CONTINGENCY PLANNING

In the real world of business, things seldom go according to plan.  All the planning in the world does not assure an owner that everything will follow a designed plan. Small business owners have to prepare for sudden changes in their target market, technology, legislative action or any one of a dozen other things that can cause “all hell to break loose.”

Every small business should have an “in case of crisis plan”.  I recommend that this becomes an addendum to your Strategic Focus Plan, the document that I am sure, all of you have on the top of your desk and refer to it on a daily basis. Let’s take a look at the components of such a plan:

• Possible disaster watch: don’t get so entrenched in working in your business that you don’t take time to work on your business. A possible exercise is creating a list of “what could possibly go wrong”. A few examples may include a supplier going bankrupt or losing your single biggest customer. I encourage this possible disaster watch to be exercised at least once every six months.
• Financial: disasters usually have a major effect on the financial stability of a firm. This becomes a budget function. Every business should strive to have at least a 6 month reserve to keep the business afloat in case of a total income stop. Best way to start the building of a reserve is to budget a certain percentage of each month’s total income and deposit it into a special reserve account. No, it may take some time to achieve this goal but the secret is to start.
• Illness: if the business owner  is the only “employee” or is the main source of the majority of the income and delivery of the product/service that the firm offers, then an illness which removes the business owner for anything longer than a week, may be disastrous.  One very useable solution to this is to select an owner of a similar business who shares your value system and arrange a “cover each other” situation. I have used this system myself for many years, and it does work.

Your specific industry may have more things that need to be placed in a crisis plan, but this is a good beginning.

Be Prepared to weather the storm!