Want all of the information on this page and more in one handy resource? We’ve got you covered. That’s why we created The entrepreneur’s guide to growing and scaling a business: infrastructure, a free downloadable guide full of expert advice, handy templates and rich resources that lead you through how to expand your business’s infrastructure. Save it to your computer, and have this guide on hand as you grow your business to the next level.
So you’re looking to expand your business infrastructure—congrats! That means you’ve successfully made it through the first few years of entrepreneurship, which is no easy task. We’ve collected information from all kinds of industry experts and resources to give you an overview of what you need to know to grow your infrastructure. Here’s a quick look of the topics we’ll cover:
- How to build strategic partnerships that drive business growth
- Cash flow and why it’s important
- Business infrastructure from all angles
- Financing your business
- Understanding the worth of your business
- Getting personal finances in order is good for business
- An introduction to personal investments
- Choosing the right business structure
- When it’s time to grow your Indigenous business
- Here’s what strategic partnership looks like
- Innovation to drive business growth
- Surviving a recession and thriving afterwards
- Business continuity planning: the need to know’s
How to build strategic partnerships that drive business growth
Though there isn’t one way to expand your business, surrounding yourself with the right people is a must. So who should be on your A Team when you’re looking to expand your business?
- Banker: while we may be a little biased about this one, having a strong relationship with your banker will open you up to great advice (for free!), guidance for your business plan and cash flow projections, and more to get you set up well to grow your business.
- Accountant: a skilled accountant will help you navigate risks, provide pros and cons for business purchases, and make your business tax-effective as you grow. They help your business increase its value and your returns, so you can focus on actually running your business.
- Lawyer: no matter how you’re planning to grow your business, a lawyer acts as a guide through the often confusing legalities.
Cash flow and why it’s important
Opportunities to drive cash flow during expansion
As you’re looking to expand your business, there are opportunities to fine-tune your operations and infrastructure to drive cash flow. We’re here to give you a heads up so you don’t miss out!
Communication builds revenue opportunity
- As your business changes, talk with your customers. Answer their questions, keep them updated on growth and changes, ask what they want—the best advertising is personal connection.
Let your customers tell your story
- Do something to impact your community and give back. Chances are, the people who are positively affected by your actions will spread the word in a more powerful way then you could ever do yourself. That’s free marketing!
Optimize your online efforts
- Learn to have an effective online presence, even if that’s not the focus of your expansion—you’ll continue to find opportunity.
- By being online, you’ll be able to take advantage of new sales channels. This will set you up for more future success, more distribution of risk, and more customers, hopefully.
Shifting operational design to enable cash inflow
- Consider your employee structure as you expand. Will you keep all of your staff full-time? Will you hire for contract work for certain tasks or projects
- Another opportunity could lie behind reassessing the instruments, mechanisms or machinery you use to drive business. For example, do you own equipment that actually makes more sense to lease?
Cash flow forecasting: driving small business through expansion and change
During expansion, change and uncertain economic times, a cash flow statement is a critical tool for helping small business owners survive challenges and overcome obstacles that aren’t only impacting them now, but putting the long-term health of their business at risk.
As you’re looking to expand your business’s infrastructure, it’s more important than ever to have a deep understanding of how cash is flowing into and out of your business.
During expansion, businesses really start kicking themselves for not having already generated something that allows them to look further into the future. There are so many moving pieces that come with expanding your infrastructure, and the static cash flow that you might extract from your QuickBooks doesn’t actually tell you what the future holds. You need a way to model the future with different scenarios. Enter, cash flow forecasting.
Using smart forecasting to make critical business changes
For many businesses, effective forecasting can make all the difference in business health and success, for both short and long term. Some businesses don’t know if they have 10 days of cash left, or two months, or a year, because it’s not business as usual during expansion.
Haven’t forecasted your cash flow? No time like the present
The reality for many small business owners is that they spend so much time working in the business that it’s tough to find time to work on the business. This means things like cash flow forecasting are often pushed to the back burner.
Expansion reminds us just how important forecasting is, and forces us to revisit our business forecasts and adapt to new realities. Good cash flow forecasting is an important part of building business resiliency as you expand.
