By Jarrod Musick, Client Wealth Strategist, CFP®
What is a Business Continuity Plan?
Simply put, a business continuity plan is a document that outlines how a business will continue operating during an unplanned disruption in service. It contains contingencies for every aspect of the business that might be affected including business assets, processes, human resources and business partners.
What are the Key Components of a Successful Business Continuity Plan?
Failure points are what keep us up at night as Entrepreneurs. Don’t blow it. Don’t let one thing wreck it all. Sometimes being brilliant, heroic, or taking great risk allow us to avoid failure points. Most of the time it is doing the correct but incredibly un-sexy thing that keeps us in the game.
"Business continuity planning is that thing to help your family, your business, and your team avoid a massive failure point."
The best part about business continuity planning is that you can initiate it without leaning on your attorney to get going. If perfect is the enemy of good in most things it definitely applies in this area. By answering a series of questions, listed below, about how the business will continue to operate or be shut down in your absence you can effectively set all the transition pieces in place today. Once you have the pieces laid out you can address funding via cash reserves, lending, and insurance depending on the specific provisions. By putting this plan in place you ensure that the business transition will occur exactly as intended and that your family will receive the appropriate equity value for it.
The fundamentals of a business continuity plan are:
Answer each of these 9 question areas in plain english. Depending on your business it may be enough to simply understand each of these pieces and have them written down somewhere that everyone can access. It may also be necessary to have the agreement formally drafted by your attorney, signed by all partners, and formally added to your operating documents. Regardless of the degree of formality involved the purpose remains the same, to give your business, employees, and family certainty about what to do in the event that you can’t continue on in your business.
Not having these plans in place creates a single point of failure. Addressing it is routine and un-sexy but can be handled relatively quickly and efficiently. If you are struggling to create or update your business continuity plan don’t hesitate to reach out to us!