You’ve likely heard that nearly half of all new businesses fail. According to the Small Business Association (SBA), 50 percent of businesses fail during the first five years. Over a 10-year span, the percentage increases to 66. But what can be done to avoid this? A business continuity plan. While it’s difficult to determine the percentage of businesses that have a continuity plan in place, one thing is certain: it’s better to have one than not.
A business continuity plan is a process by which businesses can prepare themselves to weather the potential threats that are always on the horizon, keeping their project plans, schedules and processes intact. Before we dive into what is a business continuity plan and how to write one, let’s quickly define business continuity planning.
What Is Business Continuity Planning?
Business continuity planning (BCP) is the process by which companies can overcome potential threats that can affect their ability to continue. Business continuity planning consists in creating recovery strategies, improving business processes and defining a recovery time objective.
What Is a Business Continuity Plan?
A business continuity plan (BCP) is a plan to assist a business when and if there’s an emergency or potential threat to its solvency. These can be any number of risks including natural disasters such as fires and earthquakes to man-made risks such as cyberattacks. All of these are outside of normal business operating conditions.
In other words, business continuity is exactly as it sounds: maintaining business functions or responding quickly to resuming them if there’s a major disruption to that business. A business continuity plan is not the same as a business plan, which contains the executive summary, company info, market research and strategies, etc.
Why Do I Need a Business Continuity Plan?
The importance of a business continuity plan should be clear, but some business owners might be overworked by simply running operations and ensuring solvency. The problem with such thinking is that it’s reactive. You’re never in a position to profit from good business and grow your company as you’re always chasing fires and putting them out.
Remaining competitive is key for business success, and to lose operational capacity due to an act of nature removes you from the marketplace either temporarily or forever. It’s not a risk that can be ignored, which is why there’s a strong need to create a plan of action.
Key Elements of a Business Continuity Plan
A business continuity plan varies from one company to another as they’re tailored to the needs of a particular business. However, there are basic elements that should always be included. Here are the five most commonly used elements of a business continuity plan.
Critical Business Areas & Processes
The first step in business continuity planning (BCP) is to analyze your business operations and identify the business units, business areas and business processes that are important to your company. You’ll need to identify which of those require improvements and which can be cut from your continuity plan.
Business Data
Once you’ve identified the business areas and processes that’ll be part of your BCP, you’ll need to look for all of the business data you can find. Data analysis is the only way to accurately understand what aspects of your business are successful and which aren’t.
Risk Assessment
Risk assessment is a critical element of a business continuity plan. To help your business continue to grow, you need to identify every potential risk that could stop you. It’s suggested that you use a risk register to list the potential risks along with risk mitigation strategies to implement if needed.
Business Continuity Impact Analysis
A business continuity impact analysis is done to determine the consequences of a sudden loss of business operations, units or processes. By conducting a business continuity impact analysis, you can determine the business impact in terms of costs, time frames and affected dependencies.
Recovery Time Objective
A business continuity plan is meant to be an actionable document that helps companies overcome difficulties and natural disasters. The recovery time objective is an estimated point in time by which you believe your business continuity planning strategies will take effect.
