Small business owners tend not to think about continuation, but that’s often a mistake. If your business generates any profit, it’s worth something. Sometimes it’s worth a great deal. It makes perfect sense to spend a little time to protect your enterprise with a small business continuity plan. A side benefit is that the same ingredients of this plan will help you make your business more successful.
I must admit that for many years, I completely ignored this issue. I simply bought more than enough life insurance and figured that would take care of my family if, heaven forbid, something happened to me. That all changed several years ago when it finally dawned on me that my clients deserved a continuity plan as much as my family did.
The point was driven home when earlier this year I was asked to step in and take over for another financial planner. Unfortunately, he passed away at a very young age. The one silver lining in that very dark cloud was that he did have a continuity plan. Of course, it doesn’t make sense to leave such an important issue to luck. As a result, I’m a big fan of business owners setting up a continuity plan while they are very much alive and healthy.
What is a continuity plan?
This is just a plan that will be implemented if something happens to you. Once implemented, the plan allows your business to continue operating to service your clients and create income for your family.
How do you create your own small business continuity plan?
The first step to creating your business continuity plan is to imagine you are going on a very long vacation. Write down all the duties you perform in your business every day. Make that list over several weeks and months, if not years. That’s because you might have certain responsibilities that simply don’t need your attention every day but only sporadically. I know in my business, we have daily, weekly, monthly, quarterly and annual duties. I continually update my plan, and you should too.
Are you in charge of technology in your company? Do you select which hardware to purchase? Do you select and install software? If you really want a continuity plan, you should hire someone to make these decisions in most cases. The nice thing about doing this (and most of the following steps) is that once you do this you’ll free up your time for more important duties – like bringing in new business.
Scan all your legal documents just as you would your personal estate plan documents. Make sure your successor COO (Chief Operating Officer – described below) has access to these documents. This will include your incorporation papers and important business contacts as well.
I’m convinced that every small business needs a Chief Operations Officer other than you. The COO is your co-pilot. This is a person who directs personnel and oversees operations to make sure everything gets done. Most entrepreneurs don’t like to hire a COO because they want control and they don’t want to spend the money. I understand the desire to hold on to control, but the cost of doing so is very high. If you hold on to all the inside information on your company, you’ll never be able to create a continuity plan.
While the issue of cost is a real one, you can solve the problem by hiring a part-time COO. Speak to your CPA. She may be willing to take on the duty or know a retired CPA who would be a good fit. Also, look into hiring a virtual COO.
While we’re on the issue of operations, it’s vital that you document all of the systems that run your business. You don’t want any aspect of your business to depend on you being there. The best way to guarantee repeatable results is to have a systems manual that everyone understands and uses. (Use this same strategy to help your family learn how to survive the death of a spouse. Document everything on the personal side too.)
If you want your business to survive you, you’ll need someone to bring in sales. Go back to the idea of being on vacation. If you were out of the office for two years, how would your business continue to grow? This is probably going to be the hardest question to answer. If you don’t have the solution just yet, don’t worry about it. Handle the other action items first and come back to this. Keep this issue in the back of your mind and be mindful of possible solutions as you conduct your business.
5. Key Personnel
Identify your key personnel and make them part of your continuity plan. Get their input. Ask them what you’ve forgotten and ask them to provide improvements. It’s vital that you get them to buy in to the solution. You certainly want them to stick around.
Once you have all the key ingredients for your small business continuation plan, make sure you haven’t forgotten anything. Of course, the odds are high that you will have overlooked something, so don’t beat yourself up. This is a work-in-progress that will improve over time.
Every time your business encounters a problem or undertakes a certain operation, ask yourself how the work would have been completed if you weren’t there to do it.
Once you have a foolproof answer to this question – every time it’s asked – you have your small business continuation plan. If you still have work that couldn’t get done without you, you still have work to do on your plan.
Do you have a continuation plan? How did you create it? How long did it take?