5 steps to develop a business continuity plan

A business continuity plan is a detailed action plan that communicates how a business will continue operating in the event of a catastrophe or other unforeseen situation. Its importance can’t be understated; it can be hard to think straight after a catastrophic event. Having a business continuity plan ready can help keep your business operations and cash flow intact.

Who needs one?

All businesses need a business continuity plan because natural disasters, fires and other emergencies can affect businesses of any type or size. Whether you’re a sole proprietor or have several employees, establishing a plan will help you prepare for these events.

A business continuity plan isn’t limited to catastrophic events. Even common setbacks, such as the sudden illness or departure of a key staff member, can severely upset your business. These situations should be accounted for in your business continuity plan.

Developing a business continuity plan is easier than you think. Follow these five steps to prepare your business for the unexpected and have peace of mind knowing you’re ready when a disaster strikes.

1. Identify your business’s scope

The first step to starting a business continuity process might seem obvious, but many business owners skip it: determining your business’s scope. Your business scope is a high-level view of all the resources needed to render the goods or services your business provides.

Start by listing what’s Required to Operate your business’s ability to provide its Products/Services in a table. Be sure to consider your core operations, and contractual and legal obligations. Fig. 1

Fig 1.
Required to Operate Product Service Product
(resource, equipment, legal)
(resource, equipment, legal)
(resource, equipment, legal)

For example, a restaurant business could start by:

  1. Listing the Products/Services they provide. In this case, their Restaurant, Catering and Delivery services. Fig. 2
  2. Listing all the resources, equipment, and legal requirements they have to comply with to stay open.
  3. Checking all instances of what's Required to Operate for each of the Products/Services.
Fig 2.
Required to Operate Restaurant Catering Delivery
Waitstaff / Hostess
Chefs / Cooks
Catering Trucks
Kitchen Equipment
Health Code Compliance

The Health Code Compliance requirements are vital for the Restaurant, Catering and Delivery portions of the business, while the Catering Trucks are only required for Catering.

Completing this step before starting your business continuity plan will help you when it comes time to allocate your resources later.

2. Prioritize business needs

Now that you’ve properly scoped your business’s functions, determine what business responsibilities are vital to maintain, and which your business can shudder temporarily. Prioritizing the essential functions for your business is necessary as you’ll need to divide resources to keep the most important aspects of your business operational during an emergency situation.

Keeping with the restaurant example, the business owner may realize that the restaurant can subsist on their catering business alone should their physical dine-in location become inoperable. In this scenario the restaurant owner should consider devoting most of their resources to keeping their catering business running optimally. This way, the catering business can keep the business afloat while the restaurant undergoes repairs.

3. Create your plan

Put together an action plan for each essential function of your business. This should include specific employees and what action is needed from them to sustain production. You’ll want to include a list of all equipment or tools needed to complete the task. Keep your vendors and customers in mind when deciding how you’ll communicate any temporary changes.

For example, at our restaurant, the business owner should write a detailed step-by-step plan on how to keep their restaurant profitable while their physical location is shut down. The plan should list the key people that need to be involved and their corresponding responsibilities, where they’ll be temporarily relocated and a method to communicate these changes to the restaurant’s vendors and customers.

4. Hone, preach, practice

You’ve probably heard the old adage, “practice makes perfect.” While no plan is foolproof, practicing your plan is a crucial step.

Rehearse your business contingency plan with your staff regularly. This serves two purposes: not only will your staff know what to do if a situation arises, but you’ll also be able to identify any issues with your plan you may not have considered.

For example, you might realize that your plan doesn’t consider how to continue business operations in the event of a power outage, prompting you to invest in a generator. Be sure that any updates you make are reflected in your plan.

When it comes to practice, a combination of a tabletop exercise and a structured walk-through can be beneficial for your plan. In a tabletop exercise, key leaders in your company review the business continuity plan together in a meeting to identify any holes. If you’re a sole proprietor, go over the plan with your business coach or mentor. In the structured walk-through portion of the review, each business member role-plays the plan after an event. Both exercises can greatly strengthen your business continuity plan, as it will expose any shortcomings your plan may not account for. The more experienced people within your business that review your plan, the better.

Once you’ve practiced your plan, make sure it’s easily accessible. Posting a physical copy where it’s easily obtainable by everyone, such as a break room, is vital to your plan’s success. Be sure to create digital backups of your plan and communicate their locations to everyone in your organization.

Returning to the restaurant example, the business owner should review the plan with his general manager and floor managers and ask them to identify any immediate flaws or concerns. Upon completion, the owner and his management staff should do a physical walk-through of the plan, so they can act quickly should an emergency arise.

5. Maintain and update

Maintaining your business continuity plan is just as important as creating it. Revisit your plan as often as needed to accommodate any changes in your business. Account for things like changes in business scope and developmental growth. As your business grows, so should your business continuity plan. You might consider revising it monthly or annually depending on your business’s needs.

For example, our sample restaurant experienced a sharp uptick in business over the past year and decided to move to a bigger location. The business owner should update their business continuity plan to include these changes and any new procedures. Of course, they’ll need to test their revised plan to make sure their strategy is still robust.

Developing, practicing and tweaking a business continuity plan takes time, which is why it’s important to view it as an investment. While it may take some resources in the present, in the event of an emergency your business will be prepared, ultimately saving you time and stress in the future.