How to Develop a Business Continuity Plan for Your Startup
April 9, 2020
Creating a business continuity plan is a bit like creating an estate plan — we all know we should do it, but we put it off because it doesn’t feel particularly urgent. Until it does.
Startups in particular may avoid (or not even think about) business continuity planning. They’re used to pivoting and adapting to new situations, and they’re moving too fast to take the time for a hypothetical planning exercise.
The problem with this type of thinking is that startups, often running on shoestring budgets or venture capital funding that could dry up, are particularly susceptible to sudden disruptions and changes in the marketplace. They need the forethought that a business continuity plan provides.
What is a business continuity plan?
A business continuity plan is an operational plan that guides an organization’s actions during any situation that causes an interruption in their business. Most business interruptions are caused by natural disasters, such as floods, fires, earthquakes, or tornadoes. In fact, according to FEMA, the biggest risk to businesses is fire.
But, as businesses around the world are seeing right now, business interruptions can come from things most of us never expected, like a world-wide pandemic.
What is the difference between a business continuity plan and a disaster recovery plan?
Most business continuity plans include a disaster recovery plan, but a business continuity plan is broader in scope. The disaster recovery portion of a plan is focused specifically on restoring critical systems after a disaster — things like IT assets, hardware, or communications systems.
Certain types of businesses, like financial institutions, are required by federal and state regulations to maintain a disaster recovery plan.
In contrast, a business continuity plan isn’t just about recovering the necessities. Its purpose is to create processes and procedures that allow a business to continue their regular operations during and after a disaster.
Steps to creating a business continuity plan
Before you begin creating a business continuity plan, you want to make sure that you engage as much of your team as possible — both so that you have buy-in and so that you get a thorough understanding of all the processes that run your business.
Step 1: Understand your business
Before you can develop any kind of plan, you need to be very clear about how your business works. Some startups have a lot of clarity about their internal processes, but others have a large enough team or are so fast-moving that some digging will be necessary.
Here are some key questions to get you started:
What are the products or services that bring in the largest percentage of our profits (our profit leaders)?
Which clients or customers receive those profit leaders?
Which employees have the largest roles in creating, selling, and distributing those profit leaders?
What business systems and processes do those employees rely on to create, sell, and distribute those profit leaders?
Step 2: Assess your risk
This step can be scary, but it’s absolutely necessary if you want to develop a business continuity plan that works.
You start with this question: What would happen if…
What would happen if our offices caught fire or flooded? What would happen if we were robbed? What would happen if a pandemic meant our entire staff had to work from home?
The purpose of the exercise is not to catastrophize. It’s to walk through each question methodically and, starting with your profit leaders, identify how each of your business processes would be affected by the hypothetical event.
For instance, if you were a small trusts and estates law firm, and your profit leader was estate planning services that occurred almost entirely in your office, where you provided the necessary notaries and witnesses for legal documents, closure of your physical office would have massive consequences.
You would not be able to see clients in your offices. You may not have access to paper case files. You may not be able to witness or notarize documents. You may not be able to receive mail.
You’ve identified these worst case scenarios. Now what?
Step 3: Determine alternatives
It’s time to figure out how to solve them — before they become actual worst case scenarios.
Identify what you need to put in place now, like redundancies, backup vendors or suppliers, a technology recovery plan.
If you were that trusts and estates firm, you might consider uploading all documents to a cloud-based file sharing system. You may research case law on the validity of un-notarized estate planning documents and create an up-to-date file — maybe even begin lobbying your state legislators to write legislation that addresses the issue in the event of an emergency.
You’ll need to determine what steps ensure that your startup will be able to continue operating even if the unthinkable occurs.
Step 4: Designate a team
Of course you want everyone on your team fully invested in and knowledgeable about the business continuity plan, but you also need a single individual to own it.
Designate one person as the business continuity lead, and depending on the size of your organization, create a team of people to support them in the event the plan must be put into place.
Make sure that everyone within the organization has clarity about their role and the tasks and systems they are responsible for.
Step 5: Memorialize the plan
A documented business continuity plan should include a detailed description of the processes and systems involved in the creation, sale, and distribution of the profit leaders so that if someone else has to step in and manage that part of the business, they will be able to do so.
The plan should include a method for accessing relevant passwords or codes as well as contact information for suppliers, backup suppliers, and major clients.
The plan should also answer the questions:
What exactly needs to be done in the 24-48 hours after a disaster occurs? By whom?
Where will those individuals be, and what resources will they need?
How will they access those resources?
What needs to be done in the week or months after the disaster occurs?
How will key customers, clients, or vendors be contacted? By whom?
Finally, make sure your plan includes an emergency contact list of employees that manage tasks relevant to the business continuity plan (these might not all be executive-level employees).
Step 6: Test the plan
Testing your business continuity plan can feel like an awkward step, but without it, you will miss the opportunity to correct errors in your assumptions or to identify potential pitfalls.
Bring all the key players together and use imagined scenarios to work through the plan. With the plan in front of them, each person should explain how they would respond according to the plan. This process will reveal inconsistencies and false assumptions, guaranteed.
Re-test and revise the plan periodically — especially after significant changes in the business.
Right now, businesses of all sizes are putting “create business continuity plan” at the top of their priority lists. Those that complete the task will be in a significantly better position the next time the unexpected occurs.
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