Why do some companies thrive while others fail in the face of possible dangers and unfavorable circumstances? Resilience in business is the solution. Here are some steps to building a business resilience plan so that you can be ready for crises and unforeseen circumstances.
Business resilience is the dynamic capacity of organizations to respond and adjust to new issues and continuously identify suitable solutions, rather than a static state. Cyber-attacks, the COVID-19 outbreak, and the turmoil in Ukraine all highlight how crucial corporate resilience is in the modern world. Various aspects are involved in enhancing business resilience across various companies.
How To Build A Business Resilience Plan
1. Enumerate Pertinent And Possible Circumstances
Listing possible situations is one of the steps to building a business resilience plan. What dangers and threats have the potential to curtail or end your business entirely? Although no one can foretell the future, you may make a list of possible outcomes based on past, present, and local and global events.
You would be better off planning for the worst-case scenario rather than the best-case scenario since a company standstill might have disastrous consequences. Consider COVID-19 as an example. While some predicted that a pandemic would be the next major world catastrophe, few firms were prepared to completely change their operations overnight.
You should provide a list of possible scenarios along with an explanation of how you plan to tackle the difficulties. To get the most accurate projections, consult with other executives within your organization. Describe the potential effects of these issues and provide a prompt solution to ensure company continuity.
2. Boost Flexibility And Visibility Of Inventory
Unexpected incidents or issues with the global supply chain may have a detrimental effect on your capacity to deliver goods to clients. Unfortunately, a lot of businesses often take inventory planning casually. In terms of inventory, you want it to be impenetrable during disruptions.
This implies that you must embrace visibility and provide total inventory flexibility. You can see what you have and where you have it from there. You can react swiftly to developments in the market this way. It is also important to prepare for the possibility that you may need to reallocate your inventory due to certain situations.
3. Employ A Successful Method To Close The Gaps
Using a successful plan to close the gaps is an answer to how to build business resilience. You want to maintain company continuity regardless of the external or internal conditions.
Your firm should be ready for every disruptive situation or scenario that may arise, according to your business resilience plan. In actuality, you often cannot predict how people will respond to calamities. Many staff members may not apply logic; therefore, having a simple-to-follow strategy is crucial. To close the gaps, your plan must consist of:
- Exercises and simulated tests to get your organization ready.
- Organizational charts and contact details for the crisis management team.
- Plans to maintain infrastructure and essential services.
- Common risks and scenarios that may arise in business.
- Data and risk evaluation of possible risks.
- Employee obligations during a crisis.
- checklists tailored to various situations.
- Workflows for business processes.
It’s important that the paper be easy to read quickly, thus avoiding having a long text wall. To make it simpler to read, make use of white space, write succinctly and clearly, and include graphics. Make sure to use numbered and bulleted lists and emphasize crucial components.
4. Expand Your Awareness & Financial Capabilities
The COVID-19 pandemic has brought to light the dire need for small enterprises to strengthen their financial resilience. Throughout your company, there may be another abrupt, unforeseen loss of income. To be able to pay bills and continue operating, you will need to strengthen your financial resilience.
Here are two essential strategies to protect your company during lean times:
Create an Emergency Fund: Generally speaking, a small company owner has to have emergency funds equivalent to three months’ worth of operational costs. You may create a rainy-day fund with 5–10% of your company profits, which will provide you with a buffer in case things go tight in the future.
To increase your savings or save money where you can, you can think about taking on additional debt in the near term (by lowering or delaying certain payments) if you’re running on a tight budget but still want to save money for emergencies in the future. Creating a planned bank line of credit is an additional way to increase liquidity if your income unexpectedly drops.
Find Out About Federal, State, and Local Resources: In the case of a regional or national catastrophe, your firm can be eligible for financial resources from the local, state, or federal governments. Being better informed about these resources and programs in advance will provide you with more power and save you time if your company is disrupted.
5. Ask For Support Of Senior Management
Asking for support from higher authority is one of the steps to building a business resilience plan. Many senior managers and even the board of directors of a firm may not be particularly aware of the concept of a resilient culture.
Resilience programs are far less likely to be started without this kind of assistance. Educating and informing leadership about the commercial benefits of a resilient organization from viewpoints like IT operations and business processes backed by IT is the main difficulty.
It is necessary to have a thorough grasp of the company’s vital business operations and how IT resources support them to teach top management about resilience. Provide an example of how the company’s reputation will be impacted, along with its financial and competitive standing. Senior management is responsible for determining what resilience means for the organization and whether or not a resilience culture currently exists.
