2017-11-30 00:00:00 Running a Business English Reduce risks from unexpected events in your business with a contingency plan to keep your company running smoothly. https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/12/Small-business-employee-views-exit-strategies-and-contingency-plans-on-electronic-device.jpg https://quickbooks.intuit.com/ca/resources/business/small-business-contingency-plan-exit-strategy/ Why You Need a Contingency Plan or Exit Strategy

Exit Plan: Guide to Selling, Closing or Leaving Your Business

Why You Need a Contingency Plan or Exit Strategy

It’s important to have a plan of action, or contingency plan, to keep your company moving forward when unforeseeable events occur, including whether or not the company will continue when you, the business owner, leaves the company. A business contingency planning guide can help a company prepare for unusual events that happen during the course of regular operations and give you a step-by-step list of how to minimize the negative effects.

Identify Risks

To develop a contingency plan, start by identifying the risks that could potentially affect your business. The best way to do this is to have a brainstorming session on potential problems and hidden risks that could halt daily operations. Ideas might include:

  • Effects of the breakdown of a POS system.
  • Data theft
  • How would you continue working in the event of a fire?
  • What if the power goes out and you lose access to account information?
  • What if the owner is terminally sick?
  • How would you complete payroll if the head of HR quits?

Define the Effects

Once you’ve identified the risks, detail the effects that each one could have to your business. Examples of effects include the inability to wait on customers in a retail location if the POS system breaks down or the power goes out, or the liability for customer’s personal information in the event of data theft.

While it might be unlikely, it’s possible that multiple calamities can occur at once. Rank each risk on a scale from one to ten to identify which events could pose the biggest threat to your company, with one being least important and ten being the most important. This is the order you should address problems as they occur.

Create a Plan

Create a contingency plan or a plan of action for each risk. Each list should form a timeline so you know what to do within the first hour, the first day, and finally the first week and beyond. Designate an individual to communicate with other employees and ensure the plan is being followed.

Business owners should appoint a manager or other responsible individual to take over should you not be able to perform your duties. This should also be detailed in the exit strategy in your business plan, which details how you eventually plan to leave your business.

Talk to each department head or team leader and find out exactly what they will need to get through a disaster or event. Make arrangements to ensure they have it.

Reduce the Risks

Once you’ve identified the risks of your business, try to reduce those risks with a few necessary steps. For example, reduce the risk of fire damage by taking out adequate fire insurance, or ensure payroll is completed in a timely manner by appointing and training an assistant for the HR director. You can also safeguard against data theft by storing information in the cloud and keeping anti-virus software up-to-date on your network server.

Even the most carefully run businesses run into road blocks that disrupt daily operations. With a contingency plan, you can reduce the effects of unexpected factors to keep your business up and running.

Chapter 2.
What Are My Options for Leaving My Business? 3 min read
Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.