What components should a founder incorporate into a business continuity plan, and why?
The following answers are provided by members of Young Entrepreneur Council (YEC), an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
1. Constant Testing
Being an IT professional, I speak to business owners about disaster recovery often. The challenge being a startup founder that is you lack time. When planning for a disaster you have to take your plan and implement it a few times. Imagining that the first time you do it will probably fail you. Go ahead and make tweaks until you have a working plan. Then test that plan every six months at the least.
2. A List of Most Valuable Contacts Updated Quarterly
We manage our networking efforts using Streak and pretty much have case files on everyone we meet. Relationship development is key to our growth strategy, so restoring our connections when we lose a point of contact has to be a part of our growth continuity plan. Keep an updated list of the top 50 contacts and keep notes on pertinent details so that the successor can reach out ASAP.
Many businesses would cease to be viable if customer and product data were lost. Data protection should be the No. 1 business continuity concern. If data doesn’t exist in at least two (and preferably three) physical locations, then it might as well not exist at all. Catastrophic data losses regularly cost millions of dollars and many businesses simply don’t recover from the damage.
4. Local Regulations
You have to consider the economy, the local government and other facets outside of your business that could affect its growth and development. Even the little things such as the weather can be a factor. Consider every angle.
5. A Credit Line When Things Are Going Great
Founders tend to begin searching for a credit line when things are going bad. Actually, the best time to get a credit line is when things are going great. Everybusiness will have its up and downs. When things get rough, the most essential thing should not be survival, but innovation. You cannot innovate with an empty bank account and without the talent that you just had to let go.
6. Key Man Insurance
Key man insurance is coverage that will protect the company in the case of an untimely death or disability of a top salesperson, executive or co-founder. The policy will provide a lump sum payment that can be used to recruit a replacement and outsource their role until that replacement is found.
– Mark Cenicola, BannerView.com
7. A Buy-Sell Agreement Funded by Life Insurance
A buy-sell agreement is a must for partners. It can control the transfer of ownership of the business when certain events occur such as the death of an owner. At such an event, the business continuity agreement can include certain requirements such as having the remaining owner(s) purchase the deceased owner’s stock or ownership interest in the business.
– Brad Cummins, Local Life Agents
8. Delegation of Responsibilities
Within a business continuity plan, you need to set up a chain of command between team members that will be put into action just in case an emergency arises. This way, your managers and employees won’t be questioning (or fighting over) who has what powers and what actions each member of the team needs to take. This needs to be set into place ahead of time so that all individuals are prepared.
– Miles Jennings, Recruiter.com
9. Your Bottom Line
For us, our perpetual KPI is “student growth and outcomes.” It’s our bottom line. From guiding our product roadmap to operationalizing our customer support, we focus on operating in a way that brings the best instruction to students with ThinkCERCA. Making decisions that could compromise that would be deviate from our business plan continuity.
10. Community Disaster Response
Business owners should answer: “In the event our neighborhood or city faces a disaster we can/will contribute the following to assist in recovery.” Because disruptions in the community will impact employees, resources, etc. of the business, the sooner the community recovers, the sooner normal businessoperations can resume. Businesses can contribute employee time, money, materials, scrap etc.
11. SWOT Analysis
Nobody is in a better position to accurately access and document the “Strengths, Weaknesses, Opportunities, and Threats” of a business than its founder. That’s why I think a SWOT analysis is by far the most important document a founder must incorporate into a business continuity plan. The founder should also visually and verbally go over the SWOT analysis with all key employees and answer questions.