“We are more often frightened than hurt;
and we suffer more from imagination than from reality.
— Seneca
”
9 out of 10 business owners I encounter, their answer to this question is a big, fat “no.” Can you guess what THE question is?
“Do you have a contingency plan in place?” – This is one of my questions that is part of the initial form everyone must fill out when they come through my doors.
Believe it or not, this to me is perfectly understandable considering that the past several years have been somewhat stable (in the US.) But this also calls for a big wake up call. Many of the things you can do to bulletproof your business are incredibly easy to do while things are seemingly normal.
The biggest reason is that you aren’t under pressure. This allows you to do all of the business continuity planning (a.k.a. contingency planning) with ease. This is the reason having a regularly scheduled CEO day on a monthly or quarterly basis is highly recommended so that you get to work “ON” (and not “IN”) your business.
For more about how to conduct one you can check out this post.
If you are finding this post because your business has been hit by any of these risk factors, do not despair:
● Macro/Micro Economic Factors
● Technology Threats
● Pandemic/Epidemic
● Natural Disaster
● New Competition
● Government Policy/Regulation Changes
This post is not to shame or guilt you about the fact that you may not have a business continuity plan in place. This is about giving you the easy steps you can take right now to have the initial one ready to go.
My framework, 5R’s of Risk Management, is specifically designed for service business owners. Therefore, you will not find topics like changing your supply chain strategy or improving just-in-time inventory management here. But, if you somehow ended up stumbling upon this post, there is enough to take away.
For those who are service business owners, you can simply follow the 5R’s in this specific order to get your business continuity plan going.
So, let’s get started, shall we?
Hey! I’m Maiko.
Thanks for stopping by. If you are a visionary business owner with the desire to build a high-functioning, profit-generating machine of your dreams, let’s connect!
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5R's of Risk Management
First things first, let’s go over what the 5R’s are.
REGROUPING
REDUNDANCY
REINFORCEMENT
REPOSITIONING
RESOURCES
It’s highly recommended that you do this in order to get the maximum results. This is not just from a strategic point of view; this is also from a psychological perspective.
This is something you can complete in one sitting, even if you invite some of your team members to join. In addition to that, you may set up additional meetings at a later time to strengthen some weak spots you might identify by going through this exercise.
REGROUPING
In your business, everything starts with you, especially during turbulent times. Even if your team is self-sufficient and reliable, they will still require your guidance and leadership to navigate through the obstacles.
So naturally, you want to regroup & condition yourself mentally at the optimal level before getting started with your business continuity planning so that you are focused on the task at hand.
When you get hit with various unexpected business challenges, there is a lot for you to digest mentally, emotionally and sometimes physically. You may be experiencing an unusually high level of fatigue, a lack of focus, being unmotivated, loss of sleep, or anxiousness.
You will probably agree that the quality of your decision making process will be severely affected by the way you feel. This is the reason the first “R” of 5R’s of Risk Management is “Regrouping” -- taking care of yourself.
Here are some practical things you can do to get yourself out of a paralysis stage.
Move #1: Create an environment that is free from external noise and commotion.
Move #2: Assemble a team who can support you & help you implement the plan.
Move #3: Understand and acknowledge that entrepreneurship is a game.
First, especially when you are dealing with nationwide or global matters affecting your business, what you want to do is to focus on creating an environment that is free from others who are unnecessarily freaking out or are all about doom and gloom or are blowing things out of proportion for their own political or personal agendas.
Ditch what you cannot control and focus on what you can control, including but not limited to:
● Shutting off your social media feed for a while.
● Getting super conscious about who you want to be in touch with.
● Stop reacting and start responding from a calm, grounded place.
● Do activities that are calming and relaxing.
● Put your focus back on your health.
Once you feel like you are back to your normal self, start assembling your business continuity planning team. You may pick a few key personnel from your team. You may also reach out to the peers and mentors that you trust. Also, you want to stay connected with your supportive vendors.
For more on how to assemble a special team with your allies, check out “Everything There is to Know About Hiring a Business Consultant.”
Successful entrepreneurs are not only resilient by nature, but also have the ability to look at problems & challenges differently. When they are greeted by adversity, they tend to seek “opportunities” rather than dwelling on losses.
Some seasoned players will take this one step further. They tend to make a conscious decision to play offence rather than playing defense.
To be perfectly crystal clear, seeking opportunities is different from one being an “opportunist.”
The truly successful ones condemn those who try to make a buck on tragedies and unfortunate circumstances. As I mentioned, entrepreneurship is a game. As any games would, this game has a set of rules to play by. Being an opportunist is against the rules in the playbook of running a sustainable business.
