Even if your small business is running smoothly at the moment, it’s important to be prepared in case something unexpected and out of your control goes wrong.
With a business contingency plan in place, you know exactly what to do when disaster strikes. For example, when the computer system at your business breaks down, you know who to contact right away to get the computer system up and running.
What is a Contingency Plan?
A contingency plan is a strategy that outlines the course of action that management and staff of a business need to take in response to an event that may or may not happen in the future. The plan will include steps to take so your business can proceed with regular operations after the event has occurred. Usually business contingency plans go hand-in-hand with risk management and disaster recovery.
What is the Purpose of a Contingency Plan?
Having a contingency plan in place for your small business will help you be prepared for any unforeseen event and hopefully minimizes the impact on your staff and overall health of your company.
Benefits of a Contingency Plan
Creating an effective contingency plan is helpful for many reasons. Not only will it help you bounce back quicker after a significant event, but it will help improve the morale of your staff.
Learn more about the benefits below:
- It Keeps Everyone Calm: When an emergency situation arises, people tend to panic. By having a plan in place, you can avert some of this panic. Having a clear and effective plan in place will help your employees push past their initial fears, and it will help you as the business owner, to make better decisions that will help you move quickly into recovery mode.
- Minimizes Loss: When disruptions occur, they usually have adverse impacts on production. Having a plan in place will allow your business to withstand any unforeseen circumstances without having to shut down production. Creating and following the contingency plan will help minimize loss in operations and production.
- Improves Loyalty and Trustworthiness: It is common for customers and employees to leave a business when a crisis is not handled well. Having a plan in place allows your business to show your employees and customers that you are resilient and prepared to handle any challenges that arise in the future.
How to Write a Business Contingency Plan
To create a business contingency plan for your small business, follow these steps:
- Identify all the risks with your small business. These include risks related to hardware failure, vendors going out of business and core staff leaving the company.
- Prioritize the risks based on their impact on your small business,
- Determine the impacts these risks have on your business.
- For each risk, write down the steps of what to do when it happens. For example, determine who to contact in case of hardware failure.
- Share and maintain the plan.
Contingency Plan Template
Download your free contingency plan template today.
Stay Organized with the Right Software
Choosing the right software to help manage your business can help you focus on the important stuff, like developing a contingency plan. Manage inventory, employees, payment methods all with one software. Download QuickBooks Online for all your small business needs or try it free today!