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Planning for business disruption and recovery

5 tips to help cope with the unexpected

Unforeseen circumstances or factors outside your control can hit your business when you least expect it, but you can still plan for the worst with these tips.

Factors outside your control can sometimes lead to severe disruption to your business. There can be a variety of causes, from the loss of a key customer or supplier to natural disasters or cyber attacks.

The impact can be devastating, but acting fast and seeking advice can often be the key to resolving the situation as effectively as possible.

If you find yourself facing such disruption, here are 5 steps you can take to help you to deal with it.

1. Understand what’s happened

It’s important to get to the bottom of what has happened, and why, as quickly as possible and to find out whether any of your customers or suppliers are going to be affected.

“The important thing is to identify key stakeholders within your own business,” says Ian Workman, Managing Director, Co-Head of SME, Barclays UK. “Sometimes it’s the people on the ground that know the best.”

Seeking out expert advice as soon as possible can also be vital. This can include calling your accountant or bank if you think your financial situation is going to be hit.

“It’s really important you engage with your bank, not least because banks will have local knowledge and experience of similar situations,” says Ian. “And the sooner they get involved, the sooner they can offer support.”

2. Assess the impact

The more you understand about the situation, the better placed you are to assess the damage to your business. It’s important to consider this in the immediate and longer terms, as the full effects may not unfold for some time.

In some situations, for example if you lose a key customer or contract, this is likely to involve scrutinising your cashflow forecast to see how your finances will be impacted. Planned expenditure, outstanding invoices and existing business commitments could all need to be assessed too.

For a cyber attack, an initial assessment could involve how many working computers or laptops you have, how compromised your systems are and whether you have lost any business or customer data.

Estimate the impact of the best and worst case scenarios, and be prepared for both. If customers or suppliers are likely to be affected, you should also try to work out the extent of the effects on them too. In a situation like this, the quicker you can act – and the more clarity you can provide – the better.

3. Contact and reassure key people

Get in touch with your customers and suppliers if it’s relevant to do so, and reassure them as best (and as soon) as you can. Remember to always be honest and not to make false promises.

They may or may not already be aware of the situation, but maintaining good relations in challenging times can be a crucial way of minimising further damage to your business.

“Having an honest and open dialogue with your employees is just as important,” says Ian. Depending on the situation, they could be feeling unsettled, and perhaps worried for their own futures. Yet it’s quite possible they will be some of your most important assets during this period, so it’s vital they feel as comfortable and confident about the situation as they can.

“It’s key as the business owner that you’re taking the lead,” says Christopher Dean, Head of London & Central London Industry, Business Banking at Barclays. “Be positive, be solutions-based and be thinking ahead and calling upon all the people associated with your business to debate how to move forward.”

4. Act quickly

Emergency situations often require a speedy response so make sure you take action where necessary.

“Prioritisation comes in here,” says Ian. “What actions do you have to take now to protect the business? In a cyber attack for example, you might need to shut down your IT system or revert to a backup. If it’s a natural disaster, you may need to seek alternative premises.”

In circumstances where you’ve had stock destroyed you may need to work with suppliers to see how quickly you can be restocked. Or you may need to change weekly customer deliveries to fortnightly ones, or ask employees to do additional shifts to clear a backlog.

Similarly, if an important supplier fails, start work on finding a replacement immediately – even if one is not yet needed. It’s possible that other businesses are in the same situation as yours and may take up any available capacity in the supply chain if you delay.

And if short-term financial needs have been identified as a concern, contact your Business Relationship team immediately for help and reassurance. If your cashflow is coming under pressure, the earlier you act the more options you may have.

5. Plan ahead

Don’t just focus on the current situation. The key thing is to start working on long-term plans today so the impact on your business – and your suppliers, customers and employees – is as short term as possible.

“Break it down like a business plan,” says Ian. “Work out what needs to be done over the next week, month, 3 months and 6 months. This makes sure you’re not just thinking about the immediate impact. The key thing is to understand the rhythm of your business, and what you need to do to get that rhythm back.”

Once you’ve done that, it’s a good time to reflect on what you could have done differently and what you need to do to help ensure something similar doesn’t happen in the future.

“Were you over reliant on a particular client?” adds Christopher. “Should you have been spreading your risk? Are there internal processes you need to sharpen to spot any potential issues earlier? And are there any financial products in the market that could protect you in similar circumstances?”

If you’re not confident that your business is able to continue in the medium term, don’t be afraid to seek insolvency advice. Businesses that are no longer viable often find that cashflow pressures escalate if they try to keep going. In this situation you may be increasing your personal liability to creditors, and trading while insolvent places company directors at risk of personal liability.

However, do keep in mind that no matter how difficult your circumstances, close contact with your bank and key financial partners will help you work better together to find the solution that works best for your business.