Understanding how cash flow works in your business isn’t just knowing the money spent on one end, and the money comes in on another end—it’s about understanding what’s happening in the middle. That’s what your cash flow tells you. It shows how you turn your investment into future dollars.
Good news: all businesses are equipped to do this. You have all the numbers, it’s just a question of taking the time and doing the math. The biggest challenge is simply getting started.
The ins and outs of cash flow forecasting
- Cash flow statement: a factual document that captures cash inflows and outflows at a single point in time using transactional details from both your income statement and your balance sheet.
- Cash flow forecast: a model that allows a company to plan for multiple scenarios in the future. It can be as simple as a spreadsheet, which looks at different revenue, operating, staffing, debt, and equity scenarios over a period of months.
Cash flow forecasting best practices
Companies who’ve built a model that allows flexibility in looking into the future with multiple staffing, debt, revenue and government subsidy program scenarios will be able to make better decisions, craft a solid infrastructure, and build a strategy that gets you through your expansion and the bumps in the road and unforeseeable events that can come along the way and beyond.
Here are a few tips for creating a cash flow forecast:
- Use a simple spreadsheet that you can easily adjust yourself. There are tons of templates for small businesses online.
- Include at least a couple of months of actuals. This will help you identify the various sources and uses of cash (these are the line items). You may also need to use an “average” for non-fixed expenses and income.
- Refer to your balance sheet and income statement for help. These can help jog your memory, especially about infrequent or irregular cash inflows and outflows.
- Update every month. Replace your forecast with actuals when the month changes. Then, update your future month forecasts if your assumptions and predictions about the business are changing. Revisit non-fixed expenses that used an average to make they’re they’re still accurate assumptions.
- Break down more complex line items, like salaries, loans and credit, cash income sources and things like grants or tax subsidy accruals. Each company is different, so breaking out these categories makes for easier and more accurate cash planning.
- Make working draft copies (or worksheets) that allow you to investigate ideas and options without changing your final version.
Need help creating a plan? We’ve got you covered. Download our free cash flow canvas.
Business infrastructure from all angles
Here are 6 questions to ask yourself before you grow your current infrastructure:
- Can your suppliers handle greater volume?
- If not, are there other suppliers offering comparable prices, quality and terms that you know you can work with?
- Can your current physical space handle an expansion?
- If you need to move into a bigger space to accommodate your company’s expansion, do the numbers make sense? Note: don’t forget to include travel between the old and new locations as both a temporal and financial cost for your company. Chances are, you’ll spend more time than you anticipate traveling between your locations.
- Can your employees take on a bigger workload, or will you have to bring on more people? Again, run the numbers and see if expansion makes sense.
- Are your company and culture set up for growth so your employees will have a positive experience working at your company, even as it expands?
Financing your business
The first step to setting yourself up for financing options is to plan. As part of the annual business planning process, it’s helpful to prepare a financial plan that forecasts and accommodates for future performance.
This plan helps you and your management team to anticipate and prepare for situations where you could be short on cash, giving leadership a road map to navigate your company through the shortage.
If your business needs to find additional funds during the year, your financial plan will reassure potential capital providers that management has planned for this situation.
Financing options for growing businesses
Here are some of your options to get your mind going on how to access the capital to take your business to the next level.
|-||Cost of capital||Growth stage||Pros||Cons|
|Bank debt||4—7%||Mature and late growth phase||
|Asset-backed loans||5—14%||Mature and late growth phase||
|Mezzanine||10—24%||Mature and immediate growth phase||
|Private equity||20—28%||Mature and immediate growth phase||
|Venture capital||25—30%||Early growth phase||
|Angel investors||35—60%||Start-up phase||
Know your financing options and costs
At some point, most businesses will require new financing to support growth or to address a cash flow gap. The cost of this capital can vary widely—from as little as four percent to a whopping 60 percent. It’s important to know which form of capital is the right fit for your business (based on its needs and life stage), as well as what capital providers will expect in return for their investment.
Private enterprises can raise capital in three main ways: senior debt, junior debt and equity. Let’s take a look at some of the key characteristics of each.
