Feeling overwhelmed? Need to reduce risks… have too many big issues in front of you?…. Do something! You’ll feel better

Today’s guest blog comes from Dave Shapiro, a group leader at Excell CEO.  Dave mentors CEOs and business owners throughout the Puget Sound and West Coast to help them gain clarity about what is holding their company back and what will propel it to even greater heights.

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One of the toughest issues to face is uncertainty… Many of the CEO’s/Business Owners I work with are facing issues they have never before addressed.  Often such issues come one at a time.  Today, I listened while a CEO said that he was facing the following issues: one of the buildings in which his business sits is now worth less then the mortgage on it; one of the Company’s markets had disappeared, not just reduced; a line they manufacture was related directly to the demand from the market that had disappeared; and one of the Company’s long time employees was performing inconsistently in ways that were costing the Company significantly.

Understandably, he felt hosed (overwhelmed).  Most of the time, when we feel overwhelmed, we become inert, stop acting.  While planning is often a good thing, taking action is often the first step to getting unstuck.  Here are some very quick steps to take that will lead to your feeling re-energized, provide some clarity and let you be more proactive as you move through your tough time.

  1. Write a list the issues/problems
  2. Prioritize the list
  3. Take only the most or least important item on your list and list all the options you can think of to do about that issue and prioritize those items.
  4. Do one of the items and with that result, see what has changed
  5. Look at that list again and add to it if something comes to mind.  Then do a couple more of the prioritized items and stop
  6. List what you have accomplished, no matter how small it may seem.

 

At this point there are a number of actions you can take and we can discuss these in another blog.  What I often feel after having taken some actions (listing, prioritizing and doing) is more powerful and able to address the issues in front of me.  Standing still is what usually makes me feel stuck.

What do you do when you are stuck?  How does that work for you?

Business Continuity – Despite Disaster

When business owners hear the term “business continuity,” they most readily think of what to do in the case of a physical loss such as a fire, flood or earthquake.  These physical losses are important risks to protect against but “business continuity” planning goes beyond that.  Business continuity planning must also address the impact of losing a key person in the business or the potential risk associated with reliance on key vendors.

PHYSICAL LOSSES: Generally, physical assets are protected using insurance.   In the case of a theft, fire, flood or other loss, the insurance company covers the costs (minus the deductible) for any losses including replacement, litigation, or other expenses incurred.  That being said, other key practice issues arise that insurance does not address.  The company must maintain backups and key procedures to help it get back up and running in the case of a loss.  An example would be the theft or loss of a laptop computer.  Insurance will pay the cost of replacing the laptop itself and may also cover the cost of obtaining new template documents or other key tools.  The insurance may assist with issues of breach of confidentiality due to the files being lost.  The insurance, though, probably would not be sufficient to recreate the lost client files.  The attorney needs to have a system, such as a backup process, to protect the firm from losing this data permanently.

PEOPLE LOSSES: The people of a company are often its most essential assets.  People losses can occur due to planned events such as retirement or unplanned events such as death, disability, voluntary termination, or involuntary termination.  It’s also important to think of these scenarios for both owners and employees of the company as a people loss in a small business can have a dramatic and chaotic effect on the company’s operations and its clients.  Without proper planning, these scenarios could result in unanticipated consequences and create chaos within the company and with the company’s clients.   As the leader of your company, you must consider ownership, management and client transition issues and put a plan in place that minimizes disruption for all the stakeholders involved.

In small companies, employees serve a critical role in keeping operations moving. If one of those employees fails to show up to work one day, how will the company operate?  The impact on the owners and employees of the business is significant and will dramatically impact operations and revenues.  The company’s best planning is to have a procedures manual and a plan for who would fill the role of the departing employee.  The company may have other employees take over certain activities.  Other activities may require a contractor or administrator to come in on an interim basis to fill those roles.  Recognizing this vulnerability and planning for the worst will help the business continue to operate in the case of a people loss.

THIRD PARTY LOSSES: Another risk area for business is if a key vendor fails to perform.  For example, many small companies contract with IT services that are “cloud” based or hosted elsewhere.  If that vendor closes its doors or has a major catastrophe in its facility (i.e. fire, flood, earthquake), the company is at risk. Similarly, if a company is reliant on a particular supplier or customer, the business is at risk of any failure by the other company.  When working with vendors that are critical to the company’s operations, the business must understand what vulnerabilities exist and how they can be mitigated.  We all know that even a short-term internet or phone outage severely limits our ability to do business effectively.  Imagine if the outage existed for weeks or resulted in a permanent loss of information.

Planning for events beyond the fire and flood is critical to business continuity.  By considering the risks to the business in the areas of physical, people and third party dependencies, a business can create plans to successfully work through these unexpected events.

