Updated June 2019
If you’re a small business owner or executive, you’ve probably taken basic steps to protect your company from threats — after all, today’s companies face an unprecedented number of predictable and unpredictable enemies. Your team may have an Office Emergency Kit or Emergency Supplies, but there is a missing piece of the protection puzzle. One that is crucial to a company’s line of defense: A business continuity plan. In fact, if a company is running operations without one, an adverse event could completely wipe the business out.
So what is a business continuity plan? Essentially, it is a strategy that helps to manage risks after a threatening event has taken place. Examples of threatening events include:
Threatening events like these are on the rise, especially as natural disasters happen at higher frequencies and more companies rely on advanced technology and networks to run daily operations. It’s clear that businesses are increasingly susceptible to a large number of existing and constantly emerging risks. That’s why it’s vital to create and implement a business continuity plan.
Good business continuity plans are developed with business owners and corporate higher-ups in the room since they are best implemented from the top down. These plans answer questions like, “Where will everyone be expected to work in the event of a natural disaster that shuts down the office?” and, “Which industry-standard programs will we use to protect our virtual data from being compromised?” Overall, they are the blueprint of a company or business’s recovery and are a big factor in a company’s ability to withstand a disaster. They should be periodically reevaluated and edited as necessary to stay current with the latest trends in technology and business protection.
When business owners and/or company executives sit down to create the first draft of a business continuity plan, they often bring a set of assumptions to the table.
These top myths represent common assumptions that should be kept in mind as the plans are created:
Myth #1: Our people will know what to do in the event of an emergency
Chances are, your employees are not thinking about business continuity or what to do if disaster strikes — and even if they are, they cannot be expected to know how best to respond. Cut down on the confusion if the unthinkable does happen by having a well-documented business continuity plan in advance and training your employees to follow it. This helps to get all your personnel on the same page to ensure an organized and timely recovery.
Myth #2: Insurance will protect us and cover our losses
Insurance is never a replacement for a business continuity plan! You should absolutely have proper and adequate coverage to help the recovery process go smoother, but insurance cannot support the business’s survival alone. Moreover, it is important to remember that insurance might not cover some of the peripheral damages from the event like development setbacks, loss of market share, or loss of customers.
Myth #3: Developing a business continuity plan is a short time investment
When it comes to developing a business continuity plan, the last thing you should do is cut corners. The time spent implementing a business continuity plan is ultimately an investment in your company: It will help return operations to normal faster to stop the bleeding fixed costs you continue to pay after a disaster (even if you aren’t open for business). Trust us, your company can afford to spend an extra day or two developing a plan — what it cannot afford is to not develop one.
Myth #4: We have a disaster recovery plan so we don’t need a business continuity plan
Disaster recovery plans are not the same as business continuity plans, therefore they cannot substitute in for each other. Instead, a disaster recovery plan is an essential part of a business continuity plan. It is the reactive part of the plan that deals with restoring the safety and function of critical employees, office location, equipment, etc. A business continuity plan is the overall proactive strategy that is developed and constantly maintained.
According to the Insurance Institute of Business and Home Safety, as much as 25% of businesses shut down after a disastrous event*. What’s more, not all of these events were catastrophic — even minor security breaches and power outages have tanked businesses in the past. However, by being proactive and taking the time to create a business continuity strategy, you and your business can avoid becoming one of the statistics.