When we look back not-so-fondly at the year 2020, we as business owners and professionals have two words to say. Contingency plan! Wow, did we all get taken by storm? The pandemic and the subsequent lockdown really showed us what we all feared could actually happen. Total economic catastrophe whereby everything we did, everything, we put on hold. It was like an apocalypse scenario, being played out for real! But what on earth is a contingency plan? There is more than one. So we believe we should look at what this type of planning means, what it allows us to accomplish and how we should treat it more seriously.
This is a contributed post. Please refer to my disclosure for more information.
Why contingency?
Firstly, a contingency plan gives you an exit. At the very least, it gives you directions to an exit door. It is there to help you essentially, continue on with a project, continue on with funding your business or continue operating as a whole. It’s something that can take years to fully decide and create. You have to know your own fundamentals. Such as…
- What are the things you need, as a minimum, to operate?
- What is your monthly cash flow?
- How many customers do you have on average?
- How much do you purchase in raw materials?
- How can you satisfy your utilities?
- What is the minimum amount of employees you need to function at the skeletal level?
All of these questions are for a contingency plan that can serve you well in the event of most crises. The issue is, you won’t be able to answer these questions unless you have been operating for about 2-3 years. You also need to be stable! An abnormal year is not a good source to plan your contingency plan.
Brand perception
Your customers will be wondering where you have gone and what you are doing to stay in business during something like, oh we don’t know…A Pandemic! Think of it as an economic crash, but three times as bad. You need to have a contingency plan for your brand, that simply says, ‘we are here, we are doing fine, come and shop with us!’ one of the leading lights in this complex endeavor is Jozef Opdeweegh. After 20 long years of experience working as an executive, Jozef has spoken at length about knowing your contingency plan. In it, he talks about supporting employees going through rough times, helping teams to stay focused, speaking with and reassuring stakeholders and having a good brand and market awareness. Your marketing team has to be on the ball, thinking of reaching out to new customers that wouldn’t normally be in your sights, or letting consumers know you are aware of the situation they are in and what you are doing to soothe their needs.
Practical application
It’s no good having a contingency plan if you don’t know if it will work. This is why having practice runs of your contingency plan is so crucial. You have to know the practical application challenges. So, organize a few days out of the year, whereby each department can practice what they would do, in the event of a natural disaster, or economic crash, or some kind of major incident such as a hacking breach.
The practical side would involve continuing their projects somehow. Can they do so off the grid, i.e. working offline? Can they access power from another source, i.e. an emergency power generator?
What about your sales team, can they still contact your B2B clients? Can they still go out to make pitches and presentations to investors? If they cannot operate at the office, can they work from home? How would the team dynamics shift or how would communication occur?
Practice makes perfect. You need to know what a real application of your contingency plan really looks like.
Listen and learn
Listen and learn from your own team! They will let you know what they need to operate when things go bad. When they can no longer operate at full capacity, or when they don’t have the software they need, they will give you options B, C, and D.
Give your employees an open channel to influence the contingency plan and don’t just leave it to the executives. They will have really novel and interesting ideas to support your plan and make it stronger.
If 2020 has taught us anything, it’s that we all need to put serious thought into our contingency plans. It’s the height of incompetency to not re-evaluate your contingency plan in the light of the pandemic and economic slumber we are experiencing.
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