The aim of this section is to provide an understanding of business resilience. It is intended to answer such questions as:
- Why is being able to operate your ‘Business as Usual’ important?
- What does business resilience mean to you?
- How does business resilience differ from business continuity?
To get to grips with the importance of your business’s resilience, you must first look more closely at what makes your enterprise tick. If there is one advantage to being a small enterprise rather than a multi- national corporation it is your ability to keep a handle on all of the different roles, processes, infrastructures and markets that shape your business. The downside of this is that the survival of your business can be even more dependent on each and every cog in your enterprise’s wheel.
The importance of “Business as usual”
Research has suggested that half of all businesses experiencing a disaster with no effective recovery plans in place go on to fail within a 12 month period. So, when you think of the number of possible crisis scenarios – be they economic, environmental, political or just plain human error -that might occur, it becomes difficult to overstate the importance of resilience.
“Business as usual” represents the ability to continue to service customers and generate revenue through changing conditions. To customers, shareholders and suppliers, your organisation appears to be as trustworthy, reliable and efficient as always . . . even when under the surface you are facing a crisis. Whatever is going on behind the scenes to handle a disruption – whether it’s changing suppliers or staff, revising a business model, moving premises or taking out a loan – you must be able to retain custom by continuing to do what you say on the tin. If there’s no one in your shop or at the end of a phone or at the end of a broadband connection to handle your customers’ needs they will simply go somewhere else with their money.
The horse meat scandal in 2013 provides a well-publicised example of this:
A supermarket stocking products implicated in the horse meat scandal is faced with the threat of losing customers who no longer have faith in what is on the shelves. The challenge for this supermarket is therefore to not only regain the faith of the customers but also to react quicker than other businesses and therefore achieve more market share than others who are implicated in the scandal.
A key part of maintaining business as usual is communications. Business resilience almost always needs to include strategies for handling internal and external lines of communication, such as:
- A chain of command and clear responsibilities in a crisis.
- Procedures for communicating with staff if phones and internet are down and you can’t access your online contacts list.
- Handling public perception of your business.
With some estimates suggesting that attracting a new customer costs up to six times as much as selling to an existing customer, retaining business should almost always be the starting point for developing your business resilience plan.
An integral feature of business resilience is ensuring that all members of staff buy into this business as usual culture. Come rain or shine, epidemic or strike action, it’s in the interest of everyone paid by or dependent on an organisation that it can continue to bring in money and get the job done. A company that employs people motivated to work towards a common goal in the face of adversity can reap significant rewards. And staff who understand this strategy can also:
- Identify early warning signs of events that may disrupt business as usual.
- Understand how to react to maintain the right internal and external image.
- Feed back through appropriate management channels.
- Aid the business in gaining a competitive edge by reacting to customer needs and staff issues more swiftly than competitors.
What does business resilience mean to you?
A survey canvassing managers’ views on how planning for potential threats benefitted their businesses reported the following results:
- Improved business resilience (77% of people interviewed)
- Reputation protection (72%)
- Meeting customer requirements (69%)
- Fulfilling statutory/regulatory requirements (65%)
- Improved understanding of risk to organisation (63%)
- Competitive advantage gained (42%)
- Planning for the worst 2012, Business Continuity Survey, Chartered Management Institute.
Disruptions to everyday business can impact on your company in different ways. Some take effect in a matter of hours; some could take weeks to make a discernible difference – for example, the impact of an office burning down against a printer breaking. But equally, the long-term impact of these problems could be unexpected. An insurance pay out to move offices may not result in a loss of money, while buying a new printer could cost thousands of pounds you don’t have in the bank. Find yourself unequipped to produce the necessary reports, promotional material, contracts, etc. for a prolonged period of time and your customers might become disillusioned and fail to believe that you are able to deliver business as usual.
Maintaining the continuity of your business demands that you deliver your core products and services (usually the ones that generate the most revenue or profit). To deliver these to your customers the processes that underpin your business must work properly. There are some which you might be able to do without for a while, but there are some that are absolutely vital to the existence of your enterprise. These are known as critical activities. Critical activities will be time dependent, have associated costs and demand that other resources such as man-power are in place.
Here are a few questions you should ask yourself when assessing the effect of disruptions to your critical activities:
- What are the bare minimum resources required to keep activities going? (Think in terms of staff, suppliers, premises, utilities, data)
- What are the potential impacts of a loss or deterioration of critical functions? (Revenue, reputational damage, legal consequences)
- In what timeframe must any lapsed activities be re-established to maintain business continuity?
- How are different functions dependent on each other
So how do I start thinking about business resilience? What questions should I ask myself? The diagram below provides a series of steps that you should think through as part of your business resilience discussion and planning process.
Business as usual demands that you can at least deliver the bare minimum number of products or services to keep your business going – and therefore the minimum resources you need to perform your critical activities. Of course, the better you are at maintaining business as usual and the more of your processes and resources you can keep in place or adapt through the course of a disruption, the more resilient you will be. It may even result in you gaining a competitive advantage over another business which is not set up to handle disasters.
Imagine that your car represents your small enterprise. The infrastructure of your business is the engine, the critical activities and processes you need to run are represented by the fuel, and the success of the business is reflected in the speed the car is propelled forwards.
You don’t always have to be giving it full throttle to get things moving when you release the clutch; in fact, you might only need to give it less than half. But fail to rev enough and the whole machine could stall and cut out on you altogether.
It is dangerous to believe that just because your business is small that it is immune to disruption or can be flexible enough to change at short notice. If you don’t plan ahead, by the time you come to implement changes it could be too late. Taking a strategic approach to managing threats can give you a better understanding of the long-term capabilities of your business under tricky circumstances. But in order to gauge your business’ resilience we must first look at the events that influence them.