Business resilience is the ability of a business to adapt quickly to disruption while maintaining day-to-day operations and safeguarding the people involved in the business.
Owners have more to lose than employees when a business is in crisis: staff will lose their jobs, but the effect may be short-lived, whereas a catastrophe may cost the owner not only their livelihood, but their financial resources, home and reputation. Surely, it is worth working out how to protect the business that has taken so much, time, talent and treasure to build? The knowledge that you have done all you can to protect a business that represents so much is clearly worthwhile.
Thankfully, natural disasters are a rarity in the UK but unexpected natural and man-made disasters do sometimes happen and may threaten a business. Recently we have needed to expect the unexpected more frequently. The sort of risks that we should consider are:
- Extreme weather/floods/climate change
- Infrastructure/power/communications failure
- Attack and terrorism/cyber-attack/riots & civil unrest
- Trade dispute/border disputes
- Financial crises/insolvency of customers/legal & regulatory breaches
Most small business owners and managers are busy and do not have the time and resources to spend on tasks which don’t contribute to the day-to-day running of their business. But it is useful to document the risks and how they can be mitigated to use as a “how to” manual if disaster hits, but it is the planning rather than the plan that is key.
Some things to think about are (not all of these will apply to all businesses):
Customers: try to build a diversified customer base (not only by customer, but also by geography) and become a trusted supplier. This helps to minimise risk to your sales, but also to the risk of customers not paying your invoices.
Suppliers: do you get your goods from geographically distant suppliers? If you do, can you get alternative supplies if there is a problem, or should you keep a bigger buffer stock?
Infrastructure (premises, IT etc): is your business in an area secure from natural disasters, with safe internet and phone connections? If IT is important (including payment systems, credit card collections), is it well protected from hacking, regularly backed up and, if need be, can you restore your data quickly?
Finance: do you have good records that are regularly updated, so that you know your financial position, particularly that you have enough cash with a margin, in case there is an event that would affect your sales? Do you have a good relationship with your bank, and will they be helpful in a crisis? Can you find personal resources to support the business if necessary?
Business management: can the business cope without the founders/owners or other key staff if they are incapacitated?
Unique business: is your business reliant on unusual resources, and if so how do you replace them in a crisis?
Once you have created an inventory of the risks, you can work out how to deal with them in a crisis. It might be helpful at this stage to discuss your thoughts with a trusted adviser who is not involved in your business on a day-to-day basis. They will be able add some perspective and help to work out how to deal with the risks if they arise.
Remember that there may be support from local Chambers of Commerce, FSB, accountants, local business support groups and lawyers. They may be able to help at low or no cost, not only for bringing additional skills to the business but also for exchanging views – it is often helpful just to be able to share views and information with peers.