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Small business: A chronic lack of preparedness

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Bombs, hurricanes, power cuts. What does it take to get small and medium-sized enterprises to prepare for the worst with a business continuity plan?
 
The London Chamber of Commerce, whose members have suffered all of the above in the last 20 years, often on multiple occasions, believes that as many as 44 per cent of SMEs in the capital have no contingency plans.
 
The chronic lack of preparedness on the part of small and medium-sized companies is the greatest avoidable threat to the capital today, Michael Cassidy, the chamber's president, said earlier this month: "Directors owe it to themselves, their employees and other companies in the supply chain which depend on them to take action now."
 
Time and money are rare commodities in most small businesses, so the prospect of having to spend thousands of pounds on new security equipment or weeks formulating a business continuity plan often makes companies unwilling to act.
 
Doing nothing in the hope that it will not happen to you is far too common among SMEs, according to Peter Brown, senior risk auditor at Group 4 Securicor. But it does not mean that it is an option. "They probably don't think that they have the profile to attract the strategic threat of terrorism, although of course they could be caught up in it" Mr Brown says. The truth is that many of the actions companies can take to secure their business against unforeseen circumstances cost little if any money. Moreover, doing something is better than sitting on your hands and hoping for the best.
 
It doesn't have to be expensive, Mr Brown notes. If you have a security policy document and you have sat and thought about your pastoral processes, such as escorting visitors around your premises, you have probably solved 65 per cent of your problems.
 
A clean desk policy is one example of a cheap method of ensuring critical information about the company does not fall into the wrong hands.
 
Advice about writing business continuity plans can also be found for free on the web from companies such as the Continuity Forum and Axa Insurance, which believes that encouraging SMEs to prepare for the worst can help keep down the number of insurance claims.
 
Finding the time to draw up such plans might seem difficult, but the cost of not acting can be ruinous, according to Douglas Barnett, risk control strategy manager at Axa Insurance. Half a day can save a family business,â€Â he says. Mr Barnett suggests time can be found if companies prioritise their activities to accommodate a business continuity planning meeting. This might mean sacrificing a staff day out or a golf outing with customers, but will be worth it in the long term.
 
Once time has been found, the people drawing up the business continuity plan should ask all the 'what if' questions, remembering that the loss of an important member of staff can be as devastating to the company as a terrorist's bomb.
 
Continuity is about being aware of what is out there, Mr Barnett explains. It is not just fire, floods or break ins. It could be something as simple as what happens if a sales director is off ill or goes to a competitor. If you lose this individual, you could lose a lot of intellectual property. Prioritising the importance of customers in the event of a business disruption should be a big element of these discussions, Mr Barnett adds.
 
If your business has a short interruption, you will want to manage your most important customers. You need to ask who will make the call to them. You may have 30 customers but only two will be critical to your business. It is also important for companies to think of the roles they perform as part of the business continuity plan, according to Mr Barnett. Training is a way of building resilience into the business. A day spent teaching your staff how to lift and move heavy materials can prevent accidents, making your business more resilient.
 
Mike O'Neill, managing director of Greymans Business Risk Specialists, which advises companies preparing business continuity plans, believes that business owners should not be too hung up on hardware costs. There isn't really that much extra expenditure that is called for because most of the company's resources are going to be resident in the people within the business.
 
Dorset Architectural Ironmongers, which sells locks and security fittings, spent about £5,000 preparing its business continuity plan, including the cost of battery back-up to run its phone lines. But the directors were glad they had acted when the power went out in Dorchester, where the company is based, and they were able to maintain their communication links with customers.
 
The additional power source cost about £300. But Danny Lillington, managing director, believes this more than paid for itself, given that many of the 300 calls his company receives each day are sales inquiries. He also found that a lot of the actions the company put in place cost little or no money.  Backing up our computer tapes didn't cost that much money but is extremely important for our business, he says. Business continuity is not so much about preparing for the worst as good business practice, Mr Lillington adds "Much of it is good common sense."
 
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