Senior debt is the least expensive form of capital. If your business defaults the loan, the senior debt lender has first dibs on your assets.
Banks are the principal sources of senior debt—they leverage the cash deposits they receive and lend these funds out as senior debt. There are several types of senior debt, including real estate mortgages, equipment loans, lines of credit and bonds.
The lender issues a debt financing obligation to a company and holds a legal claim to its assets above all other debt obligations. The lender generally requires the business to demonstrate positive cash flow that’s capable of paying interest and making principal payments.
There are many forms of junior debt, including subordinated, mezzanine and convertible debt.
Junior debt isn’t usually secured by assets. Instead, it’s offered based on a company’s strong cash flow and ability to pay higher interest costs on a monthly or quarterly basis.
When proceeds from junior debt are used to fund an acquisition or rapid period of business growth, interest payments may occasionally be postponed and made later (for instance, as a one-time balloon interest payment at the end of a prescribed time period). It’s common for junior debt providers to expect an “equity kicker” (in other words, a warrant to share in any increases in your company’s equity) at the end of a term.
Equity capital is provided by investors in exchange for an interest in the ownership of a business. An equity-based financing arrangement can vary to include common voting shares, common non-voting shares, preferred shares, etc.
Since debt holders typically rank above equity holders in terms of their claim on a borrower’s assets, providers of equity capital assume high risks. Consequently, they expect high returns on investment.
Providers of equity capital often take a specialized approach, focusing on certain phases of the life cycle of a growing business. The main types of equity investors include angels, venture capitalists and private equity investors.
Angel investors are typically wealthy individuals or groups of individuals (sometimes friends or family members), who invest funds or buy equity in start-up or fledgling businesses that need money to grow.
Since these businesses are in an early stage of their life cycle, they’re operating under a high level of risk and uncertainty, and have limited ability to generate revenue and cash flow. Angel investors, therefore, have a personal interest in seeing the business succeed and/or expect a high rate of return on their investments.
Venture capital (VC) investors generally invest in rapidly growing businesses with long-term growth potential that are seeking significant external funds for the first time. They prefer working with business owners who have a track record of success.
Venture capital funds pool money from individuals, companies and sometimes pension funds to raise a fixed amount of money to invest in a number of businesses in certain industries. VCs tend to target high tech sectors, including information technology, artificial intelligence and nanotechnology. They may make a series of equity tranche (portioned) investments over a period of time, with the intention of achieving rapid growth and market presence.
Private equity (PE) investors can be individuals or funds. Since individual investors don’t typically have the resources to acquire a controlling interest in a business, they can be helpful sources of capital for businesses seeking minority shareholders.
PE funds attract capital from individuals, family offices (wealthy families), university endowments and pension funds. Some funds target companies with as little as $1 million of EBITDA (earnings before interest, taxes, depreciation and amortization) while others require more than $10 million of EBITDA. PE funds typically don’t operate a business once they’ve made an investment and will look to a second management team to execute a business plan.
Most PE funds will require a controlling interest in your business. They’re suitable investors for situations where a major shareholder is seeking an exit (such as in the case of retirement), or a management team wants support executing a management buyout.
Understanding the worth of your business
If you’re planning on selling a share or all of your business as part of your growth strategy, you need to figure out how much your business is worth. This process is called ‘valuation’, and you can get a professional to do it, or do the review on your own. There are a few different ways to value a business, and all of them are based on financial information and some assumptions:
- Discounted cash flow is an investor favorite, since it’s partially based on future cash flow and is generally the most accurate way to estimate the amount of money coming into a business. To figure out your business value with the discounted cash flow method, answer these questions:
- What will your business earn in the future? To your investor, your business is worth what it can earn during the period of time they plan to stay invested.
- What’s the investor’s expected rate of return, given the amount invested and your financial projections for your business?
- How much money will the investor make compared to how much they’re investing?
- How much equity will the investor receive for their investment?
- Going-concern value calculates a business’s value based solely on its future cash flow. Basically, the more cash flow you think your business will be able to generate in the future, the more your business is worth now. Just remember that your numbers have to be based on real numbers (like your previous cash flows and outstanding orders).
