It’s important to have contingency plans

Editor’s note: Michelle Stockman is an independent consultant with her company, Fort Smith-based Msaada Group. Stockman earned a bachelor’s degree from Loyola University-Chicago in communications and fine arts, and earned a master’s in entrepreneurship from Western Carolina University. Her thoughts on business success appear each week on The City Wire.

With the dawn of the fall season upon us, we all understand survival now that the hottest summer on record has begun fading to later sunrises and football fun. While 2011 is far from over, this is the year of survival for many. From snow storms to hail storms and tornados, Mother Nature has packed a big punch.

Likewise, government debt ceilings to spending cuts to stagnant unemployment statistics, the economy has been the undercover earthquake the environment has left behind.

Survival throughout this challenging year has not been for the fittest, but for the ones who have had contingency plans in place. According to Planningskills.com a contingency plan is “a systematic approach to identifying what can go wrong in a situation. Rather than hoping that everything will turn out OK or that ‘fate will be on your side,’ a planner should try to identify contingency events and be prepared with plans, strategies and approaches for avoiding, coping or even exploiting them.”

Contingency plans are used in businesses large and small to plan for any number of possible events that can occur within that business. From the economy to rolling out new products or projects, creating a plan for worst-case scenarios can prove just as valuable as planning for the best. More commonly, businesses develop contingency plans that coincide with their disaster recovery plans.

For example, with temperatures running past 100 degrees for over a month, businesses of all sizes should have been prepared to handle rolling power outages (or even what to do if the AC were to break down). Does the business have a server? If so, how will the server be kept cool in the hot weather? How will it be kept on during power outages and what happens to the data that may get lost during an unexpected shut down? What are the plans for the business if the power outage affects employee productivity?

This past spring, we saw many communities affected by devastating tornados, many of which shut down businesses for weeks, or longer. Were those businesses protected by insurance? Was their critical business information secured? Do they have plans to rebuild, rehire and restart? Do the businesses have the same opportunities in that location as they did before?

With the government tangling on the edge of default, was your business prepared for any fall-out in the market or government reimbursements (if applicable)? Did you create a plan to protect your business from a potential market crash or serious change in market spending? What about a possible recession? Has your business prepared for decreased consumer spending, changes in market behavior or differences in cash flow?

What about changes in the business’ market? Has your business been able to engage in new market trends or taken advantage of new technologies? Have you created plans to engage and stay involved with marketing or advertising trends sweeping the global market? Do you have a plan for addressing a bad review or customer complaint made publicly? Do you have a plan for staying relevant to your customers’ needs?

Contingency planning begins with asking your business all the questions necessary to find the weaknesses in the most likely worst-case scenarios. Finding your weaknesses allows you to develop plans to overcome those weaknesses in times of trouble.

The key is to avoid as much down time from problems as possible. If storing computer files on the cloud or a server located in three different states is necessary to keep your business moving if the worst happened, then isn’t it worth the extra effort on the front end to think through these needs before they cost you the whole business?

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Stockman can be reached at [email protected]