Small Business Recovery Planning – What is a Business Recovery Plan and How to Avoid Business Insolvency?
In the world of business management best practices, small business recovery planning is one of the key activities aimed to avoid business insolvency and develop a contingency action plan. The term “business recover planning” also refers to “disaster recovery planning“. Most experienced business owners perfectly understand the need for disaster planning to ensure their businesses’ survival when disaster strikes. Crisis management and business recovery solutions require small companies to make their best to take into account both inside and outside factors influencing business stability and continuity. Some small-sized companies employ business recovery professionals and specialists who analyze their business activities, make necessary evaluations, and finally give helpful small business recovery advice. Others prefer using their own internal resources to cope with the challenging business environment and outline a business recovery plan template.
In fact, no matter what way you’ll choose. The key idea is that as a good business owner and a talented manager you need to know well about small business recovery planning, learn key components of a successful business recovery plan, and find out common ways for fighting business insolvency and bankruptcy. This article is designed to help you with handling these challenges.
Business Recovery Plan Definition
In simple terms, a business recovery plan means a set of actions to help a company get through difficult times. It is a strategic business management tool for making better business decisions during a down-turn and saving the company’s reputation. The purpose of this business document is to state about the start of the business recovery phase and specify immediate actions to be taken to fright business insolvency, mitigate risks, avoid business interruption, and protect business assets.
The key advantage of small business recovery planning is that having a plan allows you to state who is in what charge, what assets are to be renewed, what business data must be recovered, and how your small company will keep operating during the business recovery phase and how employees will communicate with other.
Developing Business Recovery Plan
To develop a successful business recover plan, you’ll need to know the key components that make the content of this document. But first let’s see what impacts are required to be considered when developing a recovery plan template for your small-sized organization:
- Scope of impact. By estimating an extent of the overall impact made by disaster, you’re likely to take the first steps in developing a recovery plan outline for small business. Answer the next question: What is the disaster limited to?
- Duration. Once the scope is determined, you need to estimate an expected duration of the crisis. This will help you set deadlines and goals for your recover plan template.
- Operational impact. The crisis will influence business operations so your task is to define what operational impact is likely to occur. This will help make your business recover plan template linked to real operational needs and expectations.
- Employee impact. The crisis situation will have an impact upon the employees working for your small business company. The impact might be reduction of real wages, increased employee turnover, increased competition in labor market, etc. your goal is to measure the impact and add cost estimations to your small business recovery document.
- Reputation. Will disaster consequences reduce your business reputation? If so, to what extent? Answering these questions will help you plan for effective partnership within the challenging situation and develop a contingency action plan to avoid small business insolvency.
Considering these different impacts and developing effective responses are the first steps in small business recovery planning. Once the impacts are considered and appropriate responses are developed, you can proceed with specifying the components of your sample business recovery plan. 6 key components are listed below:
- Introduction. This section of your small business recovery plan template includes executive summary, a short description of the business, and the table of contents.
- Situation Analysis and Errors. This component contains a description of the situation that makes the business less effective and losing profits. The situation analysis is required to determine what errors have been made by the company management.
- Restructuring Company. This section of your business recovery plan template describes your proposal for reorganizing an existing organizational structure of the company. You need to make a high-level overview of the business and propose your own vision on how to restructure it and fight small business insolvency.
- Business Management. Now it’s time to describe specific actions you’ll take to implement your ideas according to your proposal. You must present a detailed action plan for the recovery implementation. Perhaps, you may need to hire a business insolvency lawyer who will give you valued business recovery advice and help with business management and small business recovery planning.
- Restructuring Marketing Strategies. There’s no single approach to developing a marketing recovery strategy. There’re only common recommendations for effective planning of marketing recovery. Your business recovery plan outline should contain tasks for renewing existing market penetration strategies, creating a new communications strategy, reorganizing distribution channels, auditing sales approaches, and setting new milestones and deadlines.
- Financial Recovery. The final component of your sample business recovery plan is most critical to achieving success. Before planning for financial recovery, you have analyzed the situation and errors, made proposal for restructuring your small business company, developed an implementation plan, and selected ways to approach a marketing recovery strategy. All this information will be used to develop a financial recover plan. Such a plan will focus on current financial situation (financial statements, debts, forecasts, charts & graphs) and proposal for improving it.
You can take into account the six components (sections) of a complete business recovery plan template to fight business insolvency and ensure stability and continuity. If you feel you can’t cope with this challenge, you can hire a business insolvency service company that will help you with analyzing your business, calculating losses and developing contingency action plan.