Business Continuity is Essential

Our guest blog post this week is from Pete DiSantis of Peter DiSantis Consulting Associates.  Pete will also be our guest presenter at the April Equinox Focus Event “Beating Your Competition through Contingency Planning.” 

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You lock your house, your office, your car.  You buy insurance for your house, your office, your car… even your life, your health and more.  You put perishable food in the fridge. What are you doing but safeguarding the things you value?

You have business plans, financial plans, marketing plans, sales plans and operations plans to keep your business running but are you prepared with a business disruption plan?  If the answer is no, you are not alone…but ‘not alone’ doesn’t make it right. Or smart.

NPR recently reported a comparison between the disasters in Haiti and Chile.  An earthquake expert said in essence: “Earthquakes are not natural disasters. They are human disasters.”  Now you can take that statement in two ways: 1) The loss of human life is certainly a disaster at any time or 2) Human error failed to mitigate the damage.  It’s important to understand that poor building codes and construction killed 200 times more people in Haiti (7.0 earthquake) than in Chile with a much stronger earthquake (8.8-magnitude).

But this is not Haiti or Chile and how many U.S. businesses are prepared for the loss of revenue during a severe disruption?  Are you? The US government claims that 25% of businesses never reopen after a disaster but you don’t need to add to their statistics.  Prove them wrong.  Loss of revenue after a disruption is not a disaster if you prepare and plan for it. The loss of revenue may be mitigated, even eliminated altogether. 

In the Seattle Metropolitan area, three recent winters caused business disruptions in the Puget Sound area.  Windstorms crippled both residences and businesses for weeks during 2006.  Interstate-5 was closed due to flooding in 2007 and record snow knocked out commerce in 2008.  Maybe your business made it through but maybe next time it won’t!

You never know when a disruption will occur but you can be prepared whenever it arrives.  Somewhere between “emergency preparedness” which is a 3-day supply of food and water to “disaster recovery” which is cleaning debris, emerges “business continuity”.

With business continuity, you plan now to maintain a revenue stream during a disruption or as soon thereafter as possible.  The cause of the disruption is not important.  Wind, flood and snow will all affect your business differently.  The issue is the disruption— to your cash flow, your communications, your staffing, customer relations, facilities, computer systems, operations and supply chain.

When one area is impacted, it can easily domino through other parts of the business.  Maybe weather issues create a disruption in several areas but because you have planned for a disruption to the areas individually, you can now group the plans including solutions for the external issue at hand.  Through the most severe conditions, you can keep your business running by planning now—and this, while your competition is closed! 

It’s true the unexpected happens.  Plan now to be prepared.

People Disasters and Business Continuity

When we think of disaster recovery for business, images of earthquakes, fires, and floods come to mind.   Thoughts about losses of expensive equipment, inability to access important data, and getting people to work and product out the door become overwhelming.   We take comfort in the fact that we have property and casualty insurance and start to feel a bit calmer.

Natural disasters, where physical damage occurs to business assets making delivering to customers virtually impossible, are frightening to business owners.  Surprisingly, though, the potential impact is not frightening enough to drive significant planning efforts.  My sense is that this is due to the comfort offered by insurance and the feeling of helplessness to stop the effects of the disaster.   Amazingly, though, some basic planning can make an incredible difference.   I’ll let our business continuity experts address these planning steps throughout the month. 

I want to focus on how “people disasters” can also stop a business’ operations in its tracks.  People disasters are much more common in business and can be addressed through contracts, insurance, and creative planning.   If a person is critical to the functioning of the business, the company should consider what would happen if that person was no longer involved with the company.   Death, disability, voluntary departure, and involuntary termination are the most likely departure scenarios.  In each of these scenarios, the company must find a way to replace the key employee.  Planning allows the company to do so quickly and cost-effectively. 

To address the risk of death, the company may elect to purchase life insurance on the employee.  The proceeds of life insurance provide the company with cash to replace that person’s function in the business.  If that person is an owner, it may also contribute to the buy-out of the ownership interest. Disability can be more difficult as insurance can be very expensive.  The company should, though, have a disability policy in place to address compensation in long-term disability scenarios.

The company needs to be especially concerned with the protection of its intellectual property when an employee leaves the company, either voluntarily or involuntarily.   A contract with confidentiality, non-solicitation and, in some cases, non-compete provisions should be in place from the initial date of employment to help the company protect against the loss of proprietary information upon the departure of an employee.   

In all “people disasters,” a company must be prepared to pull another resource in to replace the departing employee.  Cross-training should be core to the business’ everyday operations.  This simple step not only makes internal functions smoother but also allows for an immediate response to a people disaster.

By taking a hard look at the critical people in your organization, you can quickly understand where your business may crack in a “people disaster,” and put in place plans to seal it up quickly to stay on course with business as usual.