How to Create a Business Continuity Plan in 6 Steps

You never know when disaster will strike — but being prepared will help you when it does.

Modern businesses and organizations are vulnerable to disruptions that stem from natural disasters, global pandemics, utility outages or even cyber-attacks — the year 2020 has made that abundantly clear.

When an emergency situation occurs, businesses may experience significant financial, reputational and regulatory losses as a result. To mitigate the effect of unexpected disruptions, a business should act swiftly and respond in a way that facilitates continuity of operations. To do this effectively, you’ll need a business continuity plan (BCP), which outlines how a business should respond in the event of unexpected business disruptions. 

Whether it’s a warehouse fire, downtime of critical software due to a denial-of-service attack, disaster caused by extreme weather events or temporary shutdown or change in business due to a global pandemic, a business continuity plan details the processes and procedures you should follow to keep your business up and running in various situations. It helps both small businesses and large enterprises with the following in the event of a disaster.

The benefits of a strong continuity plan include:

  • Maintaining smooth business operations
  • Protecting the supply chain
  • Preserving your brand’s reputation
  • Building customer trust
  • Mitigating financial risks
  • Maintaining a competitive edge

With a solid BCP in place, a disaster encountered should not mean a complete catastrophe for business operations. In this article, you will learn the key steps to take when developing a continuity plan for your business.

1. Establish a Disaster and Emergency Preparedness Team

A business continuity plan relies on the stakeholders’ ability to understand business objectives and conduct research on potential risks.

Above this, they should make reliable decisions and offer practical solutions to these challenges. To achieve this, the business must first identify team members who will be responsible for emergency preparedness. 

Ideally, the team to take charge should constitute cross-functional leaders and other members who can add value to the process. It is also a good idea to assign a manager who will coordinate activities and lead the project moving forward.

The disaster and emergency preparedness team will be responsible but not limited to the following:

  • Establishing alert levels and trigger points for the BCP
  • Assessing the impact of a disaster and advising senior management
  • Defining the implementation criteria, including policies and procedures for workplace safety and employee compensation
  • Ensuring the availability of necessary supplies during an emergency
  • Determining whether key business partners including suppliers have a BCP
  • Developing and implementing training plans for all staff
  • Liaising with necessary authorities and government agencies as required
  • Preparing and disseminating necessary information to all employees

Note: this team only serves as a pioneer for your project. You should solicit input from all employees and departments to ensure your BCP is fully inclusive.

See: Mistakes to Avoid in Your First Year of Business

2. Perform a Detailed Risk Analysis

Next, you need to identify threats that can potentially disrupt your business. This is where the team conducts a comprehensive analysis which involves identifying risks and prioritizing them based on severity and probability of occurrence.

During this stage, you must understand the implications of these risks from an operational, financial, and reputational perspective. Additionally, you should specify acceptable risks and those that require action. A business may accept risks that cause considerably insignificant damage to business functions. Other risks will prompt the business to develop a mitigation strategy or contingency plan.

When assessing the risks, be sure to consider business locations, technological infrastructure, company culture, and employees. All these factors determine the kind of risks a business can encounter as well as its impact.

3. Analyze the Impact of Potential Risks On Business Functions

The business impact analysis phase involves understanding how the risks identified disrupt business processes and functions. Here, the business continuity team will carefully assess the financial and operational impacts of a disaster on individual business processes and functional areas. Additionally, they must identify the point in time at which the disruption of a business process or function would result in the impacts stated. At the end of the analysis, you should gather important pieces of information such as the recovery time objective (RTO) and the recovery point objective (RPO).

Information from this stage is incredibly valuable when making decisions about recovery strategies and priorities. Business functions with the highest financial and operational impact become top priorities for restoration.

Learn: 12 Entrepreneurs on the Big Risk That Paid Off

4. Develop an Incident Response Plan for Each Essential Service

Every business should have a pre-developed response plan to follow whenever a disruptive incident occurs. 

Ideally, this would involve outlining the actions to take and assigning specific recovery responsibilities of all staff members. When preparing your incident response plan, ensure it contains a realistic path of action, that when followed, can avert or successfully mitigate the damage done. 

For instance, a clothing e-commerce brand should have an alternative source of raw materials to keep their production lines alive should the current contractor run out of supplies. Other effective response plans would include:

  • Identifying financial resources that you can easily tap into during a disaster
  • Purchasing business insurance to help manage disruptions
  • Implementing IT back-up services to minimize downtime during outages
  • Establishing compensation policies for employees affected by a disaster
  • Finding community partners or external organizations to work with during extreme disruptions.
  • Crafting a press release when your business features in an online public disaster that will damage your reputation

The above are just examples of general recovery strategies that can help businesses deal with disasters. When preparing yours, leave no business function untouched to ensure you resume normal operations with minimal inconvenience.

5. Communicate and Train Stakeholders On Recovery Strategies

Once you have addressed all business functions in the recovery plan, it is time to disseminate this information to employees across the company. So, start by organizing departmental as well as cross-functional training sessions. Sufficient training ensures all parties stay abreast of the emergency preparedness and disaster response plan.

Other than training employees, document this information and share the complete continuity plan with everyone in the company. The business continuity plan is designed to serve as a reference point should a disaster strike.

As such, it should contain complete information on what actions to take, what resources or facilities to use, and where to seek support. The documented BCP should also contain all contact information for suppliers, employees, partners, and IT support teams.

See: 9 Tips for Building a Better Business Budget

6. Test Results and Maintain the Continuity Plan

This is arguably the most important part of the process. You need to review and test your plan to ensure it is reliable. Otherwise, an untested BCP would be a waste of resources. 

Testing the plan does not mean shutting the business down and monitoring how the staff responds. Instead, you should create mock disaster scenarios and ask team members to take on different response roles. You can vary the testing strategy depending on the business functions, disaster frequency, or any other conditions you want to test.

It is important to keep in mind that continuity is a long-term goal and an ongoing initiative for your business. For this reason, aim to test the plan rigorously after every four to six months. This way, you can identify weaknesses and update the BCP as required. Continuous improvement is the most surefire way of making the continuity plan effective in the long-run.

Up Next: How to Write a Great Business Plan

The Bottom Line

Entrepreneurial challenges are inevitable in today’s world. However, creating a roadmap for dealing with risks and restoring business operations can take away a fair share of challenges whenever a disruption occurs. 

When creating your continuity plan, remember that every business is different; so, you cannot pick a continuity plan from another company and expect to implement it successfully. Instead, follow the steps above and tailor the plan to your business. 

Once done, ensure everyone in your company is well-trained, motivated and comfortable implementing the plan. Doing this will cushion your business and its operations against the negative impacts associated with a disaster.

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