potential risks or threats that your business could be faced with. A BCP puts measures in place so that your business is able to continue operating if these risks were to become a reality.
For example, if a manufacturing business is located next to a river or stream that could potentially flood, restricting the access to their premises, a business continuity plan would detail how the business would deal with the flood. This could be anything from finding details of short term premises to arranging robust business insurance – any actions that would minimise lost revenue or delayed orders.
Does my business need a business continuity plan?
As a business owner, you are responsible for safeguarding the future success of the company, as well as your business premises, inventory, assets and employees.
Putting your business continuity plan into action could mean that your business can continue to operate, serve customers and meet deadlines. It can also be a requirement from some insurance providers, therefore it’s a good idea to check this with your insurer, especially if you haven’t got a BCP.
A business continuity plan can help minimise the effects that can occur due to a threat or a downturn in the market - such as government activities that could affect a number of things including currency strength and future prospects for a business.
If you choose not to have a business continuity plan, you could put your business at further risk. To give you an idea of the risks, we’ve listed some of the potential consequences below:
What would be a risk or threat?
When you’re forming your business continuity plan, it’s important to define what constitutes a major threat to the operation and the future of your business. Most threats and risks fall into at least one of the categories below.
Your BCP should be personalised to how your business operates and cover every possible incident within these three categories. Below are a list of threats to consider as they could have detrimental effect on your business’ operation and productivity.
How to write a Business Continuity Plan
Competitor research can help you to identify your business’ unique selling point and whether there is enough demand for your product or service in your market.
Continuously monitoring your competitor’s successes, failures and investments in their business can give you an indication to how the market is going and how you can best prepare and grow your business. It can also offer guidance in terms of pricing your product or services accordingly to maintain a competitive edge.
How to perform competitor research
When writing a business continuity plan, it’s important to consider the below. This will help you effectively write a strategy that considers all aspects of your business and the resources needed in order to effectively carry out your strategy.
1. Risk evaluation
Identifying all of the possible risks and threats to how your business operates is the first stage of a risk evaluation.
Once you’ve identified any threats, you should look at the probability and frequency of them occurring. This will help you prepare accordingly and look to invest in ways that can help your business recover better and quicker, especially if a risk or threat had the potential to frequently impact your business – e.g. your product can be affected by factors like the weather.
It’s also worth considering any secondary risks – risks that can occur after you’ve been affected by a threat or disaster. For example, in the event of a flood, the primary risk is restricted access to premises, while a secondary risk is damage to the building’s electricity which would delay restarting operations.
2. Conduct a business impact analysis –
Once you’ve identified the risks your business could be faced with, the next stage is detailing the affect these risks could have. This will help you identify what is needed in order to maintain your business work flow and avoid unnecessary downtime. You should consider the cost and resources or equipment you may need in order to achieve your plan.
3. Develop a recovery strategy
Your recovery strategy outlines how your business will recover during a threat and who is responsible for each step. It should include the following:
4. Test plan
Testing your plan is the only true way of knowing it works. It will allow you to identify any loop holes that you may have missed before putting it into action. It will also help you evaluate the priorities of actions and whether you may need more or less people involved in the continuity plan in order to make it fully effective and continue your business operation.
5. Maintain your plan
Your plan should be regularly evaluated and edited in order to stay current. Your business’ threats and risks could change over time, especially during and after an expansion or if you’re moving premises.
If you don’t update it, you could risk having a plan that doesn’t cater for your business and therefore compromises its chances of success if affected by a threat.
The sections of your BCP listed below are most likely to need updating and maintaining:
Crunch offer a detailed and easy to read business continuity plan template that can help you in forming a strategy and preparing your business for any unexpected threats.
Here at Esme Loans, we offer business loans from £10,000* to £150,000 over a 1 to 5 year repayment period. Our business loans could help you find the right resources to create an affective business continuity plan that can help prepare your business for any unexpected threats. Try our business loan calculator or apply today.
*From £25,500 for sole traders
Business planning is vital to start and grow a business. Writing a business plan is a crucial first step, it will force you to think and scrutinise how best you can operate your business and maximise profit.
A commercial loan is a convenient and effective way for a business to obtain finance. The easiness of getting a commercial loan, depends on the type of loan, lender and financial health of your business.
Understanding who your business is competing with can help you prepare and identify gaps in the market to grow your business. A lack of competitor research could do the exact opposite.