Introduction
Any economic downturn will pose a varied threat to various industries, businesses and operational strategies. So even if a recession is worrying, it’s crucial to know how it will affect your company- because prevention is better than cure.
If your organisation isn’t cautious about handling crises, it can impact your brand image and see you lose millions in the process. You must devise a strategy to sustain your organisation’s core operations if you want it to be able to continue operating in the face of a catastrophe. Therefore, having a business continuity plan/strategy is always preferable.
What is a Business Continuity Plan (BCP)?
A business continuity plan outlines how a company can continue operating in the event of a sudden and major shift in market conditions. It protects a company from unforeseeable risks. The approach ensures that people and assets are safe and that operations can resume quickly in the event of an emergency.
Without a BCP, a company runs the risk of experiencing downtime and other problems that could endanger its financial stability. In the event of a serious crisis, failing to have a BCP could cause irreversible financial damage and cause the permanent shutdown of a company.
Why it is important for businesses to have BCP?
Even though recessions are only temporary, how you handle them can have a lasting impact. Reduced earnings and cash flow could be a sign that the company is no longer sustainable. Because it can resist fewer strong shocks, previously negligible hazards are now considered continuity threats.
A well-thought-out business continuity plan aims to preserve your company’s competence. Your business will significantly outperform rivals who might not have been able to adapt to disruptions as quickly and effectively. It presents your company as dependable, competent, and equipped.
Microsoft survived the 1970s Great Recession. Bill Gates and Paul Allen, came up with the idea of a simple computing system for households and businesses. Since then, there have been multiple recessions experienced by the largest operating system firm in the world. They survive every single one by constantly innovating and succeeding.
Amazon remained resilient during the 2008 financial crisis with its strategies. The e-commerce giant introduced a wide range of products, including the Kindle 2, which was a breakthrough for the business. Additionally, its commitment to putting customers first kept its business solvent.
The world’s largest streaming service, Netflix, survived the 2008 economic downturn. The company, which began in the 2000s as a DVD-by-mail service, offered video streaming services as video stores and other associated businesses battled to thrive. This move earned them millions of subscribers, a rise in stock price, and the current reputation it enjoys on a global scale.
Steps Involved in Planning a Comprehensive Strategy
The most frequent scenarios used to develop a BCP during a recession are the loss of facilities, loss of IT infrastructure, loss of staff, and loss of suppliers. A business continuity plan is developed in seven broad phases.
- Do a risk analysis
- Establish the scope of the plan
- Identify key business sectors
- Identify the critical functions
- Determine the interdependence of various company sectors and functions
- Establish the acceptable level of downtime for each crucial function
- Design a strategy for operation maintenance
A significant portion of your customers may hold orders during a recession, they might explore new alternatives to the product or service you offer or you might lose important suppliers. Numerous factors may have an immediate effect on the sales of your business and cause you to reduce expenses, possibly even your workforce.
Top Management should use the information offered by a business continuity plan to better understand the firm before considering cost reduction through firing employees.
Implementing BCP in your Business Process
Many businesses take multiple steps to create a good BCP. such as:
Business Impact Analysis: The company should identify time-sensitive operations and resources.
Recovery: In this section, the company must identify and implement steps to restore critical business functions.
Organisation: A continuity team must be constituted which will prepare a plan to manage the disruption.
Training: Training and testing are required for the continuity crew. Members of the team should participate in exercises that review the strategies.
Companies may also find it beneficial to create a checklist that includes crucial elements such as emergency contact information, a list of resources that the continuity team may require, the location of backup data and other required information, and other relevant employees.
Wrapping Up…
Preparing for a crisis improves your chances of surviving and succeeding in the future. Recessions come and go, and with them, opportunities and breakthroughs. You can become more resilient—and experienced—in your operations if you are better prepared.
At Blue Helion we assisted one of the leading internet ventures from South-East Asia during the pandemic. They were impacted by a huge attrition rate and were falling behind on the growth roadmap. They anticipated tremendous growth and required support in a number of crucial operating areas. We helped them with change management and relieved an Overstretched Operating Model. We have years of expertise creating business continuity strategies for various scenarios. We are ready to help businesses like yours during the upcoming recession. Contact us today to learn more.