Instead, they will see the situation they find themselves in to be:
1. A lesson
2. A chance to course-correct
3. A time to explore new approaches to get them back on track while they may be able to help others
4. A missing piece to what they always thought they want to experiment
5. A gift that allows them to re-evaluate their values & priorities
They are naturally wired to be grateful no matter what kind of situation they are in. That’s the main difference between them and opportunists.
For more on this topic, check out “How to Bounce Back from Business Setbacks Fast: 5 Questions to Ask Yourself Immediately After a Setback” & “Want to Be an Opportunity Magnet? 9 Secrets I Found by Observing Successful Entrepreneurs”.
“Too many people are thinking of security instead of opportunity. They seem to be more afraid of life than death.
— James F. Byrnes”
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REDUNDANCY
One of the reasons I consider my approach to be unique & more effective is this: I have purposely placed “Redundancy” before “Reinforcement.” Normally the recommended process of reviewing anything is to go over:
1. What worked,
2. What didn’t work,
3. What can we do differently?
Nothing wrong with this, by the way.
However, when it comes to creating a useful business continuity plan, I’d like you to deal with the big fat elephant in the room first. In other words, you are going to focus first on what part of your business is exposed to various risks. So, you are starting from #2 above in a sense.
Simply put, redundancy acts as your Plan B. Something you can fall back on. But often, in the world of small business, creating one tends to not sit at the top of your priority list. Honestly, I am guilty as charged just as you are.
If you aren’t familiar with the concept of having enough redundancy in your business, no sweat. Start from these questions to identify what you can work on.
Move #4: Ask, “What am I heavily relying on to conduct my business?”
Move #5: Ask, “What if I no longer have access to this, what would the alternative options look like?”
For example, if you are solely relying on referrals and word of mouth to get business, this may not be enough to get through the “new normal.” Or, if your only source of lead generation is through Facebook ads or Google AdWords, then you realize there is no redundancy in place.
This doesn’t just apply to strategies. How about your employees (team members)? Do you rely on one person to run a major part of your business without S.O.P. (standard operating procedure) being documented? What if this person leaves suddenly, who is going to train the new hire?
If all of your employees (team members) work from one location (city, state, or country), and you are to face challenges that are tied to geographical/logistical factors, your business is exposed to a higher risk.
How about your data? Where does it live? Any backups? What if the server goes down or no internet access for days or weeks, what is the project impact it would have for your business?
Create a list of areas that lack enough redundancy & come up with ideas that you and your team can implement rather quickly.
Ideally, you want to identify & eliminate single source reliances in your business as much as possible when you have no immediate need to do so.
But you are here. Right now. It’s better late than never. Stay positive & let’s keep going!
“If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it;
and this you have the power to revoke at any moment. -Marcus Aurelius”
REINFORCEMENT
This is somewhat self-explanatory. After listing everything that needs more redundancy, you can assess “what’s working” and create a plan to reinforce it.
Move #6: Brainstorm ways to “double-down” on what’s working to minimize financial risks.
This will require adjustments so that your implementation process is timely. For example, you may have already meticulously planned to do a campaign later in the year. Knowing this has been done many times in the past and it works, you may reconsider to do it…now.
Let’s say this campaign is an enormous undertaking logistically and financially, then you consider a mini version of what the full-scale campaign entails. Remember, it is all about being flexible and fluid with your business activities during hard times.
● Do you need to assign more people to tend to this?
● Do you have to temporarily lead this effort for the time being? If not, who will?
● Are there any ways to incentivize customers to take you up on your offer right now?
These are the follow-up questions to the original question. This will help you come up with an action plan you can start right now.
One important thing to keep in mind:
Move #7: List what’s working & how you can double-down on them. But always start from the place of serving your clients and customers, not from the place of prioritizing your needs.
Depending on the type of hardship, there may be many people who are affected by the change. As I mentioned earlier, this is not about becoming an “opportunist.” This is about you and your business staying calm and resilient.
REPOSITIONING
This is very similar to “rebalancing a stock portfolio.”
Due to whatever challenge your business faces, the weight and the value of each business activity shifts between high and low. With the “rebalancing a stock portfolio” analogy, you either need to rebalance the % allocation of each category i.e. blue chip/index category, mid-cap, global, sector specific, highly speculative, etc., or change your entire positioning (strategy) depending upon how the market moves.
You do something similar with your business activities.
OK, OK, do not glaze over. I just thought this was a good analogy. Let me explain in more of a…less-boring way.
Say, your current focus is divided up into these areas as follows:
● Sales (lead & prospect generation) (35%)
● QC (quality control) before shipping projects (10%)
● Financial review & management (15%)
● Team management (15%)
● Hands on client work (10%)
● General marketing (15%)
After reviewing redundancy & reinforcement, you may shift your focus on as follows:
● New lead experimentation (15%)
● Sales (double-down effort) (20%)
● QC (quality control) before shipping projects (10%)
● Non-sales redundancy tasks (10%)
● Financial review & management (15%)
● Team management (10%)
● Hands on client work (10%)
● General marketing (10%)
As you can see 3 areas are reduced, 1) Sales, 2) Team Management and 3) General marketing.
