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Crafting A Contingency Plan

Recovery Strategies: Crafting a Contingency Plan

Crafting A Contingency PlanIt feels like the pandemic is over, with businesses opening at regular capacity in most states. But the future is uncertain. There could be another pandemic. Or there could be other unanticipated catastrophes that may befall your business. As part of your recovery strategies from COVID-19, it’s advisable to take the lessons you learned and put them in a contingency plan so your business can know what actions to take to protect itself.

What is a contingency plan

A contingency plan is a written (albeit on the computer) strategy for handling whatever situation arises. Think of it as “Plan B” or even “Plans B, C, D, and more.” Crafting a contingency plan when things are calm will enable you to manage challenges without panic. Think back to the start of the pandemic and the great uncertainty. How did you handle this? Would it have been easier if you’d had a contingency plan in place?

What contingencies to plan for

Obviously, you can’t anticipate every crisis; that’s the nature of the challenge of contingency planning. Who could have imagined COVID-19? As Former Senate Majority Leader Mike Mansfield said, “the crisis you have to worry about the most is the one you don’t see coming.” Nonetheless, there are some basic situations you may anticipate and plan for them. This planning may then be adapted to any unknown situation that creates a disruption in business operations.

Consider planning for:

  • Data issues. Your computers may be subject to hacking, causing you to shut down (hopefully for only a short time) and even to paying ransomware to unlock computer access.
  • Local construction issues. Roads may be blocked or buildings near you under construction.
  • Weather issues. Hurricanes, tornados, wildfires, mudslides, and other catastrophes may cause short-term or long-term closures, depending on your proximity to the weather issue and whether you suffer property damage.
  • Staffing issues. You may be short of the necessary employees to run your company effectively due to illness (e.g., another pandemic), difficulty in recruiting (as is the situation currently), or the “great resignation” (a Microsoft report found that over 40% of current workers are  planning to move because they can now work remotely).
  • Supply chain issues. Shortages and transportation disruptions may create havoc with stocking inventory.
  • Utility issues. Electrical outages, water restrictions, and other utility problems may impede normal business operations.

Crafting your contingency plan

Step 1: Do an assessment of each potential situation that may impact your business.

Step 2: Arrive at the answers needed for your plan.

Here are some ideas to help you put solutions in place for specific concerns:

  • Data breaches—consider cyber liability coverage, which may pay for data restoration, ransomware, credit monitoring for customers/employees subject to exposure, and even PR for brand maintenance. Also be sure you have an IT professional to help in an emergency.
  • Lost revenue from shutdowns—consider business interruption insurance that provides payments for ongoing expenses (e.g., rents, utilities, etc.) as well as lost profits. If possible, build a cushion into your budget to create a “rainy day fund.”
  • Property damage from weather issues—check on insurance coverage. Consider potential alternative worksites (e.g., remote locations for employees) that may be used during shutdown/repairs. Be sure to have on hand the contact information for repair people (e.g., electricians, contractors).
  • Supply chain disruption—don’t rely on a single source for inventory items. Explore alternative suppliers while you can.
  • Utility problems—consider backup generators to continue operations during power outages.
  • Personnel problems—be proactive to retain good employees. If your business depends on a certain key person, such as a designer, consider key person insurance to have cash for recruiting and to cover lost revenue if that person leaves the company. Explore all avenues for recruiting, including referrals from existing employees, posting jobs on your website or social media platforms, and using job search sites (e.g., Indeed).

Final thought

To paraphrase an old adage, don’t wait until the horse is out of the barn. Take steps now to foresee problems and take actions to protect yourself to the extent possible.