- The book value of your business is its value as shown on your financial statements. Subtract your liabilities from your assets and you will have your book value. (Book value is rarely used with equity funding.)
- Liquidation value refers to how much money you would have if you sold all of your assets. Tangible assets are given liquidation value close to actual value, but accounts receivable and inventory are worth considerably less than what’s written in the books.
Getting personal finances in order is good for business
Things can get messy when your personal and business finances overlap—which is the case for many business owners before they start to grow. Here’s some advice on how to handle your personal finances to protect you and your business.
- Have a line of credit attached to your chequing account. If a client pays you late or a deal falls through, your automatic payments can still come out and can help tide you over and prevent a personal cash flow crisis.
- Keep your business and personal bank accounts separate. And separate them if they’re not. This will set you and your business up for financial success in the long run.
- Keep your expenses below your income. We know this is obvious, but when you’re juggling a business and your everyday life, it can be easy to lose track. Work out a budget using your income (or lowest of your average monthly incomes if your income fluctuates) to keep yourself on track.
- Automate your monthly bills. You’ll never miss a payment or rack up nasty late fees.
- Make it a part of your schedule. Set time aside every week to review your financials.
An introduction to personal investments
Is all debt bad?
Not at all! While not all debt is good, there’s such a thing as “good debt”. Good debt is, basically, debt that creates value—think business loans, home mortgages and even student loans. Not only are these types of debt considered an investment in themselves, they also tend to have lower interest rates and tax-deductible benefits, and could help you accumulate wealth over time.
How much time does it take for my investments to grow?
Investments need time to mature. The more time they have, the more opportunity you have to compound your investments (re-invest the interest you’ve earned) and increase your wealth. Making small investments now, even if you’re in (good) debt, and giving that money time to grow can have a higher pay-off than waiting until you’re debt-free before you start investing.
Should I invest or pay down my debt?
Personal preference pays a huge role. If you feel overwhelmed by being in debt, you might be able to reduce your anxiety by putting all your resources into paying it off. Alternatively, you might see the manageable investments you’re able to make while in debt as a light at the end of the tunnel.
For more in-depth answers to these FAQs, download our (free!) guide to expanding your business infrastructure. We dive deeper into all of the topics covered on this page and more in one handy, downloadable PDF.
Read more about the basics of investment asset classes.
Learn about investment speculating.
Choosing the right business structure
There are a number of reasons why a structure that used to work when your enterprise was starting out no longer works as your business grows. Both your tax and business plans need to be revisited and updated on a regular basis to reflect your current and projected circumstances. Making sure you’re looking at up-to-date information will help you maximize your tax opportunities and discover the best structure for your enterprise as it evolves.
Our best advice is to talk with an advisor to find out which business restructuring can minimize your tax exposure and maximize your business’s efficiency. You can read more expert advice on restructuring your business’s infrastructure in our business infrastructure guide.
When it’s time to grow your Indigenous business
There’s a common misconception that Indigenous people and businesses are exempt from paying tax in Canada—don’t buy into it. In business, there are always tax considerations. As an Indigenous entrepreneur, it’s important to be aware of the tax nuances—and opportunities—your enterprise has to deal with.
What is an Indigenous business?
According to the Canadian Council for Aboriginal Business (CCAB), an Indigenous business can be a sole proprietorship, limited company, co-operative, partnership or a not-for-profit organization, and at least 51 percent of the firm must be owned and controlled by Indigenous people. In this case, the term "Indigenous" refers to a Status or Non-Status Indian, Métis or Inuit.
Statistics on Indigenous businesses
While it’s relatively easy to find data for Canadian business owners in general, less information is known and widely available about Indigenous entrepreneurs. That’s why the Canadian Council for Aboriginal Business created the 2016 National Aboriginal Business Survey. This survey specifically addresses who they Indigineous business owners are, what their experiences have been, and what they need for future growth and success.
Here are some statistics on Indigenous business owners that emerged from the CCAB’s research:
- According to the 2011 National Household Survey (NHS), there are more than 43,000 First Nations, Inuit and Métis in Canada who are business owners.
