In the first quarter of 2020, thousands of small businesses were obliged to close due to the COVID-19 global pandemic. According to a report by the U.S. Chamber of Commerce and MetLife, approximately 24% of small businesses in America were forced to shut down in Q1 2020, at least temporarily due as a result of the coronavirus, with more closures anticipated.
Thankfully, many of those small businesses have been able to reopen. According to a follow up report by the U.S. Chamber of Commerce and MetLife, “Most businesses are partially open. Seventy-nine percent of small businesses are either fully (41%) or partially (38%) open. One in five are closed, either temporarily (19%) or permanently (1%). 51% of small businesses in the South report they are fully open.” Most small businesses anticipate that it will take “six months to a year before the U.S. business climate returns to normal.”
With the business sector slowly reopening, small businesses should consider how they can be in a better position when the COVID-19 crisis is over. In order to ensure a successful recovery after a disaster it is important for businesses to plan for contingencies.
What is a Contingency Plan?
A business contingency plan is a pre-planned strategy that describes the actions or steps that should be taken in case of an emergency to help with disaster recovery. A contingency plan allows a business to be prepared for disaster, which will then minimize its impact. It also lays out plans for returning to normal business operations when the disaster has passed. When disaster strikes, having already established lines of communication is critical.
What to Include in Your Contingency Plan
Identify the key risks that could have a negative impact on your business and on your business’ key resources, such as employees, service providers, machines, etc. In addition, make sure to distinguish between a crisis and an issue. If possible, work with internal stakeholders and/or public relations to determine the best way to handle risks. Decide who will determine when the crisis is over and run crisis drills to become familiar with practice in real life situations.
Prioritize Key Risks
It is important to prioritize the key risks based on the impact they could have on your business. What is the probability of each of these risks occurring? Think about internal and external possibilities, as well the likelihood of each risk. Focus your initial effort on events that are most-likely to happen.
Create a Response for Each Risk
For each risk create a separate plan that outlines the actions you need to take. Consider what needs to be done in order to resume normal operations after the disaster passes. In addition, prepare some pre-approved messages to address internal and external issues when they arrive.
As part of this plan you’ll need to identify employee or contractor responsibilities, timelines of when things should be done and completed after the disaster, communication processes, and the steps you need to have taken in advance to prevent losses when the disaster has taken place, including insurance coverage.
It’s important to update your contingency plan as new risks are identified. Not many businesses considered the impact of a global pandemic on their livelihoods pre-COVID-19. However, it is now imperative that small businesses do so. Reviewing your contingency plan from time to time will allow you to identify new risks and recovery opportunities.
By planning out how your business can endure and recover from a disaster – be it on a global or regional scale – you will help to safeguard your business from the aftermath of COVID-19 and any other challenge that may come your way.