We still don’t know the mark COVID-19 will leave on the global economy and workforce — but we know businesses and people have had to respond with flexibility, agility, and empathy. Now many business owners are wondering: “What will I do if this happens again?”
To help prepare for any future unforeseen crises, it’s vital that your company has a business contingency plan. If your business was able to remain open during COVID-19, you can include how you adjusted your services and what was most lucrative. If you weren’t able to stay open, a contingency plan will give you a chance to determine what steps you can take now to ensure your business could weather another pandemic or disaster.
The Value of a Contingency Plan
What is a contingency plan? A business contingency plan helps protect your business — specifically, your business’s financial health — from unexpected events. It also ensures that you keep people safe, keep operations flowing, and maintain the ability to eventually return to critical operations. Ideally, the plan leverages event monitoring and forecasting models to help you predict and plan for worst-case scenarios. This will give you peace of mind that your business would make it through any tough times to come and give you a playbook to follow, should another crisis happen.
The economy is in a very precarious position. The global debt was already at an all-time high, which only compounds the damaging effects of the pandemic on businesses and debt markets. That’s why it’s critical now to have financial planning as a key part of your business’s emergency contingency plan.
Cash flow is key to keeping your business open and financially healthy. In fact, it is your business’s lifeblood. So it’s imperative that your business contingency plan details how you will maintain at least some cash flow during a crisis. Without as much money coming in, how will you stay afloat? Are there expenses you can cut back on now? Can you pay down balances on your credit cards more aggressively now to lower your monthly payments in the future? Small businesses aren’t always the most financially stable, but yours can be if you plan ahead.
Financially Sound Strategies for Your Post-COVID Contingency Plan
Whether you wanted it or not, you already got a crash course in creating a coronavirus contingency plan. It’s no easy feat to adapt to a global crisis, so let your response inform an updated emergency contingency plan. This will be beneficial regardless of whether additional waves of COVID-19 end up occurring. Start with the three crisis management strategies for small businesses below.
1. Recognize and prioritize threats that may impact your business.
A contingency plan for a small business is different from a plan for a larger company. You have to get very granular with addressing the threats that could impact your business. Start by thinking through the most obvious aspects of your business that a crisis would affect. You can generally break these out into three categories: natural disasters, technological glitches, and human-triggered events.
Brainstorm possible crises in each category and what your business would do to address them. Keep in mind any impacts COVID-19 had on weak points of your business. Did your salespeople crumble under the feeling that they were chained to their desks? Help them innovate creative ways to sell digitally. Did your customers bolt at the first signs of trouble? Think of ways you might pivot your product or service offering to address their needs in a radically changed environment.
2. Keep the business open by any means possible.
Again, cash flow is key. Your No. 1 priority should be to keep the lights on in your business, but to do so requires forethought and planning in regard to your assets’ liquidity, bottom-line numbers, and cash reserve.
Now that you’ve experienced a global pandemic once, you’re not starting over with this contingency plan. You’re starting from a place of experience. Make sure you document your COVID-19 approach in your contingency plan; you may be able to roll it out faster than the next time if you have better execution ideas from what you’ve learned. You may also find inspiration from other companies’ innovative ideas, such as dine-in restaurants pivoting to curbside pickup, toy stores offering toy concierge services, yoga studios shifting to digital classes, and even traditional restaurants offering grocery delivery services.
3. Prepare your supply chain.
If you’re still doing business during a pandemic or other threatening situation, you’ll likely need to communicate with your supply chain and vendors to see how they’ll be able to continue to work together, or if you should source new vendor, partner, or supply chain relationships.
When developing a crisis management plan for small businesses, it’s imperative you prioritize threats, come from a place of experience, and prepare your supply chain for the worst. Keep your business contingency plan in a safe and accessible space, and make sure multiple key people know about it. Ideally, your plan exists in the cloud to be accessed anywhere at any time should a disaster occur. But if you do need to keep it in analog format, assign one person to grab the plan on the way out, should you have to evacuate your building.
That plan is the difference between reinventing the wheel every time a threat occurs and coming from a place of experience in the way you address unforeseen crises.