- The population of self-employed Aboriginal peoples continues to grow (15.6% between 2006 and 2011), while the population of self-employed Canadians overall has declined (-4.4% between 2006 and 2011).
- Aboriginal peoples remain less likely to be self-employed (6.3 percent of the Aboriginal labour force) than the rest of the Canadian population (10.7 percent of the total labour force).
- In general, Aboriginal businesses tend to be quite small, with three-quarters (73%) that are unincorporated and more than six in ten (64%) that have no employees.
- This is a similar profile to Canadian businesses generally, although Aboriginal businesses are slightly less likely to be incorporated.
- More than one in three Aboriginal businesses (36%) create employment for others. Since 2010, the proportion of businesses creating full-time or temporary employment has declined, as has the rate of Aboriginal employment within these firms.
- Attracting qualified employees continues to be a challenge and an impediment to growth: two-thirds of employer firms say it’s difficult to find Aboriginal employees, a problem that is particularly widespread among larger firms (e.g., incorporated, higher annual revenues).
- Since 2010, the geographic profile of Aboriginal businesses remains largely unchanged: Aboriginal businesses continue to focus primarily on local markets and within their own province/territory.
- Nonetheless, half have customers in other provinces and territories and substantial minorities have clients in the US (25%) or other countries (17%).
- Aboriginal businesses supply goods and services to a variety of sectors, and since 2010 have increased their customer base among private sector businesses and governments at all levels (federal, provincial, municipal and Aboriginal).
Learn more about Indigenous businesses in Canada—explore the 2016 National Aboriginal Business Survey. It includes all kinds of research on topics such as business profitability and growth, growth factors for aboriginal business, business objectives and successes, and more.
Tax exemptions for Indigenous businesses
Under the Indian Act, certain bands and status First Nation individuals are exempt from tax on income earned from businesses and/or properties situated on a reserve. Therefore, if you’re a status First Nation individual and have a sole proprietorship that operates fully on a reserve, you will generally not pay personal tax on the income you earn. However, if your band has a self-governance or tax agreement with the government of Canada, the exemption might not apply.
Things to consider when growing your business as a First Nations individual
- What’s your business structure?
An experienced tax advisor can help you figure out which business structure will ensure liability protection, since it’s not necessarily straightforward.
- Who owns the business?
A business owned by a tribal band or counsel can access different exemptions than a status First Nations individual.
- Are you in partnership with a non-Indigenous business?
As with any business collaboration, there are income tax and indirect tax considerations to keep in mind, particularly in the case of partnerships, which have different rules based on whether they are limited, limited liability or general partnerships.
Inclusive trade for Indigenous businesses
Inclusive trade exists to make sure that all members of society have access to the opportunities that come from importing and exporting. This means that small to medium sized businesses owned and operated by women, members of the LGBTQIA+ community, Black peoples, Indigenous peoples and youth, and other underrepresented groups are provided equal opportunity.
Read more about inclusive trade and explore helpful resources for Indigenous businesses in this Spotlight on Inclusive Trade – Indigenous Business released by the Canadian Trade Commissioner Service.
Resources for indigenous businesses
- Canadian Council for Aboriginal Business
- Start Up Canada
- Business Link
- Indigenous Works
- Government of Canada
We couldn’t fit all we wanted to share about taxes for Indigenous-owned businesses here, so we included it in our guide for expanding your business infrastructure. It’s free to download, and has tons of helpful information and expert advice to guide you along your expansion journey.
Here’s what strategic partnership looks like
As an entrepreneur, you don’t need us to tell you that you face (and overcome) challenges everyday. The great news is that as you’re growing your business, you don’t have to face any of them alone. Throughout the province, there are organizations you can partner with to drive your business growth.
Here are a few of them:
Chambers of commerce
Chambers are focused on helping small and mid-sized businesses succeed and grow by advocating with local governments for business-friendly regulations, and by creating programs and events that provide educational opportunities.
