Do you have a business continuity plan (BCP)? Here’s what to know

In business, as in life, anything can happen at any time. Some can be great, like an unexpected interest in your products or services from a high-paying potential client. Others can be disastrous, such as cyber attacks, natural disasters, fires. A business continuity plan can help minimize the negative impacts of such disasters. Below, learn about business continuity plans and how to create one.

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What is a business continuity plan?

A business continuity plan (BCP) is a series of contingencies, so that your business can continue operating after an unexpected disruption in services. It documents how your key processes, assets, team, and business partners can respond and keep functioning after a major disruption, including cyber attacks, fires, or other natural disasters.

As part of your BCP, you’ll create a disaster recovery plan. These two types of plans, though sometimes used interchangeably, are different. A disaster recovery plan details how you’ll get your IT systems back up and running following a disaster. It covers your servers, networks, mobile devices, personal computers, and other applications and data. It should include manual workarounds and methods for reimplementing any software that becomes unavailable.

What does a BCP include?

Comprehensive business continuity planning touches upon all the following areas:

  • Potential risks

Your first step in creating a BCP is to define the risks your plan should address. Take care not to limit yourself to solely natural disasters that feel realistic for your area – say, hurricanes in Florida. You should also include earthquakes, tornadoes, mudslides, and anything else that could affect your community.

Notably, a BCP can’t quite cover a society-wide disaster such as the COVID-19 pandemic. Instead, it focuses on events that could impact just your business or region. This zoomed-in focus is why risk management experts often recommend the creation of BCPs.

  • Potential impacts

Once you’ve identified potential risks, you should detail how they might affect your business. For example, a fire could destroy your inventory, and a cyber attack could cripple your IT infrastructure. This step is important since you can’t put solutions into place without knowing the problems you’ll need to solve.

  • Safeguards and action plans

Business continuity management starts long before a disaster occurs. That’s why your BCP should detail the steps you’ll take now to minimize the chances of risk. For example, you could set up a business security system that automatically alerts the fire department if a fire occurs. Or you could use cloud-based software backed up in another region to maintain business operations after cyber attacks or local disasters.

  • Plan testing

A plan to keep your business afloat amid disasters can sound great in theory and then collapse in execution. That’s much less likely if you regularly test your plan at every step of the way. For example, if you’re implementing cloud-based software backups, you should check now that you can actually log in remotely and use the software. You should also check that your fire alarms and security systems are up and running.

  • Plan auditing

As you test your plan, you should also audit it for processes and ideas that no longer make sense. For example, let’s say your cloud-based solution provider recently moved to a high-risk flood zone. In that case, you may want to switch providers. Sure, that backup data could be available to you during failure on your end, but what if the provider’s facilities had flooded the day before? That puts you right back at square one.

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7 parts of a BCP

The below seven sections should be part of every BCP.

1. Business impact analysis (BIA)

Business impact analysis (BIA) is the process of identifying how interruptions could affect your company. Although the BIA process is complex, the Federal Emergency Management Agency (FEMA) offers a helpful worksheet. You can use the worksheet to identify the financial and operational effects of a business process or function, as well as to figure out when a disruption would indeed result in the negative effects you’ve listed.

Using your BIA, you’ll know which processes could suffer most - and how to prioritize them -  amid a disaster. As a result, you’ll have an easier time figuring out when to implement your BCP. This moment is often called the “recovery time objective.”

2. Applications and data

This part of your BCP will cover any physical infrastructure necessary to run your software. The computers you keep in your office would be an obvious example. This section should also cover the hardware that enables high software availability, such as servers and internet routers.

3. Technology

This section isn’t quite the same as applications and data. Instead, it encompasses the systems, networks, and tools specific to your industry that power your continuous data and application backups. Protecting this technology ensures that you can take all the steps you detail in your “applications and data” section.

4. Facility

In the facility section of your BCP, you’ll outline which facilities could be subject to disasters. You’ll also describe how you would get them back up and running. You should be clear on how certain substitutes can be used in times of crisis. For example, you could put remote work tools into place to keep operating if your office becomes unusable.

5. Recovery

Here, you’ll detail the actual steps you’ll take to overcome a crisis. You should list steps for each potential crisis you identify in your BCP. For example, if your plan covers earthquakes, you should determine how you would rebuild your office or purchase commercial real estate for a new site.

6. Organization

Now that you have all your plans in place, you need to appoint team members to see them through. You can do so in the organization section of your BCP. Here, you’ll name each person involved in your disaster recovery and the role they’ll play. For example, your head of IT could be responsible for communication with data backup centers to get everything up and running again.

7. Training

Simply naming people to a team doesn’t automatically mean they’ll excel at business continuity and disaster recovery management. You’ll first need to train them in their roles. This way, when emergency management becomes necessary instead of theoretical, everyone will be well-prepared to play their part. The result is a stronger, faster response in any circumstance.

Why is business continuity planning (BCP) important?

BCP is important since any business is theoretically subject to any number of threats of varying severity. Should any of these threats become actual problems, your BCP can help you keep operating. That means you won’t lose as much revenue or garner as many expenses, both of which tend to happen amid disasters. And sure, business insurance helps, but no plan will cover all of your expenses – or the costs of losing customers to competitors who remain operational.

Who could benefit from creating a BCP?

Any and all businesses could benefit from creating a BCP. That said, the larger and more complex your company, the more important a BCP becomes. A sole proprietorship that you operate out of your home may be more resilient to natural disasters – you can just pack up and go elsewhere. A 25-person team that works from one office where all of your data and files are stored would incur much more damage and thus needs a plan to recover.

Prepare for the costs of business disruptions with SmartBiz®

A big part of business recovery is covering the costs, and you can get help with that. The Small Business Administration (SBA) offers disaster loans that you can apply for after a crisis to help pay for your expenses. But a big part of a BCPn is putting your recovery infrastructure into place well ahead of time. On that front, SmartBiz can connect you with SBA 7(a) loans and bank term loans to expand your working capital or shore up your savings.

Check now whether you pre-qualify* to begin planning for disasters before they happen.

*We conduct a soft credit pull that will not affect your credit score. However, in processing your loan application, the lenders with whom we work will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and happens after your application is in the funding process and matched with a lender who is likely to fund your loan.

WHAT YOU NEED TO KNOW: The SmartBiz® Small Business Blog and other related communications from SmartBiz Loans® are intended to provide general information on relevant topics for managing small businesses. Be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed. Please consult legal and financial processionals for further information.

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