If 2020 has taught us anything, it’s that there’s a requirement for us to prepare for the unexpected with both our personal and business finances. Granted, few could predict a global pandemic, but it is reasonable to expect that there may be situations where events destabilise your current financial position. With that, it is strongly advised to coordinate and implement a Business Recovery Plan. As the name suggests, a Business Recovery Plan is a plan that includes information relevant to a plan for responding to and/or recovering from incidents or crises affecting your business. Its aim is to lessen the recovery time, minimise losses and respond as quickly and efficiently as possible to this.
What’s included in a Business Recovery Plan?
There are some key components to a successful Business Recovery Plan that should be included to ensure your business can face adversity and uncertain turns of events with confidence. Or, at least, some assurance that a course of action is in place. This does not need to be a pandemic. BRPs are for any instance of disaster, including weather, floods, fires and cyber attacks. Each has their own set of considerations and solutions, and it is possible to craft BPRs to individually deal with these categories. However, for the purposes of this article, we’ll stick to the broader inclusions of a successful BRP.
Identify the scope of the plan
This is to clearly identify how the plan will be executed both in written form and then in practice. The ‘scope’ is to outline the plan’s goals (eg, to protect the business’s assets, see the business retain productivity, maintain its service or product requirements to existing customers/clients etc.), outline the processes and checks and balances of written procedures, and who/how the plan will be implemented.
Key resources, staff and equipment to successfully implement and execute the plan
This is a detailed description of everything needed to ensure the success of the plan. This is best done in checklist form for ease of reference, and include:
Who are the key staff members to implement the plan, and each of their roles within that
Equipment; including data backups, backup sites, supplies and resources required
Each should have their purpose outlined and when in the plan they will be required.
Identification of critical functions
This is essentially the ‘non-negotiable glue’ that ensures your business’s survival. It’s the areas that are necessary for your business to respond, recover and/or rebuild. While maintaining stock/stakeholder stability and financial objectives are included in this, it must also cover your legal obligations. You can’t simply implement critical functions that are only concerned with maintaining a healthy bottom line; there are legalities around your staff, processes and safety standards that make up your critical functions. Critical functions should also include the safeguarding of irreplaceable assets.
While you will not be able to necessarily create specific timelines (to use the pandemic as an example again, or even the 2019 bushfires, there was no simple or clear timeframe around the crisis itself, therefor making it impossible to impose precise time structures), it’s important to establish some expectations around the pacing of your plan to keep your business from floundering in uncertainty. This can be established by simply outlining the preferred pace (eg., ‘Once X has been implemented, Y will be put into motion’).
Objectives are arguably the most important aspect of your plan because by concentrating on them, you are able to have a goal to focus on when the crisis event opposes your preconceived plan. Meaning, if your objective remains clear, pivoting and thinking on your feet can not only be made more efficiently, but effectively.
This is by no means an exhaustive list of inclusions in your Business Recovery Plan. Just as the crises themselves tend to be complex, so too will be your business response to it. However, once created, you provide invaluable peace of mind for yourself, your stakeholders and your staff that you are prepared for adversity.
Shaw Gidley are experts in restructuring, turnaround and insolvency and provide free initial advice on these matters. Please contact our offices on (02) 4908 4444 or (02) 6580 0400.