If you have a business continuity plan, you’re already in a better place than most. Slightly more than half don’t have one, per the Risk and Resilience Hub. However, developing one is only the first step of the journey. Updating your business continuity plan is equally important. This allows you to catch emerging business risks, so you stay protected as your business and the world around you change.
When to Update Your Business Continuity Plan
Business resilience strategies must evolve with your company and the times. Because of this, it’s essential to revisit your continuity plan regularly.
Annual Reviews
At a minimum, run through your complete continuity plan review process at least once a year. Schedule it on your calendar or tie it to another annual event to keep it top of mind.
Trigger-Based Reviews
It’s also a good idea to have trigger-based reviews. These kick off anytime your business experiences a significant change or event. Depending on the event’s overall impact, you can either conduct a full review of your continuity plan or update only the relevant sections.
A few common trigger events that indicate it’s time to update your continuity plan or business disruption response plan are outlined below.
- Changes in Key People: Perform an audit when anyone who manages a critical process leaves the company, shifts roles, or changes their schedule.
- New Systems: If your business installs or replaces software or equipment that supports ordering, production, billing, payroll, or communication, evaluate all the areas of the plan that the new system touches on.
- Moves: If your business relocates, opens a branch, adds a warehouse, or reconfigures a facility in a way that affects access or safety, it’s time for a review.
- New Products, Services, or Markets: Do a thorough evaluation if your business launches an offering, enters a fresh market, or relies on materials that create unfamiliar risks.
- Customer or Supplier Disruptions: If a large customer changes buying or payment habits, or a primary supplier experiences repeated delays, quality issues, or capacity limits, make sure you’re prepared to handle the ripples.
- Regulatory or Contract Changes: Nearly half of all small business owners and 78 percent of mid-market business owners say regulatory changes have had a fair or great deal of impact on their management practices, Nationwide surveys show. If new laws, standards, or contract terms alter how you handle data, safety, reporting, or service delivery, do a deep dive.
- Operational Incidents or Near Misses: If you experience an outage, cyber event, weather incident, or vendor failure that exposes a gap in your current plan, take the time to shore it up right away.
10-Point Audit for Emerging Business Risks
The business continuity update checklist below can help you audit your current strategy and highlight weak spots to reinforce. If any of the statements below are not true for your business, it’s an area to address.
1. We Set Time Aside at Least Once a Year to Look for New Risks and Update the Plan
Small businesses are more fragile during a crisis than large businesses, Stanford researchers say. We saw the impact of this during the pandemic, where small businesses closed en masse. Larger businesses closed, too, but not at the same rates. Your annual reviews are key to ensuring your organizational resilience framework is airtight.
2. We Have a Quick “What Has Changed” Conversation with Key Staff Every Quarter
Earlier, we touched on the importance of updating your business continuity plan anytime there’s a significant event or change. If you’re the owner or leader of a small business, you can probably clock those events with no issue. However, as a business grows, knowledge tends to be spread across different departments and roles. Modern business continuity planning takes this into account.
While you may not make any changes to your continuity plan at this time, it’s essential to bring everyone together, including the full leadership team, sales, and operations. It’s also a good idea to bring in people from the frontlines, such as customer service reps, drivers, or technicians, who can let you know what’s happening as they carry out their work and engage directly with your customers. While they may not know big picture details about the market or your company, they can certainly tell you about competitive threats, recurring complaints, or process-related issues.
3. We Watch a Few Leading Numbers That Warn Us When Risk is Rising
Many businesses track key performance indicators (KPIs) such as late payments, order lead times, or site or system downtime. A sudden surge in these areas can indicate that risk is rising. Depending on how your business risk management plan is written, these may serve as trigger events for reviewing your plan or as catalysts for taking action.
For instance, if late payments skyrocket, it’s prudent to activate your contingency plans for this. It may involve things like more frequent follow-ups on invoices, more stringent credit vetting, or leveraging a tool like invoice factoring to accelerate payment on receivables.
4. We Review Our Biggest Customers at Least Once a Year for New Risks in Their Industries
Businesses often focus exclusively on the direct risks to their operations, but what happens with your customers can influence your company, too. Moreover, small and young companies tend to have higher customer concentration. For instance, you might have one customer account for 20 or 30 percent of your revenue, or a handful of customers account for 70 percent of your overall revenue. In these cases, your livelihood depends on theirs, so you must be aware of the challenges they’re facing.
