How to Create a Business Continuity Plan For Small Business (With Examples)

Business continuity is no longer a discussion exclusive to large corporations; it's now equally relevant for small businesses. The recent pandemic underscored that no company, whether it employs five people or hundreds and thousands, is immune to such disruptions.

If you're a small business owner, ask yourself:

• What are the most significant risks and threats to my business's operations?
• How dependent is my business on external suppliers or vendors? What happens if they face disruptions?
• Do I have the necessary resources (financial, human, technological) to support my business during a disruption?
• How long can my business afford to be non-operational? What's the maximum acceptable outage time?

If you're struggling to find the answer to these questions, this is where business continuity planning comes in to ensure your company can function during a crisis.

Why Is Business Continuity Essential for Small Businesses?

Small businesses often operate with limited resources. While creating a business continuity plan might seem daunting, especially with a smaller team, this very constraint underscores its importance.

Compared to larger enterprises, small businesses are more vulnerable to threats and disruptions. Limited resources and staffing make small businesses especially susceptible to even a minor disruptive event. For instance, a temporary closure due to a natural disaster could result in financial losses so significant that recovery becomes challenging, potentially leading to permanent closure.

Thus, a business continuity plan isn't just a strategy to thrive and maintain a competitive edge. For small businesses, it's a lifeline — an essential tool that provides a roadmap during uncertain times to ensure operational resilience, retain the workforce, and continue to serve clients effectively.

Creating a Business Continuity Plan BCP: A Case Study of A Local Bakery

Now that you understand how significant a business continuity plan is to your small business. It's time to create one.

We will walk you through the process of creating a BCP, using a local bakery as an illustrative example, to emphasise that businesses of all sizes and sectors can benefit from being prepared.

Step 1: Risk Assessment

The first step is to conduct a risk assessment. This is the foundation of any business continuity plan, as it helps businesses understand what they're up against.

So, what are the potential risks for a local bakery chain?

• Supply Chain Disruption: Bakeries depend on suppliers for fresh ingredients, e.g. flour, sugar, dairy products, etc. Interruptions in the supply chain can put a halt to the bakery's operations; this can be anything from transportation issues and supplier setbacks to global food supply chain disruptions.
• Operational Failures: Equipment malfunctions, such as oven breakdowns or refrigeration failures, can disrupt operations. Without functioning equipment, a bakery might not be able to produce or store its products.
• Staff Shortages: Bakeries, especially small ones, can be heavily reliant on a few key employees. Unexpected absences due to illness, personal emergencies, or other reasons can disrupt operations.
• Natural Disasters: Bakeries, and any business, in areas where there's a higher risk for natural disasters (e.g. floods, hurricanes, or earthquakes) face unique challenges. These events can lead to power outages, structural damages, or access issues for both staff and customers.
• Regulatory and Compliance Changes: Changes in local regulations, such as health codes, labour laws, or environmental standards, can impact operations. Bakeries need to be prepared to adapt to these changes.

Step 2: Develop Solutions

Given the identified risks for a local bakery, the next step is to devise strategies that mitigate those risks and ensure business continuity. This step is about being proactive and thinking ahead about how to address potential challenges.

Supply Chain Disruption

• Diversify Suppliers: Instead of relying on a single supplier for essential ingredients, consider sourcing from multiple suppliers. This reduces the risk of a complete halt in case one supplier faces issues.
• Maintain a Reserve Stock: Keep a buffer stock of essential ingredients. This can help in situations where there's a short-term disruption in the supply chain.
• Local Sourcing: Whenever possible, source ingredients locally. This can reduce the risk associated with long-distance transportation and global supply chain disruptions.

Operational Failures

• Regular Maintenance: Schedule regular checks and maintenance for all equipment. This proactive approach can prevent unexpected breakdowns.
• Backup Equipment: For critical equipment, consider having backup options available. For instance, a spare oven or a backup generator can be invaluable during equipment failures.
• Training: Ensure staff are trained to handle minor equipment malfunctions so they can either fix small issues or know when to call for professional help.

Staff Shortages

• Cross-Training: Train employees in multiple roles. This way, if a key employee is absent, another employee can step in to fill the gap.
• Flexible Scheduling: Offer flexible work schedules or part-time positions to attract a broader range of employees.
• Temporary Staffing Agencies: Build a relationship with staffing agencies. They can provide temporary workers during unexpected staff shortages.