You take 15% out of your normal sales activities & reallocate that to new lead experimentation as a redundancy task. You determine this is a good opportunity to let your team have more control & accountability over their work and reallocate that 5% over to non-sales redundancy tasks such as creating training videos and putting necessary guidelines in place. Subsequently, you notice your general marketing isn’t all that important right now, so move 5% out of it & add to non-sales redundancy tasks.
Move #8: Create a pie chart and allocate how much time, energy & attention you are newly committing to give to each key business activity.
You may keep certain %s the same but within those %s, the tasks you choose to prioritize may change. For example, your financial review & management remains at 15%, but 5% may be newly allocated to handle loan applications or revised forecasting for the next 2 to 3 quarters.
Move #9: Review & update your priority list per category to fit the current business needs.
It takes a bit of effort to get used to a new way of operating a business. While you give your best shot at these changes, keep in mind to be kind to yourself. Remember, if you go down, the rest will too.
“I have learned over the years that when one’s mind is made up, this diminishes fear;
knowing what must be done does away with fear.
-Rosa Parks”
RESOURCES
It’s always fascinating to me to observe different behaviors among business owners. Leveraging or not leveraging available resources is much like using or not using coupons for grocery shopping.
What do I mean by this?
Some are fanatic about collecting, organizing, and using coupons. Some never once bother to use them.
For whatever reason, the middle doesn’t seem to exist. It’s more like either you do, or you don’t at all.
With this post, I would like to change that. There are various resources and assistance available for business owners, from the local government level up to federal level for grants (no need for repayment) and zero interest loans if qualified. Moreover, SBA (small business administration) and some non-profit organizations offer useful support that may or may not be monetary.
If you find yourself resisting the idea of seeking assistance…Check. Your. Stories.
Maybe your story is that you don’t want to ask for a handout. Or somehow you feel like asking for help is a cop out.
Do you feel shame? Do you feel like a failure? Does your story stem from your past experience or what you’ve heard from family members growing up?
You want to get to the bottom of why you are sticking with these beliefs and stories while resources are available to simply help business owners in need.
There is nothing more. There is nothing less. They just are.
You can read more about what you can do with the feelings of resistance here.
Because my job is to be resourceful and informative to my clients, I subscribe to many email newsletters that come from local government offices, Chamber of Commerce and non-profit organizations. It’s mind-blowing to witness so many business owners that are completely unaware of the existence of these programs.
It’s also mind-blowing how great some of the programs are out there. Before you blow through all your credit cards, I strongly recommend you do some quick research on the available resources near you.
Move #10: Research what type of free resources are available.
Move #11: Consider applying for short-term business loans even if you don’t need it.
Seriously, I cannot emphasize enough how important it is for business owners to get loans when they don’t need them.
It is not optimal to apply for one when you need it for one simple reason – your financial numbers will not be impressive enough to give underwriters peace of mind when you are in need of a loan. Period.
So, before your numbers plummet, apply for one. I’m not getting into the nitty-gritty of what the process involves here, but be sure to have several months’ worth of bank statements & accurate books to generate P&L, B/S and A/R.
If you aren’t sure about these terms, be sure to have your bookkeeper and accountant help you with these items.
There is no need to make it harder on yourself. Whatever situation you are in, it is hard enough. You agree?
So, leverage what is available to you to remove the extra tension in your shoulders so that your road to recovery will be faster and easier.
“Fear is only as deep as the mind allows.
— Japanese Proverb”
FINAL THOUGHTS
I am going to totally date myself, but I know a thing or two about hard times after having to go through:
● First dot com bust
● 9/11
● NYC Summer Blackout
● Mortgage crisis
● Fukushima nuclear fiasco
● Various infectious diseases like West Nile, H1N1, Zika, SARS, etc. in between all these years.
From these experiences, I know one thing for sure. I’ve never heard of anyone who recalls these accounts and says, “I am so glad I worried myself to death. It helped me get through these difficult times.” Never.
My mantra is to be “cautiously optimistic.” While I keep an eye on reliable information, I intentionally cut out all the noise and, at times, all ties that are not helpful. This, I have full control over.
I hope this post was helpful in the way that you are able to stay focused on what you can control. Each time you come out of hard times, you build up your confidence and mental toughness as well as the ability to maintain the mindset of having a sound business continuity plan in place at all times.
Over time, you will become a pro at maintaining normalcy through hard times. As a result, you will be able to help others in a truly meaningful manner beyond commiserating.