Perform external research or gently probe to find out if they have their own customer concentration concerns, how their market is doing, or if there’s any regulatory pressure. This can help you determine the best course of action: whether you can continue serving them as you always have, if you need to diversify, or if you need to adjust your contract with them to protect your business.
5. We Review Our Most Important Suppliers at Least Once a Year for New Bottlenecks or Delays
Three-quarters of companies have suffered supply chain disruption, per the Risk and Resilience Hub. This can lead to challenges ranging from increased expenses to customer dissatisfaction, either due to an inability to meet demand or retain quality.
On an annual basis, look into any shipping issues, capacity limits, geopolitical issues, or recurring quality problems.
6. We Ask an IT or Security Partner at Least Once a Year Which New Cyber Threats We Should Plan For
Two out of five cyberattacks specifically target small businesses, according to Small Business Trends. One of the primary reasons for this is that smaller businesses are perceived as having reduced protections. And, in many cases, this is true. For instance, one in five SMB executives doesn’t have a data recovery plan, per the Risk and Resilience Hub.
While you may not be able to address every recommendation a professional gives you, you can gain a lot of ground and ensure you have access to critical resources, such as data backups, if an incident occurs that you couldn’t protect your business against.
It’s also worth noting that, if you have cybersecurity insurance, you may be required to have specific safeguards in place. Your security partner can help ensure you’re covered.
7. We Check Whether Extreme Weather and Local Infrastructure Problems Are Getting Worse Where We Operate
Excessive heat, wildfires, flooding, long outages, road closures, and more are everyday occurrences. And, for insurance purposes, it doesn’t always matter if these things are happening in your backyard or across the country. But for the purpose of ensuring you don’t get caught off guard and wind up with downtime or an insurance claim, it’s essential to regularly evaluate your risk and plan for the more likely scenarios.
8. We Capture What We Learned After Every Disruption or Near Miss and Update the Plan within 30 Days
As touched on earlier, trigger events should result in an immediate review and update of your business continuity plan. Quarterly reviews also help you catch any shifts that don’t seem catastrophic in the moment but could impact continuity in the future.
9. We Know How We Would Handle a Sudden Cash Crunch and Where Fast Working Capital Would Come From
It’s often cited that cash is the most common reason small businesses shut down. For clarification, this doesn’t mean these businesses are not profitable or doing well. It simply means they lacked the liquidity to keep the lights on and continue serving customers.
Many things can contribute to these conditions. For instance, economic shifts, rising supply or labor costs, or even performing extraordinarily well and growing can leave a business without cash on hand.
You should know how you’ll get cash if you need it. Most small businesses don’t have sufficient cash reserves to support them for more than a few weeks or months. For this reason, it’s helpful to have some type of funding tool that you can tap into quickly if needed, but not use or pay for when you don’t. Factoring fits into this strategy well, especially when you partner with a top factoring company like Charter Capital. We don’t have long-term contracts, you aren’t tied into minimum factoring volumes, and there are no obscure hidden fees, so you can set it up and not use it until a need arises.
10. We Have One Person Who Owns the Continuity Plan and is Responsible for Keeping it Current
You’ve probably heard of the bystander effect. It’s usually associated with physical emergencies. It simply means that even if a group of people is present who can help, nobody administers aid or calls emergency services because they all assume someone else in the group has done it. Something similar occurs outside of these situations. In terms of your continuity plan, it could mean that everyone assumes “leadership” has taken care of it, or that “everyone” knows something was a risk, so nobody reports it or takes action.
For this reason, it’s essential to ensure that one person takes charge of your continuity planning. This person schedules annual reviews, touches base with teams quarterly, monitors for triggers, and updates the plan accordingly.
Ensure Your Business Continuity Plan is Backed by Flexible Funding
Most of the challenges we’ve talked about here can result in a cash flow shortfall, which is why addressing a cash flow crunch was a standalone point. If your business does not have a backup source of funding ready, factoring is a flexible option that turns your unpaid invoices into cash as needed.
To learn more or get started, request a complimentary rate quote.
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