Small businesses need to expect the unexpected and create continuity plans to manage against everyday risks.

It’s 6 a.m. on a cold February morning and the owner of a small local restaurant has just unlocked the door of his business to find tables, chairs, supplies, purchase orders – essentially everything of value – swimming in water. Overnight, a city water pipe burst, flooding the restaurant not only with water, but with all the uncertainty and panic that comes when disaster strikes.

An unlikely scenario? In Ontario alone, thousands of water mains burst each year. And that’s just one of the many disasters – never mind minor setbacks – that can halt a small business’s growth and profitability in its tracks.

Floods, fire, power outages, computer viruses, internet failures, unexpected accidents or illness – the list of potential disruptions to a small business can be staggering. Unfortunately, many Canadian small business owners are not prepared to deal with them – a full 40 per cent, according to the American Express Small Business Monitor. The result? Thousands of small business owners in Canada are rolling the dice when it comes to protecting their assets.

Managing the big picture with a business continuity plan

While it’s impossible to foresee all potential disruptions to a business, it is possible to be properly prepared when and if they do occur. A business continuity plan takes stock of assets and ensures backups are in place in the event of a problem – yet only 15 per cent of Canadian small business owners have one, and half are not at all familiar with the process of preparing one.

A business continuity plan enables critical services or products to be continually delivered to clients. Instead of focusing on recovering after a disaster, these plans help to ensure that critical operations continue to be available. At its most complex, it may outline a secondary work site, technical requirements and readiness, regulatory reporting requirements, work recover measures, the means to re-establish physical records, or the ability to establish a new supply chain. Small business owners who implement business continuity plans can also carefully assess how their business functions, both internally and externally, to determine which staff, materials, procedures, and equipment are absolutely necessary to keep it operating.

Small business owners may feel they’re covered in the event of a disaster if they have adequate insurance – and 51 per cent of survey respondents said they did have fire or flood insurance. But it’s important to note that a business continuity plan is much more comprehensive than ensuring insurance needs are covered.

Lauren Gervais, who owns Data Probe, a market research firm based in Winnipeg, is one small business owner who thought she was prepared for the unexpected. But in 2008, her company expanded into a new space, and due to a faulty plumbing installation, experienced a catastrophic flood.

“It destroyed pretty much everything,” says Gervais. “The ceilings collapsed, furniture was floating – we couldn’t salvage a thing.” Even though she was insured, the flood halted her business for six months. “I thought I had done everything right, but I was astounded by how long we were out of commission,” she said. “We lost clients and a lot of the intangible stuff that insurance companies don’t assign a value to. There are lots of grey areas and I know there are business owners out there who think they’re protected and aren’t.”

Planning to plan

There’s no doubt that setting aside the time and resources to put together a proper business continuity plan can seem like an overwhelming task for many small business owners who understandably need to prioritize immediate concerns and expenditures first. Indeed, aside from lack of knowledge, 35 per cent of survey respondents cited money as a hindrance to developing a plan, while a third said finding time was a struggle. Yet developing a business continuity plan for unforeseen disruptions is something that all small business owners should think about – and it is possible to develop one that is both realistic and easy to execute during a crisis.
Here are 10 simple suggestions to help get started:

1. Document critical assets. What does your business absolutely need to function? Consider everything from critical employees to equipment essential to the business to irreplaceable HR and accounting documents.

2. Identify key employees to contact in case of a disruption. Ensure their contact information is kept up-to-date and make sure each person is aware of any roles you may need them to play in the event of an emergency, such as calling insurance companies or notifying colleagues.

3. Set aside key times throughout the year to back up information. If your data isn’t backed up automatically on a continuous basis, ensure that a manual process is in place to do so at regular intervals. This can include inventory details, payroll information, and all pertinent information about your clients and business partners.

4. Determine contingency plans. Where will the business relocate if need be? Can employees telecommute during the disruption? Can essential equipment be easily rented or borrowed? Is there a budget for unforeseen out-of-pocket expenses?

5. Know when to activate the plan. Provide information on circumstances under which the plan will be activated, including outage time frames, who declares a disaster, and detailed response procedures.

6. Don’t forget about employee communication. Ensure corporate updates are sent out to all employees during periods of crisis, and set up a special hotline or email distribution where employees can access information in the event of an emergency. Employees today are increasingly dependent upon access to data, so facilitating remote access to the company’s IT network in the event of an emergency is important wherever possible.

7. Present the information in an easy-to-read format. Provide step-by-step instructions, checklists, and flow diagrams that provide a high-level view of response and recovery. Be sure to include the who, what, where, when, why, and how.

8. Store the information properly – and make sure key people know where to find it. If you’re putting together a paper-based version, choose a brightly coloured binder, ensure it’s labeled appropriately and make several copies. Ideally, the plan should be stored-offsite; at minimum, store the information in an appropriate fireproof and waterproof safe.

9. Test it out! Don’t wait until something happens to see if you’re missing anything from your plan. Do a run-through of a disaster scenario with key employees and ensure they understand all the steps to take in the event it becomes a reality.

10. Plan for change. Businesses aren’t static, and business continuity plans shouldn’t be either. Describe how often the plan is to be reviewed and updated, and by whom. Ensure all backup plans are still relevant too – for example, equipment rental companies are still in business, off-site storage is in place, etc.

No one likes to think their business is at risk. Yet the reality is unforeseen circumstances devastate small business owners in Canada all too frequently. Taking the time to properly assess assets and developing a plan to protect them does not have to be onerous or expensive – and in an emergency, a proper business continuity plan can provide both peace of mind and cost savings in the long run.