Have you ever considered how your business would survive in the event of disaster?
Who is the key person in your business? The person with all the expertise and knowledge on how the business is being run? You?
While it is not a topic that anyone likes to discuss, have you ever thought about what would happen in your business if the worst were to happen to you? This is where a business continuity plan and a will, can become the most important documents you prepare in your lifetime.
What exactly is a business continuity plan?
A business continuity plan not only outlines how you plan on keeping your business operational if you were unable to do so yourself, it should cover the prospect of an unplanned or severe disruption to your usual services.
Downtime for any reason costs businesses money. Depending on how long the downtime persists, it may be impossible to recover. Many small businesses struggle to reopen after a disaster. Planning greatly improves the likelihood that your business will survive — so it should be on your must-do list.
So, what should a business continuity plan include?
Business continuity plans are only as good as their contents. While this is not an exhaustive list, 6 key categories that should be considered for inclusion are:
- Your key contacts
You must have clear points of contact in the event of a disaster. Ideally you should appoint someone to be the main point of contact, to be the overseer of the Business Continuity Plan and a contingency plan in case your overseer is unreachable.
- Communication guidelines
Know how your overseer will communicate with staff, suppliers, and customers if the systems go down. Ensure you have a secondary line of communication in place to reach people and communicate vital messages.
- Threat analysis
Understand the threats that could affect your business, whether this is a natural disaster, major cybersecurity event, or employee error, and rank these threats based on:
- How likely they are to occur
- The impact they could have on your operations
- Understanding the threat, you’re dealing with, and its possible ramifications, tells you how to respond should the need arise.
- Suppliers and merchants
Have a means of contacting your utility suppliers, merchants, and landlord, and IT service providers should the systems fail. Knowing how you’ll contact these individuals in advance reduces the stress associated with disaster recovery.
- Recovery phases
Understand what your critical business operations are and prioritize getting them up and running again. This should be stage one of your recovery. Implement your system recovery in phases to reduce the risk of error, system malfunction, and miscommunication.
- Disaster planning
Every business continuity plan needs a specific plan for handling natural disasters, such as hurricane or storm damage. Be aware of how likely it is that a natural disaster will affect your business and plan accordingly. You should also be aware of what you’ll do if, for example, a plumbing disaster floods the entire office and makes it uninhabitable. This means, although a disaster recovery strategy is part of any good business continuity plan, it’s only one part of a much larger strategy for keeping things moving during times of operational difficulty.
By ensuring your business continuity plan covers these 6 key categories, you are also putting yourself in a strong position in the event of the sale of your business, an exit strategy to business cessation, or succession planning to an internal person or family member.
How do you begin a plan?
We recommend viewing the step by step process available on the business.govt.nz website. This page has been written in partnership with Resilient New Zealand and is full of invaluable resources that can help get you started.
You may also consider speaking to your Certified Bookkeeper or accountant. As a person contributing to the financial success of your business, they may be in a position to assist you in preparing a business continuity plan.
If you have made the decision to engage an expert, search our directory for a Certified Bookkeeper near you. We recommend interviewing potential candidates to determine if you feel they will be a good fit for you and your business. Your bookkeeper is going to be an integral member of your team! Mutual trust and respect are important.
Read our tips on finding the right bookkeeper for you here >
Estate planning for business owners
A business continuity plan should be supplemented, and consistent with your Will.
Did you know that you cannot leave your role as a director to someone else in your Will? But one of the best ways to plan for what happens to your business after you die is in your Will.
Your Will can provide for the transfer of company shares to an appropriate person, but these should remain consistent with any Shareholder Agreement you may have in place. You should also consider whether you want your business to continue when you are gone, or whether you would want the business to be wound up, and if so, what is to happen to the assets of the business.
If your current Will does not have provisions for your business, we recommend you see your lawyer or legal advisor as soon as possible.