(2 Minute read)
Hi there accounting fans! Welcome to part 2 of the business continuity plan guide!
In the previous article, we looked at why you should set up a business continuity plan (BCP). We also discussed how to identify your key products/services and how to do some simple mitigation strategies to ensure that your business processes run smoothly.
In this part, we will focus on Identifying your essential equipment and relocation options.
#4 Essential equipment and supplies
In this part, you are identifying what your essential equipment and supplies are. These are the fixed assets and supplies that your business uses to operate. This step is as simple as preparing a list of assets that are ABSOLUTELY crucial to your business’ operations.
Let’s go back to Johnny’s Yoga Haven.
Johnny has identified some fixed assets which are important to his business. To keep his studio running, he needs to make sure the temperature is just right. So his heat pump is an essential equipment. He also supplies mats and blocks to his students, these are considered essential as well. So he writes down his essential equipment and supplies as:
- Heat pump
- Mats
- Blocks
Of course this is just a very simple example. You will need to have a good think about what equipment is required for your business to operate. Once identified, you need to come up with a simple maintenance plan for the assets to keep them in working condition. For example, the heat pump may require regular servicing every 3 months. The Mats need replacing every 12 months.
#5 Relocation options as part of your business continuity plan
Relocation may not always be an option, but it is good to have a think about it. What would you do if you were forced to relocate your business? It’s good to have a list of backup options (and maybe one fanciful option) you could set up shop if your current location became unviable.
Johnny is set up in a cool, swank, urban Auckland loft and attracts plenty of wealthy, hipster clientele. He loves his place. But he also knows that rent has been increasing far more than his sales have been. He’s starting to think that he should look at different places. Another rent hike could cut into his bottom line so he prepares a list:
- Move to a less up-market part of Auckland – his loyal customers will still come, but he may find it difficult to attract new clientele
- Shifting to a cheaper town, like Whangarei – he may have to charge far less, but his operating costs would be far cheaper
- Moving to Indonesia, a fanciful option – he could run a yoga retreat for affluent individuals while still keeping his costs down
Of course, relocation isn’t just about dollars and cents, other issues come into play as well. Things like your local connections, your spouse’s work, your children’s schooling and your circle of family and friends.
Which is why relocation is usually low on the BCP list, but it is still important to have a plan.
But now that we’ve covered the basic framework of the BCP, we can move onto the more exciting stuff – like scenario planning!
What we’ve done so far is identify what your key business processes are and how they relate to the delivery of your products/services. I know I said that I’d cover scenario planning in this part, but scenario planning is a pretty huge part of the BCP that deserves its own article.
We’ll finish this off in part 3: BCP – Scenario planning!
Once again, if you need help in building a Business Continuity Plan, drop me a message at www.shadvisory.co.nz!