Economic development organizations
A great resource if you’re looking to expand beyond your city. They spend a lot of their time and resources looking beyond local borders and trying to attract new business, investment and talent—and helping their local businesses with trade missions, opening new offices in other cities and developing new trade relationships.
Accelerators are growth engines, and can offer your business a serious boost. Many accelerators are three or six months long and involve mentorship and strict programming.
Want to know more about any of these types of partnerships? We dive into more detail, along with providing links to relevant partners, in our guide to expanding business infrastructure. Download this (free!) guide and keep it on hand as a reference as you grow your business.
Innovation to drive business growth
‘Innovation’ and ‘transformation’ are such big buzz words at the moment that just hearing them can be intimidating. Thoughts of spaceships and robots come to mind—but in reality, innovation is a way of viewing the world and forming new ideas and opinions.
How can you stay on the lookout for innovative solutions? Part of the answer is: by feeding your curiosity. Continue to search, read, explore and seek to understand different people and different things that are happening in the world around you, whether in your local community, within the province or within the country. More importantly, examine what’s happening around the world in terms of micro- and macro-trends in your area of interest. Organizing, synthesizing and interpreting information are all key to innovation.
We lay-out our top six tips for innovation and business growth in our guide to expanding your business’s infrastructure.
Surviving a recession and thriving afterwards
Surviving a recession can be tough, and starting out in the middle of one can be even tougher. Despite the fact that your customers may still want to support you during an economic downturn, they also have to look at their own budgets.
But when the economic outlook looks grim, don’t worry! There are always practices that you can deploy to help your business through tough times and point toward the light at the end of the tunnel.
8 things you can do to help boost your business during a recession
Work with other businesses to support each other—you may have complimentary products or services that each of you could benefit from.
So maybe you can’t share a product with another business—you could try combining marketing campaigns. Cross promotional campaigns aren’t only cost-effective, you’re exposing your businesses to each other’s customers.
When things slow down, you have to go out and find the market share you need. We’ve heard from many businesses that making personal connections is the best strategy to get a response. Get active on social media, dedicate entire work days just to reaching out to and responding to your customers.
Take your friend up on their offer to introduce you to a potential collaborator or business colleague. Make connections with like-minded entrepreneurs through social media. Reconnect with those great business owners you met at that conference years ago. You’ve got the time to build relationships that will outlast the recession and may have huge impacts on your business in the long run.
How you deal with a client who has cash flow issues and can’t pay for your product or services within a certain time frame comes down to clear communication. Be clear to your client about how payment delays can impact your own business. That conversation may involve term negotiations, which are common when a recession or sudden emergency strikes.
If a business owner had 30-day accounts receivable terms for a client, extending them to 45 or 90-day terms can give anxious clients more breathing room, or lay out terms where payment comes in chunks, such as 25 percent within 30 days, another 25 percent 30 days later and the final installment being paid 45 days afterward.
On the other hand, your business could be the one struggling to repay your suppliers. One way to preserve working capital is to take longer to pay your suppliers. Some companies may unilaterally decide to delay their payments and force the extension on their suppliers, especially when stuck with inventory they can’t deliver into impacted margins.
Keep in mind that this kind of approach can bruise supply relationships, so, openly communicating the proposed new terms may help maintain the business relationship that was established before the crisis. And be understanding—all businesses take a hit during recessions.
In times like these, understanding your cash flow cycle is more important than ever. If you’re new to all this, or need help, definitely talk to your banker to make sure available lines of credit remain accessible.
If you need equipment these days, consider renting rather than buying. In the long-term it may be cheaper to buy, but in the short-term, if cash flow is an issue, buying might not be the best option. When it comes to rent, check the expiry date on lease agreements and begin conversations on your cash-flow challenges with your landlord.
Then review the trial balance for any expenses associated with storage or other locations you no longer need. Reviewing any retainer-type relationships with fixed monthly costs (e.g., public relations, lawyers, accountants), and having open discussions with all of them to assess your unique needs during this time, could be another opportunity to shift expenses from fixed to variable.
Whatever you decide to try, your customer should still be at the top of your mind. During a recession, you need to invest in your customer relationships more than ever—because your customers will remember. No matter how tough times are, they won’t come back if you do something that negatively affects their experience with your company or brand.
