Risky Business
In the last post in this series, I presented a new framework for risk to help small business owners better assess the likelihood of experiencing the “everyday disasters” and appreciate the need for implementing business continuity measures. However, we all have lists of things we need to do, but fail to follow through as other matters assume priority. So the next step in our process to enable small business disaster resilience is to make the business case for the financial returns to business continuity programs.
Many people mistakenly believe that an investment in business continuity programs only pays off in the {unlikely} event that disaster strikes. Nothing could be further from the truth. A well-structured continuity plan will improve the profitability of the business even if disaster never strikes. Sharing this insight with the owners small and mid-sized businesses will help to motivate a greater sense of urgency to protect their businesses and raise the priority of investment in continuity planning in an appropriate way.
Let’s consider three specific ways in which continuity planning improves the profitability of the business. The first driver of profitability is the reduction in the cost of risk. A well-structured plan offers the opportunity to reduce the cost of insuring the business, with lowered premiums commensurate with improved risk management practices. Speaking from the experience of my own business, I was able to lower my commercial insurance premiums by more than ten per cent by sharing my continuity plan with my insurance carrier and even soliciting feedback and input from my insurer for suggestions as to how I might improve upon that plan, based on their institutional knowledge. The reduced insurance expense alone covered my up-front expense in data protection and other measures to ensure resilience.
The second manner in which continuity planning yields a positive return on investment arises from expanded market and procurement opportunities. I connection with their business continuity planning, large enterprises are re-evaluating the resilience of their supply chains. Their due diligence on prospective vendors explicitly considers the risks associated with their ability to meet their deliverables in the event of unexpected disruptions. Small and mid-sized businesses that have continuity measures in place are more competitive to win contracts and grow their revenues.
This is also true of public procurement. While government contracting officers do not always explicitly ask about continuity planning when they issue RFP’s, the form for response nearly always includes a section to address quality measures. This is the forum where I like to write about the measures in place to allow for consistent, reproducible results in uncertain conditions. This allows me to convey that awarding a competitive contract to my company is less risky than awarding it to a competitor owing, in part, to our thoughtful continuity planning.
The third, and most powerful manner in which continuity planning drives profitability is the creation of more robust systems that emerge from a continuity plan. Taking measures to protect your business requires that you begin with performing due diligence on your company. Can you identify your key assets? Are you able to document your business processes? Often as entrepreneurs start their businesses, they have informal, ad hoc and improvised ways of doing things. Effective continuity planning requires that you put systems in place for consistent results even in challenging conditions. Those systems will become a platform that will enable you to scale and grow your business. And as you undertake an examination of your company to determine how best to protect it, you will inevitably discover opportunities to do things differently – and more profitably.
I will be sharing these and other approaches to small business risk resilience in an interactive webinar offered by Datto’s and scheduled for February 4, 2015 at 2:00 p.m. EST. To register for the webinar, please click here. Upon registration, you will receive a “Risk IQ Test” to see if your framework properly estimates the risks to which small businesses are exposed! We will begin our webinar by sharing our findings and conclude our webinar with resources for follow-up support and a blueprint that small businesses can use to begin simple measures to protect their businesses. I hope you will join us!