The only sure-fire way to be ready for whatever is going to happen to us is to be prepared. For most of us, the first time we go through a surprise and threatening situation is not our best try at it. It is because we are not prepared. As a professional in this business of preparedness for crisis response and management, I have found that there are five primary reasons why business owners, especially the private or closely held businesses, are not ready when a crisis hits. In fact, recent surveys of participating business owners not only re-enforce my findings, but emphasize the large exposure personal, business and community wealth and assets have to threats of business interruption, damage, and permanent loss.
Consider the survey conducted in 2011 by the Symantec Corporation (see link below) on small businesses from around the globe. And mind you, a small business can be up to 50 million in annual revenues. We aren’t talking just the sole prop or the Mom&Pop establishments. We are talking up to 100 or more employees, multiple business sites, international sales, and millions of clients. This threat not only threatens the owners, employees, and creditors, it threatens the large business enterprises and public agencies that are served by these businesses. Read the findings for yourself.
So here’s my take on it, from my years of emergency response management, disaster preparedness, public education, forums, workshops and task forces on businesses; and, my own work with businesses. The following are my hit list for the 5 major excuses for businesses not being prepared:
- It won’t happen to me. A false sense of security since everything has gone well so far. Statistics show the opposite – that the longer one is in business, the greater the risk is that something will happen. This of course can be averted through hazard and risk identification and profiling and then treated as if it is a disease by prevention, mitigation and preparedness. Same reason we all get our vaccinations, avoid dark and creepy areas of town late at night, make contingency plans in case something is cancelled, and keep an extra $100 bill tucked away in our wallet. So, just because it hasn’t happened yet, doesn’t mean it won’t. Your risk for today is the same tomorrow and may be just a little more, since it didn’t happen today. Risk is real and stuff happens. RISK: Maximum loss FIX: Know your hazards and your risk and accept it as a part of doing business – get your plan in place now.
- Ok – I believe it will happen and I know I need to prepare, but not today – I’m too busy with more important things. Which means it doesn’t ever get done because we are always in the state of today and what is in front of me is the most important. If the boss or owner or board has this attitude, it is lethal. They will get caught and then they get mad that it happened and they don’t know what to do and have to figure it out without a plan and they hold the full responsibility for ignoring the nudge EVERY DAY to get prepared. RISK: Maximum loss and SOBS of regret FIX: Get a preparedness program in place and do something every week or so until the program is complete
- I’ll figure it out at the time – I’m smart – I’m in charge and I already know what to do – I don’t need a plan. This is what we call the COWBOY COMPLEX. Cowboys have a gun and a horse and enough chew and bullets – they are admired and brave. They go running off at the hint of danger to run an offense. Good intentions, but, often, as our own frontier history has shown, they don’t have enough real and reliable information to know what is going on and while their bravado is admired, it can often be their worst enemy when they don’t have a good strategy, shoot at everything that moves, take on more than they can manage, become fatigued and are scared to let someone else be in charge, and want to win themselves. Sometimes this is an ego battle. I just sigh when I get told this by a business owner or an Operations Manager. Best practices in EVERY AREA OF LIFE scream against this attitude. You need to prepare – you need to think strategically – you need to have some protocols and resources ready to use and you need to know what is going on before you run out and start shooting. Otherwise you end up like Don Quixote – threatening windmills and giving your priority to something that may not have value. RISK: Maximum loss and looking like a fool FIX: Get a preparedness program in place and practice the roles of management and leadership – work with your team and your support services for the most efficient and effective plan and know what you are doing so you don’t lose your head
- I can’t afford this. This excuse has substance – it IS HARD to justify extra expense for what appears to be duplicated services and/or resources and assets that can’t show a direct relationship to current profit and growth. Sometimes our budgets are just so tight, we can’t pay for the consultant, the services we need to have or the training – we have to budget for it and spread it out. The problem is that your current asset value, in fact ENTIRE ASSET PORTFOLIO is then at total risk. For some businesses, this is an executive policy level decision and a new policy of the set-aside and investment into business continuity and crisis management must be made. The cost of getting a program is basically a one-time fee for preparedness, with support fees to maintain continuity. There are cost-effective solutions. For example, for one small business operation that managed millions of dollars of benefit monies, I provided just two days of consultation with the key officers and managers of the business, using a general outline and checklist to prepare a core plan, assign functional responsibilities and get a basic protocol in place. It cost them 2 days of my time and travel and one day for their business for meeting with me and a couple of follow up meetings for themselves. Today, with the efficiency of web conferencing, follow up services are very cost efficient. That any business CAN afford. It is isn’t fancy and there are early work items that come out of such a project that have costs associated with them – but just by doing this – you at least know what to have in place now, what you will do in a crises and in what order to do it. Further, you realize just by going through this evaluation of your business operation, you quickly identify where your weak points are and you can make daily adjustments in your processes that don’t cost anything. And, remember: Avoided loss is a savings – it DOES end up in the bottom line! RISK: Maximum loss which means you lose all and have no business FIX: Start with one day with a consultant or facilitator and try one day a month for 6-12 months until your program is complete. Do small changes to make your business fail-proof.
- I have already paid for this with my back-up of my data system and I have business interruption insurance. This is good place to start. You know that you have to back up your data and so you have a process to do so. Here are some of issues associated with a business interruption or a failure: (1) Backing up your data means you don’t LOSE IT. Getting it back in your system so that you can USE IT is another plan. You are right back to your crisis management plan. (2) Leadership – crisis management – of your business operation involves: safety and immediate response (EAP), crisis management of the issues impacting employees, customers, operations, and tomorrow’s business requires a plan, protocols, alternative business options and processes, training, extra money and contingency resources – and the skills, knowledge and capability to be able to direct, order, implement and pull off a crisis management of a crisis – you are right back to your crisis management plan, (3) Without a plan in place, people will do all sorts of things on their own or maybe not do anything because they don’t have sufficient direction or are afraid of being blamed – you actually lose ground – you need your crisis management plan in order to effectively and efficiently lead and manage through a crisis so that you can restore your operations, reload and use your data and minimize your down time. As far as insurance goes, you have to have a plan in place and certain preparedness steps in place in order to know what to do to make a claim for insurance reimbursement. Insurance doesn’t prevent the crisis. Insurance doesn’t run your business. And, if you don’t file for the claim in accordance with the requirements, you won’t get that re-imbursement. Further, most insurance REPLACES CASH, that means you have already spent it and then it will be replaced. Or you have lost something and they will replace what you had. You still need a plan. RISK: Loss of business from interruption, extended time between the crisis and the return to operations, loss of customers and revenue, ineligibility to recover losses from insurance. FIX: Crisis Management Plan.
Final word: Everyone knows that it is better to be safe than be sorry. I think it is also better to be smart and use GOOD SENSE than it is to have no cents left. Jan Decker, Crisis Management Consulting 253 261 2704 firstname.lastname@example.org
Copyright 2012 Jan Decker