6. Do Market Research
Effective market research and analysis are essential building blocks for developing new strategies. Furthermore, the swift digital environment in which we operate is built on the expeditious implementation carried out by prominent management. As we work and live in the present, we should keep in mind that tomorrow is just around the corner, waiting for us to respond to all of the problems that lie ahead.
7. Work With HR
HR may also provide direction and materials to spread pertinent knowledge about resilience and its significance. Internal training programs to teach staff resilient techniques are one of the choices. It has a significant chance to contribute its knowledge and initiative in this way.
It may strengthen the resilience culture by giving staff members updates on system and data access, cyber security best practices, and advice on how to properly safeguard important files and data.
Employees may promote resilience by participating in awareness programs that use an internal platform like SharePoint or something similar to send out frequent information about resilience’s relevance. It may provide staff members with a chance to discuss the importance of a resilient culture with top management and ask questions. It is one of the best steps to building a business resilience plan.
8. Review Recovery Plans
Reviewing all the plans you created is a solution to how to build business resilience. The recovery of the company and technology are normally the main goals of business continuity plans (BCPs) and technology disaster recovery plans, respectively.
Existing plans may be sufficient to handle problems that arise at the moment, but they may not include any sections that deal with how to adjust and enhance company operations based on knowledge gained from a catastrophe.
Plans may be made better, however, by including portions that outline how to become more resilient and survive unforeseen circumstances. Performing a post-event evaluation and reporting on what went well, what didn’t, and suggestions for improvement are a few examples of these. The capacity to modify plans to function better based on lessons gained from previous incidents is one of resilience’s essential characteristics.
Take care to regularly test these plans to ensure they are functioning as intended. Although technology with enhanced resilience characteristics may seem appealing, there is no better method than testing. Tests should show that the company has the policies and tools needed, particularly in IT, to withstand disruptive occurrences in the future more successfully than in the past.
9. Encourage Cooperation
Since creating a resilient culture encompasses all facets of an organization, dismantling the silos that have traditionally kept different activities apart can be required. This is a common occurrence in the IT department, and continuous collaboration across the IT, DR, and cyber security departments is essential for resilience.
From an IT standpoint, reaching resilience entails that every IT-related unit, including operations, security, programming, engineering, the help desk, and storage management, must be aware of its part in the process.
They next need to figure out how to let their colleagues know about how they are developing resilience. Collaboration, along with the dismantling or removal of silos, is what fosters corporate resilience. Weekly status meetings, for instance, may include a section on the agenda addressing the attainment of resilience.
Common Mistakes You Should Try To Avoid
When unanticipated events hit, failing to maintain business continuity may result in your company coming to a full or near standstill. It doesn’t have to imply another epidemic or storm. Even seemingly little occurrences, such as the resignation of an employee or a rise in power costs, may have far-reaching effects for some firms. Now that you are aware of the steps to building a business resilience plan, try to avoid these mistakes:
Not having a plan: Lack of a strategy is the largest error businesses make when it comes to business resilience. In the IT industry, we speak about business continuity and disaster recovery plans, but it’s more typical than you may imagine for organizations to overlook formal written versions of these plans.
You would be amazed to learn that just 20% of company owners can show you their business continuity plan. Particularly in SMB markets, where businesses have less developed operational structures. Naturally, there are significant dangers associated with not having a business continuity strategy, especially for small organizations that cannot afford a data crisis.
Neglecting to evaluate your risks and hazards: Not every danger applies to every kind of company. For instance, a small accounting business that depends on systems and apps may face catastrophic consequences if ransomware prevents workers from accessing their computers.
Cybersecurity, however, is perhaps the least of a café owner’s worries. A natural calamity, on the other hand, would force a café owner to shut down for many months. The most common four risks for small and medium-sized enterprises are as follows:
- The sudden departure of a key employee.
- Being unable to endure a recession.
- Inadequate procedures and systems.
- Natural catastrophes.
Consider and prepare for relevant risks to the scope and nature of your company.
FAQ
Q: What is business resilience’s top priority?
A: Understanding that workflows and business processes must be maintained for organizations to withstand unforeseen occurrences is the first step toward developing business resilience. The human factor is one of the major obstacles to corporate resilience planning. People need to know how to handle chaotic situations and be ready for them.
Q: Why is business resilience necessary?
A: The shorter the duration and less damaging the crisis will be for your company, the more equipped you are to handle the interruption. Resilience planning that incorporates best practices from across the world, as well as lessons learned, may help your company weather disruptions and lessen the overall effects of a disaster.
Q: What is the business resilience theory?
A: According to organizational resilience theory, SMEs may logically maximize their goals through company expansion to attain sustainability. Organizational resilience theory adds growth phases and resilience as tactics and techniques to achieve corporate sustainability, expanding on the crisis literature.
