Why a Business Continuity Plan is a prerequisite for businesses to brace against any eventuality
The world is going through its worst crisis in the last 100 years with the pandemic which has had far-reaching consequences on the world economy. In March this year, the IMF declared a global recession and that signalled a huge impact that almost every company was going through globally. But startups, in particular, have been hit the hardest by the viral outbreak as they lacked resources or staying power to continue/pivot.
At the outset, it becomes very critical for startups to somehow stay alive; after all, there has to be a “business” for a Business Continuity Plan (BCP) to exist.
Hence, as the pandemic and the lockdown hit, the best BCP plan was to focus on “cash is king”. Conservation of cash, collecting dues, and right shifting expenses was the first step for startups to continue to stand.
After that, it's imperative for companies to assess their customers, especially in the changing environment – the pivots they need to make and the cost efficiencies required to build. Therefore, BCP is important from three different perspectives: customer retention, cost-effective product, and cash collection.
If the startup has the ability, a good BCP would be to create another line of products that will generate quick cash, leverage competencies, and ensure continuity alongside the mainline of business, which may have a longer gestation period.
'Hope for the best, but plan for the worst'.
The meaning of this adage became more apparent now than ever before as the world continues to fight the spread of the novel coronavirus. In a strangulated funding landscape, several startups and firms were forced to lay off employees and cut salaries to tide over the crisis.
According to a study based on Mercer’s Business Responses to the COVID-19 Outbreak Survey, 51% of companies across the world had no Business Continuity Plans put in place to meet the threat of global emergencies such as the COVID-19 pandemic.
Several startups have been fighting existential battles to cope with the economic upheaval caused by the pandemic. This is where a BCP comes into play for business leaders to take measures that will help firms find their balance during the COVID period, and beyond.
What is Business Continuity Planning?
It is a process of identifying the specific needs of a business and developing solutions accordingly. This could include the management of workforce productivity, taking stock of critical business functions, and supporting the recovery process when a disaster strikes.
The fact remains that calamities play no favourites when it comes to disrupting operations. Whether you are a multinational corporation or a small business, everyone bears the brunt of an impending disaster. Consequently, all businesses rely on business continuity planning to combat emergencies and curtail legal or economic fallouts.
It is imperative that companies restrategise to build a plan which leverages their competencies and ensures cash flows. Crisis like the one we are going through is a situation of “Pivot or Perish”.
Businesses require robust planning in times of crises and an effective Business Continuity Plan can help startups sail through catastrophes.
Though every organisation has unique approaches when dealing with plans, they start with a businessimpact analysis as a ground-rule.
The impact analysis helps them identify vulnerable areas within the organisation, allowing them to devise implementable plans in the advent of a major disruption.
Founders need to identify the potential risks, losses, and other threats that could impact the company during a crisis. Further to this, it's imperative to question the company’s business models, its sustainability, positive growth prospects, etc. and not take anything for granted. Pandemic has triggered a paradigm shift: the old order giveth away.
Test and re-test
No value is brought to the table if a prototype remains untested. Therefore, it is important for startups to evaluate plans several times over to make sure that it is not obsolete or unrealistic. For instance, businesses would want to stress-test financial plans for multiple scenarios to understand the potential impact on financial performance.
Moreover, it is essential for companies to assess the effects of the crisis to determine its longevity. Similarly, a disaster walk-through is another viable option for a team to think through different scenarios and identify weak points.
Businesses of every size, vertical, or culture are susceptible to disruption. Therefore, having a concrete business continuity plan helps in resolving challenges, so that they can be turned into an advantage for the company.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)