In a word: Yes. Really, you don’t have a choice but to afford business continuity planning. Admittedly, plans do not come free. But the costs to your business will be much lower than if you have to clean up after a disaster and don’t have a plan.
Why You Need a Plan
93% of companies that experience a disaster without a recovery plan close within 5 years. Why? Cash flow. Your insurance will keep you running through your business day, but once the money runs out you better know who your customers are going to be. Without a plan, you have lost your contact list, so you don’t know who owes you money, who is close to signing deals, and whom you’re targeting for future deals. In short, your cash flow has dried up and you have nowhere to turn!
50% of companies that lose their critical business systems for more than 10 days never recover. This comes down to brand loyalty. The brand loyalty that we saw a generation ago simply isn’t a constant in today’s business world. If you aren’t open for business, your customers will find someone else. This is the Internet age – it isn’t hard for your customers to find your competitors and quickly and seamlessly give them your business. Are you willing to take that chance with your customers?
Almost 60% of businesses consider customer services and competitive advantage to be the factors most critical to their company’s survival. With so much advertising and market saturation, it is very expensive to win a new customer to your solution; it is much cheaper to keep your existing customers happy. If you aren’t open for business, or have limited services with no warning, your customers are going to find another solution. We have become an “instant generation”; if you can’t supply a service or product instantly, your customers will find someone else who can.
For every eight hours of down time, you lose one half of a percentage point of market share (0.5%), and it takes three years to win that market share back! Without a business continuity plan, you won’t have three years…
Convinced? Good, now lets move onto what you need to consider when building your business continuity plan.
Building a Business Continuity Plan
What is your Recovery Time Objective (RTO)? By what time must you recover? Your RTO determines how much time you have to get everything back up and running. This helps you determine the amount of resources you need to allocate when planning your recovery budget. For many small businesses, it is very important to be the first back in business. This means that, when there is an area-wide disaster, such as a snowstorm or flooding, you need a plan that gets you back in business before your competitors. This shows your clients that you take their needs seriously and are ready to go the extra step to keep them happy. Time is money for you and your clients.
You have to determine which services are key to your success and how much you will lose (customers, prospects and money) if you don’t have those services available. The services that are crucial to your success have to be back in operation first, but be careful – sometimes the crucial operations aren’t the most obvious ones.
You have to be prepared to have people go home and wait by the phone. Although they are not generating revenue for you (or helping in the recovery) you know where they are, they’re available when needed and they’re not distracting your core recovery.
While these three factors might seem obvious, when disaster does strike, you will be so swamped with decisions to make that you probably won’t even be able to remember your home phone number.
Afford a Business Continuity Plan
We recently worked with a small development company that experiences frequent power outages. They had backup batteries but did not have a generator. Fifty people, most of their staff, cannot continue to work without power. We calculated how much direct salary money they were losing with the power outages. The total cost was $125,000 per year! And that didn’t even include employee benefits, lost sales, and lost profits. This company now has generators and sound business continuity plan to keep them in business when power outages occur.
To calculate a gross dollar-value for how much a disaster could cost you use the KingsBridge Return On Investment (ROI) calculator. The result is the lost revenue per hour. (Yes that’s a pretty big number…)
KingsBridge develops plans that are cost-effective (the savings in insurance premiums often are enough to pay for the plan) and that are a differentiator for you and your competitors. If you can guarantee to your customers that you will be open for business, regardless of the local situation, they are more likely to remain as your customers, more likely to tell others and it is most likely that you will pick up customers when others are facing a disruption of some sort.
Your customers aren’t going to wait for you to return to operations (while their deadlines expire) – they are going to look for a solution that allows them to remain competitive and operating at full capacity. You expect the same from your suppliers, so why should your customers expect less?
Ensure your market share continues to grow, keep your customers happy, keep your investors happy and keep your doors open – put a business continuity plan in place. You really can’t afford not to.
KingsBridgeBCP offers businesses of all sizes BCP Software Solutions and industry know how based on best practices. We help build, exercise, and maintain Business Continuity Plans. Our services and software packages are customized to meet the wide range of our customers’ needs, ensuring we deliver the best value in every project. To learn more click here or check out our Services.