Managing a small business can be a challenging task on its own, let alone when something goes drastically wrong. Unforeseen circumstances can often throw small businesses into chaos, and when this has a direct and unforgiving impact on livelihoods – preparing for these situations is an absolute necessity.
Contingency planning is commonplace in the corporate world and for larger organisations. The process identifies potential threats to a business and outlines planned responses for such circumstances if they were to happen. Threats can include anything from supply chain issues to natural disasters, but anything can happen. So why should you be creating a contingency plan for your small business?
Avoid panic
Unforeseen events can cause serious panic in a workforce or organisation. When a small business is your main source of income, any negative impacts from external factors can cause significant anxiety for yourself and any employees you may have. Therefore, a contingency plan can help to settle worries and panic in your business by having a clear process and set of actions to follow in the event of a contingency. Taking certain pre-emptive steps such as investing in small business insurance can also help to minimize panic in the event of an unforeseen disaster, giving peace of mind that a business may be able to claim for any damages or losses caused.
Minimize damage and disruption
A contingency plan also ensures that a pre-prepared response to a particular event allows your business to limit any damage, disruption or loss. An organised response is more likely to allow your business to overcome a situation faster than a spontaneous plan of action, meaning you could save yourself thousands in costs or keep the loyalty of your customer base, for example. Any event that causes a complete shutdown of your business will have a significant impact, but a contingency plan can help to resume your operations as quickly as possible.
Bounce back better than your competitors
Contingencies such as supply chain shortages can have a wide-reaching impact across whole industries. Planning for such events or issues can potentially be a competitive advantage if you can respond to common challenges in a more effective or efficient way than your competitors. Forward thinking in this sense could be the difference between surviving, or even thriving, through a contingency orsubsiding at the hands of your competitors.
Easier handovers
Finally, contingency planning helps to share the responsibility around a small business in the event of an unexpected incident. An easily accessible contingency document means that wider team members can respond to events, rather than sole responsibility sitting with the owner. This can help to give peace of mind to small business owners whilst they are away and leaving someone else in charge.
