Don’t Let a Crisis Leave Your Business In Question

A crisis can strike at any moment. Some can be planned for. For example, you may live in a region more prone to particular natural disasters such as hurricanes or earthquakes. In predictable environments, there is likely more information available. You may have previous experience, or your community has available information on how to respond. These can be tools which you can utilize in developing operational contingency plans for how your business or organization responds and continues its operations.

Many crisis situations are less predictable, such as how the COVID-19 pandemic affected the global economy. If nothing else, executive leaders and business owners quickly gain awareness of how vital business contingency plans are. It’s important to have alternative operational processes in place allowing your team to transition into alternative work requirements.

Leaders who have a keen understanding of their business operations and capabilities will be able to adapt operations quickly and sustain revenue generation. It is imperative to have up-to-date and efficient daily processes and procedures adopted for your organization before any contingency plans can be created. This existing knowledge will enable you to seamlessly implement a contingency and determine the operational pivots needed to:

• Keep operations running
• Buffer revenue and profit loss
• Determine the cost impact of modified operations
• Estimate the client impact of modified service-based offerings and/or programming
• Continue to meet the demands of target markets

Contingency planning needs to account for disruptions that might affect business operations – financial shortages, information technology disruptions, data breaches, staffing vacancies, natural disasters, and health pandemics are all examples of what might affect business operations. When planned for properly, your organization will be able to alter and pivot daily operations and short-term business models. This quick adaptation will help your organization or business survive a crisis and quickly recover.

The primary elements needed in an operational contingency plan are:

Scenario—what is the situation which is causing a need to adapt?

Trigger—the result of the scenario.

Response—what actions need to be taken?

Who needs to be informed/notified?

Key responsibilities—who needs to take charge of what tasks?

Timeline—what needs to happen and when?

A disaster situation will likely require extended employee leave of absences and remote work or modified schedules to ensure team safety. Access to organizational systems and technologies such as cloud storage for files and task tracking applications will help ensure affected employees can get information as needed to stay productive, accountable, and connected.

It will be necessary to cross train employees while developing a contingency plan. Because normal operations are altered, employees often need to take on additional responsibilities or personnel with essential skills and knowledge in another area will need to be shifted. As an immediate benefit, cross training could help improve teamwork, create opportunities for innovations, and increase the ability to pivot daily tasks or modify short-term business models. Without cross trained employees, executive leaders would be forced to fill vacancies as needed to sustain operations during a crisis. This is a high-risk alternative because your organization’s finances would likely be compromised during a crisis and employees might not be in the best position to train.

A scenario requiring the implementation of a contingency plan is likely to affect your organization’s cash-flow, especially if the crisis caused revenue sources to be significantly altered or suspended. Therefore, contingency plans need to be complemented with a pre-existing emergency funding plan. Having emergency funding, such as cash reserves or an open line of credit, helps to keep operations running. Discuss with your CFO, financing department, accountant, and bank to determine the best options for your organization and industry.

When developing or redrafting contingency plans for your organization, it is important to keep in mind that flexibility is necessary to sustain during unexpected situations. When a natural disaster or crisis occurs, executive leaders need to have a continual awareness of operations and the capability to pivot products or services for survival and continued success.