“Forty percent of businesses do not reopen after a disaster and another 2 percent fail within one year according to the Federal Emergency Management Agency (FEMA). Similar statistics from the U.S. Small Business Administration indicate over 90 percent of businesses fail within two years after being struck by a disaster.”- Mary Kay Hyde-Bohn, Make Sure Your Business Never Screeches to a Halt Again, 2015
For small businesses, even a small crisis can have a big impact and significant disasters can be devastating. Businesses need structure and tools to prepare for situations that could both diminish the ability to service customers or could force business closure. Disasters and crises can impact several aspects of a business.
Awareness of potential issues is an important first step. By developing a list of potentially negative situations that could impact your business, you gain more clarity on the challenges you could face. Once you have a list, you can evaluate the level of risk so that you can tackle the most critical issues first. Don’t panic! You don’t need to solve everything right away.
“The key deliverables that result from a comprehensive business continuity plan are choices. You get to decide what to do before a disaster instead of afterwards or worse, in the middle of one. It is a fact of life that most things are scarier when you have your back turned to them. Having knowledge gives you the power to act and allows you to be proactive, instead of reactive” - David Kinlaw, CloudTweaks May 13, 2014
The following case studies were sourced from the workbook “Make Sure Your Business Never Screeches to a Halt Again” by Mary Kay Hyde-Bohn. Each example is my retelling of the story based on my personal viewpoint and thoughts. However, each one heavily relies on details and questions sourced from the workbook.
When a key person at Light Manufacturing broke his leg, he was placed into a full leg cast. To ensure team (and his own) safety, he couldn’t work in the shop area during recovery. The business owner was in a difficult situation. This was one of his most knowledgeable shop employees and the team would struggle if he wasn’t available. If only better process documentation and cross training had been done before this happened!
· Do you have an employee training manual?
· Do you have a supply chain flowchart?
· Do you have a vendor list with contact names and backup contacts?
· Do you have documentation of the consumable and IT supplies needed for your business?
In this situation, Light Manufacturing came out with a win. The employee was given a desk in the front office where he could safely perform a temporary job learning and documenting the company’s Supply Chain process. Shop team members came to ask him questions several times a day, which was disruptive, but allowed the business to function.
Ultimately, the employee developed documentation of the end-to-end supply chain flow chart, processes and an employee training manual. Then a local high school art student painted the workflow on the shop wall, providing a visual guide for the team. This allowed the entire organization to function at a higher level and the company was better prepared for future incidents. Company leadership learned the value of process documentation and cross training!
The employee was pleased with the situation as he was able to continue working, collect his regular salary rather than Workers’ Compensation, and learn about the Supply Chain process. This temporary role gave him, the front office and the shop team a greater appreciation for how each contributed to the company’s success.
"Why doesn’t your online pricing reflect the sales pricing in the newspaper ad?” The sales staff and call center personnel were caught off guard.
A small retail company used multiple channels to market their products. They had developed a website and a Facebook page and used local newspapers to advertise periodic sales. The Marketing department had initiated a newspaper ad but had failed to inform the web team and the sales department about the sale items, prices and details. As a result, customers weren’t receiving the promised pricing as they placed online orders. Even worse, the sales staff and the call center staff were assuring customers that the online pricing was correct.
The situation escalated and the sales department and call center staff were being consumed by this issue rather than managing other customer sales. Negative reviews from angry customers were being posted to the company’s Facebook page.
· Do you have a process for creating and communicating your marketing plan internally?
· Do you have authorized contact(s) for responding to social media posts?
· Do you have a single person to manage communications in a business crisis?
Company leadership went into crisis management, communicated the new product pricing, had the information technology teams make emergency changes, and updated their call center staff. Next, they addressed the negative reviews on Facebook, contacted customers to apologize and tried to make amends for the error but a lot of damage had already been done. This couldn’t be allowed to happen again!
To mitigate a future crisis, new procedures were put in place to schedule advertisements and to inform all ‘customer facing’ teams so that sales and website teams had adequate time to make system updates. Additional scripts and information sheets were developed to give call center personnel everything they needed to respond to phone and email questions. Finally, the company established new policies, procedures and personnel to monitor Facebook and to respond to or remove damaging comments.
Overnight, a severe storm hit the company offices. As employees started coming into work, they noticed that the power outlets had black marks on them and several pieces of office equipment didn’t turn on. The staff started investigating which equipment was damaged and tried to isolate it to certain power strips or outlets. However, they couldn’t find any obvious pattern which meant every piece of equipment had to be tested so a list of damaged equipment could be provided to the insurance company. The office staff was consumed by the incident for most of the day.
· Do you have an inventory of your equipment?
· Is all your equipment listed on your insurance policy?
· Is your equipment properly protected from lightening with surge protector power strips or even better a ‘whole building’ surge protector?
· Do you have a back-up power source in case of power failure
Fortunately, the insurance policy covered the electrical repair work and damaged equipment. This incident prompted the business owner to develop better lightening protection solutions and work with the landlord to implement them. It also initiated conversations about other incidents that could impact the company’s physical infrastructure and to create a business resilience plan.
These common and seemingly insignificant situations had a tremendous impact on each business, causing disruption, a loss of productivity, a loss of reputation, and less profit. It’s difficult enough to keep a small business operating profitably without being faced with damaging crises. How prepared is your business?
A helpful resource with questions and templates for businesses to evaluate risk and develop a response plan is READY.GOV provided by FEMA.
The Small Business Association Emergency Preparedness website also has resources and access to business counselors to help with resilience planning.
Finally, the workbook “Make Sure Your Business Never Screeches to a Halt Again” by Mary Kay Hyde-Bohn is a great starter kit for small businesses. The workbook includes resources, reading materials, organization websites and business resilience questions covering:
· Customer Operations
· Human Resources
· Business Operations
· Communications & Marketing
· Revenue Management
· Facilities & Equipment
· Information Technology
If you would like a copy of this workbook or would like to discuss business continuity planning with Mary Kay Hyde-Bohn, contact her at firstname.lastname@example.org
Awareness is the most important outcome! By utilizing the free resources that you have available, answering these basic business resilience questions, developing a list of potentially negative business situations and taking action on the most critical areas; you are increasing the chance that your business will survive and hopefully, continue to thrive, despite disasters or crises.