Natural Disasters

• Insurance: Ensure the business is adequately insured against natural disasters prevalent in the area.
• Disaster Preparedness Plan: Develop a plan that outlines steps to take before, during, and after a natural disaster. This should include evacuation procedures, communication strategies, and recovery steps.
• Backup Power: Invest in generators to provide power during outages.

Regulatory and Compliance Changes

• Stay Informed: Join local business associations or chambers of commerce to stay updated on potential regulatory changes.
• Regular Training: Conduct regular training sessions for staff to ensure everyone is aware of and compliant with current regulations.
• Consultation: Consider hiring or consulting with experts in areas where regulations are complex or frequently changing, such as health codes or labour laws.

By proactively addressing these risks with proper solutions, a local bakery chain can enhance its resilience and ensure smoother operations even in the face of challenges.

Step 3: Implementation

Once you've identified the risks and developed solutions, the next step is to put those solutions into action. Implementation is about turning strategies into real-world practices that protect the business from disruptions.

• Action Plan Creation: For each solution, create a detailed action plan. This should include what needs to be done, who is responsible for it, the resources required, and a timeline for completion.
• Allocate Resources: Ensure that you have the necessary funds, staffing, and equipment to implement your solutions. This might mean setting aside a budget for backup equipment or hiring additional staff for cross-training.
• Training: Conduct training sessions for your staff on new procedures or equipment. For instance, if you've decided to cross-train employees, schedule training sessions where they can learn new roles.
• Communication: Keep everyone in the loop. Inform your staff, suppliers, and even customers (where relevant) about changes you're making to ensure business continuity.
• Documentation: Document all changes, procedures, and training sessions. This not only serves as a reference but also ensures that new employees or stakeholders can be brought up to speed quickly.
• Test the Plan: Once everything is in place, conduct drills or simulations to test the effectiveness of your solutions. For example, simulate a supply chain disruption and see how well your diversified suppliers or reserve stock can handle the situation.

Step 4: Review and Refine

A business continuity plan is not a one-time effort. As your business grows and changes, and as external factors evolve, your BCP should adapt accordingly.

• Regular Audits: Schedule periodic reviews of your BCP. This helps in identifying any gaps or areas that need improvement.
• Feedback Collection: After drills or, unfortunately, real-life disruptions, gather feedback from staff, suppliers, and other stakeholders. Their insights can be invaluable in refining the plan.
• Stay Updated: Keep an eye on external factors, like changing regulations, emerging risks, or new solutions in the market, that might affect your BCP.
• Adjust and Update: Based on your reviews, feedback, and external changes, make necessary adjustments to your BCP. This might mean adding new solutions, removing outdated ones, or tweaking existing strategies for better effectiveness.
• Re-train: Whenever there are significant changes to the BCP, ensure that everyone involved is re-trained and aware of the new procedures.
• Document Changes: Just as with the initial documentation, ensure that all changes, updates, and refinements to the BCP are well-documented.

By continually reviewing and refining your business continuity plan, you ensure that your small business remains prepared and resilient, no matter what challenges come its way.

What Are Unique Business Continuity Challenges Small Businesses Face?

Small businesses often feel the brunt of business disruptions due to their limited budgets and resources. A well-crafted business continuity plan helps allocate resources to critical functions and curbs unnecessary spending.

Another challenge for small businesses is the rapid pace of change and the demand for adaptability. Small businesses need agility and the ability to quickly pivot to address new challenges or shifts in the business environment. Proactive strategies, such as business continuity planning, bolster business resilience in volatile settings.

Furthermore, small businesses usually operate with smaller teams. Each team member holds significant importance. The absence or inability of even one employee to perform can disrupt business processes. Hence, efficient role designation and a coordinated disruption response plan become crucial.

Benefits of Small Business Continuity Planning

• Business Sustainability: A robust business continuity plan helps businesses navigate crises, maintaining consumer trust and brand reputation.
• Investor and Customer Trust: Operational resilience and proactive planning can enhance the confidence of investors and customers.
• Competitive Edge: A robust business continuity plan can position a small business ahead of competitors during crises.

Common Pitfalls of A Small Business Continuity Plan

• Failure to Update: Continual updates to the business continuity plan ensure its relevance.
• Overlooking Minor Risks: Small businesses should consider all disruptions, regardless of size.
• Inadequate Team Training: Properly trained employees can effectively handle crises.

Get Started on Your Small Business Continuity Plan

With a business continuity plan, small businesses can navigate disruptions confidently. Despite limited resources, a clear roadmap provided by the plan dictates the steps to take and resource allocation. Beyond mere survival, business continuity planning can also offer a competitive advantage and empower employees, fostering long-term business growth.