If you’re an SME, you’re busy making money and keeping daily business under control. The last thing you need is another task, creating something that you may never need to use. But there are many immediate benefits and important reasons for creating a Business Continuity Plan (BCP).
Here are six reasons that will more than justify the effort of creating a BCP…
1. Stay out of legal trouble
A number of industries require their players to have a BCP, either due to Government regulations or contractual obligations. Typical examples of regulated industries are the financial industry (through the Central Bank Business Continuity standards), certain time-critical Government functions, as well as supply chain driven industries such as the Oil & Gas sector and the Manufacturing industry. This means that if you operate in any of these industries, having a tried and tested BCP is a ‘must’ if you do not want to risk losing your customers and/or your license to operate.
2. Gain competitive advantage and increase your revenue
Having a well developed and tested BCP can mean you get the business instead of a competitor.
Many regulatory standards and commercial agreements now include a ‘third party Business Continuity’ requirement. This means that an organisation’s critical suppliers need to have a BCP. So even if you’re a catering supplier, a construction company, a transport supplier or a cleaning company, you can be critical to your customers. And they will be keen to review your risk management capability and disaster response options. So be smart and proactively communicate your continuity ability on your website and in your business proposals.
And BCPs are not just valuable to businesses whose customers are other businesses (B2B). Even consumers can be interested in your ability to continue providing products and services ‘no matter what happens’. Imagine you’re operating a small tourism business and entire families join you on your trips. Why not proudly tell them about your alternate guides, drivers, communication tools, emergency health provisions, accommodation options and transport facilities in case any of a disruption. Why not use the existence of your BCP to convince your customers that they (and their kids) are in good hands? This strategy can be applied to numerous sectors, in particular those where health and wellbeing are at stake, such as private hospitals, food suppliers, security providers and utilities.
3. Appeal to investors
Investors are concerned about your business being sustainable and your ability to continue to operate should adverse events occur.
One of the tools you can use to convince investors that you will stay ‘afloat’ in the event of a flood or other disruption, is a properly developed and tested Business Continuity Plan. In fact, the U.S. Securities and Exchange Commission prescribes asking for a BCP by any investment advisers as a compliance requirement (see footnote 22). Hedge Fund investors have been pushing for years for Business Continuity Plans to be in place prior to a fund’s launch.
4. Reduce your insurance premiums and/or get better coverage (or any coverage at all!)
According to a survey amongst brokers and insurers by the British Insurance Brokers Association (BIBA), 61.6% of interviewed insurers and brokers confirmed that companies, by having a BCP, will benefit from getting additional types of insurance, and as a result, comfortably opening new markets. If an SME, for example, is looking to include larger clients in its portfolio, it is required to show strength and seriousness in their management processes to the insurer (e.g. its ability to deliver on any obligations arising from larger contracts), so the insurer will cover them for related risks.
The BIBA survey also shows that 55.7% of the responding insurance firms offer discounts on premiums, if a client has a BCP. Additionally, they pointed out the unacceptable risk of not having a BCP when wanting to access insurance products. In total, 83.3% of the respondents said they would either offer a discount or improvement of the terms of business interruption policies, if companies had a BCP.
5. Be prepared for the big disaster, therefore also for the small disasters
Having detailed plans in place for the ‘big bang’ makes you stronger against the far more regular, minor mishaps of everyday life. Your responsiveness to small incidents will improve exponentially, considering your staff will have a stronger ‘what if’ mindset, making themselves and the company more resilient. Plus, having your contingency procedures kept updated and accessible from one central place (i.e. your BCP), will enable you to get ready quicker in the event of such smaller, regular mishaps without having to hunt around for the relevant response procedure.
6. Fill the gaps left by your insurance policy
Most businesses care about their people and about the future of their business. Not knowing what threats are around the corner (and not knowing in what forms they may present themselves) can be very stressful. Knowing that your insurance policy covers you for some unforeseen circumstances can partially alleviate that stress. But not every risk is insurable!
- Your SME has certain assets, tangible or intangible, that are not covered by any insurance, simply because there are no policies for every single threat or every single asset (for example, your reputation).
- Insurance policies often include force majeure clauses, meaning that for certain threats the insurer doesn’t pay.
- Long waiting periods and/or ‘no claim’ requirements limit your ability to insure your business from day 1; and/or
- It takes ages before the approval occurs and/or the physical pay-out hits your bank account.
By having a business continuity plan, arrangements can be made before a disaster hits that would minimise its adverse impact. These arrangements might include having reciprocal arrangement in place with a business who can service your customers while you recover, or who can provide you with the tools and equipment you need. You might also look at ensuring the key information you need to continue your business is accessible in the event of an IT disaster, such as storing a copy of your customer details and order information offsite or ‘in the cloud’.
Setting up and running a business is not easy. After surviving the avalanche of getting licenses, paying for the set-up of equipment, allocating roles and responsibilities, marketing the products/services and establishing systems required to run business functions, SMEs face new challenges, pressures and deadlines every single day.
Even more reason to protect your business and ensure its survival and make sure you didn’t waste all that time, effort and money. Especially if your business is part of a supply chain, or customers can choose between you and your competitors, or if the business is taking off and growing. You need to have a plan. One that will help you even if you don’t experience a disaster.
If you want your BCP to work when you need it most, contact us at www.businessasusual.net.au.
And if you’re keen on training, you can also have a look at our upcoming courses in Business Continuity, Risk, Information Security and Supply Chain Security Management (incl ISO22301, ISO31000, ISO27001& ISO28000 certification exams).
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