Business continuity planning: the need to know’s
What is business continuity planning?
Business continuity planning involves creating systems of prevention and recovery to deal with potential threats to your business—since you never know what could happen. More than just preventing threats, the goal of a business continuity plan (BCP) is to allow for your business to keep operating before and during disaster recovery, so you’re not left scrambling and unable to run when disaster strikes.
Here are some of the critical components of an impactful BCP:
- How to address staff absences that result from an emergency. Depending on the scenario, it might be best for employees to work remotely. The instructions should outline specifically what working remotely looks like for all kinds of employees, including managers.
- Describe what will happen when services like utilities, financial services, information, telecommunications and logistics are suddenly unavailable or altered.
- Outline back-up plans if vital materials or contractors are suddenly unavailable.
- How to work with a huge increase or decrease in demand for your products or services.
- What happens if travel or cross-border movement of employees or products are interrupted.
- How to prioritize essential services to the business while suspending roles that aren’t essential.
- Figure out the minimum number of employees and skills required to do and maintain essential services within the business.
- Create action plans that shape essential services to suit the scenario, and make sure that responsibilities for every role are clearly outlined.
- Build out action plans to communicate with your business partners, key customers and broader audience about what your company is facing and your next steps, along with an outline of what services have changed due to the situation.
- Draw up a checklist of how your business continuity plan should be tested, what needs to be revised and how often you do both things.
All business continuity plans are different, since each business and emergency will require a unique response. You should scale your BCP to meet the current crisis—a business continuity plan for a single branch of a business is going to be different than one that addresses a crisis that affects the entire company.
Business continuity plans can tend to look a lot more like lofty aspirations than concrete plans. It’s easy to create something hypothetical when there’s no crisis in sight. But it’s important to establish an actionable plan. You don’t want to be stuck if the economy takes a downturn.
Keys to handling a widespread crisis
An important step in implementing a business continuity plan during a monumental emergency with major consequences is making sure that everyone’s on the same page. Communication between everyone in your business must be clear and flexible. As much as you plan, a BCP can’t possibly account for everything, so you have to be able to pivot quickly and equip your team. The goal is for your employees to feel like their managers have a grasp on the situation.
Since many crisis situations can leave you wondering when your next sale will come in, you’ll need to have systems to address emergency situations with extremely lean solutions, both when it comes to finances and people-power.
It’s easier said than done, but one of the best ways to prepare your company for the worst is to plan on creating an emergency fund, so that you can continue to have a steady (adapted) cash flow even during the harshest storm.
What are the steps in the business continuity planning process?
While the number of steps to the continuity planning process seems to vary depending on what resource you read, there are a few steps that are a must across the board. To build an effective business continuity plan, go through these 7 steps:
No plan is effective without a goal. On a high level, the purpose of you creating a business continuity plan is to either keep essential processes in your business running, or to reduce disruption.
But when it comes to how that looks practically, you’ll need to create goals that are specific to your business type and operations. Goals will guide how you assess risk, how to create your business continuity plan and your recovery strategies.
These go-to folks will lead your business in creating and guiding others through crisis with the business continuity plan. Make sure that you assign one person as the leader so they have the authority to keep the plan moving forward and make decisions.
Identify the biggest potential threats to your company, then research and analyse them. Talk about what would happen if you have to modify essential services with your emergency preparedness team. Write all of this down.
Create a list of essential services divided into branches or departments. Then rank them based on the degree that these services impact vital areas such as customers, staff, financials, production, etc. Then determine how long, if at all, a service can be suspended.
You’ll need to have strategies for all services and functions that affect your customers, staff, business partners, suppliers and contractors.
Write down the following for each service/function:
- Level of business risk
- Staff and customer impact
- How you’ll communicate to staff and customers
- Emergency policy creation
- Which financial resources can be reallocated if a crisis strikes
- Partners from outside of your business who you can work with to benefit both of you
Show your stakeholders your plan, and do some testing to make sure that the plan works as it should. Make any updates that you need, then train your employees based on the final product.