You may be aware that over 33 coun­tries, in­clud­ing many in the Eu­ro­pean Union, have en­cour­aged cit­i­zens to pre­pare for ma­jor dis­rup­tions by keep­ing at least a three-day sup­ply of ba­sic sup­plies. While these na­tions may have dif­fer­ent rea­sons, the mes­sage is clear: we live in a more un­cer­tain, riski­er, and un­pre­dictable world. The “Big One” is not a once-in-a-gen­er­a­tion neg­a­tive event. It is any cat­a­stro­phe that can dis­rupt cash flow, cus­tomer ser­vice, op­er­a­tions, and sup­ply chains.

In ad­di­tion to the top haz­ards—geopo­lit­i­cal and mil­i­tary ten­sions, cy­ber­at­tacks on crit­i­cal in­fra­struc­ture, and en­er­gy grid fail­ures—ex­treme weath­er events are an­oth­er risk. A new kid on the block is just get­ting start­ed: Su­per El Niño. Sci­en­tists ex­pect it to dis­rupt food and wa­ter sup­plies in north­ern South Amer­i­ca. WASA is al­ready strug­gling to dis­trib­ute enough wa­ter to cer­tain ar­eas. Be­cause dis­as­ter plan­ning is weak at sev­er­al lev­els of our so­ci­ety, a busi­ness that in­vests in pro­tect­ing its in­fra­struc­ture and sup­ply chains has a good chance of con­tin­u­ing with lit­tle dis­rup­tion.

Be­cause small firms are more vul­ner­a­ble to ex­ter­nal shocks giv­en their lim­it­ed re­sources and lack of spe­cialised ex­per­tise, you, as an en­tre­pre­neur, need to build a more re­silient or­gan­i­sa­tion in a low-cost way. This is not about be­ing a dooms­day prep­per—plan­ning for the end of the world, it is about in­cor­po­rat­ing risk man­age­ment in your op­er­a­tions.

What must keep work­ing

The worst place to start is from fear, as it trig­gers high cor­ti­sol lev­els that can dis­rupt clear man­age­ment think­ing. This fight-or-flight re­sponse can un­der­mine your abil­i­ty to craft a good con­ti­nu­ity plan. Peo­ple of­ten ig­nore psy­chol­o­gy when it comes to dis­as­ter be­hav­iour. While not all crises are the same, the first step is to iden­ti­fy what needs to run. These can in­clude serv­ing cur­rent cus­tomers, col­lect­ing pay­ments, pay­ing em­ploy­ees and crit­i­cal ven­dors, ac­cess­ing key sys­tems and records, com­mu­ni­cat­ing with staff, cus­tomers, sup­pli­ers, and ad­vi­sors, pro­tect­ing in­ven­to­ry, equip­ment, and da­ta.

Some sys­tems, like back­up pow­er, can be re­stored in min­utes; oth­ers will take days. Know­ing which is most crit­i­cal sup­ports bet­ter de­ci­sion-mak­ing and im­ple­men­ta­tion. In fam­i­ly firms, the ab­sence of a leader might leave the or­gan­i­sa­tion with a vac­u­um as the younger or in­ex­pe­ri­enced next gen­er­a­tion might be lost.

Sim­ple con­ti­nu­ity plan

SMEs do not need a large and vo­lu­mi­nous file on dis­as­ter prepa­ra­tions. This more com­pre­hen­sive doc­u­ment can come lat­er. In fact, the best plan is usu­al­ly short, clear, and easy to use. At min­i­mum, the plan should an­swer five ques­tions:

1. Who is in charge if nor­mal lead­er­ship is un­avail­able?

2. What are the first three de­ci­sions that must be made?

3. How will the team com­mu­ni­cate if email, phones, or the of­fice are un­avail­able?

4. Which cus­tomers, ven­dors, and part­ners need to hear from us first?

5. What sys­tems, doc­u­ments, pass­words, and con­tacts are re­quired to restart op­er­a­tions?

Put the an­swers in one doc­u­ment. Store it in more than one place. Re­dun­dan­cy is not be­ing in­ef­fi­cient.

Pro­tect your cash po­si­tion

In a cri­sis, rev­enues may be slow to re­cov­er, but ex­pens­es must be paid. Your mort­gage, in­ter­net, in­ter­na­tion­al sup­pli­ers, and em­ploy­ees who need to know that their ex­tra ef­fort will be re­ward­ed. Cash is king means some­thing dif­fer­ent. You may need to re­pair dam­aged equip­ment, re­place flood­ed build­ings, buy fu­el for the gen­er­a­tor, pay for over­time, and hire clean-up crews to bounce back quick­ly. Re­mem­ber, if you can re­store nor­mal op­er­a­tions faster than your com­peti­tors, you can gain valu­able busi­ness.

Since cash earns very lit­tle re­turns, it has an op­por­tu­ni­ty cost. Re­serves in lo­cal and for­eign cur­ren­cy for 30 to 60 days are ad­e­quate; speak with your bank to have over­draft fa­cil­i­ties on stand­by and cred­it ap­provals for re­cov­ery while in­sur­ance pay­ments are pend­ing. These have lit­tle cost to your busi­ness. Se­cure liq­uid­i­ty be­fore you need it.

Weak­ness of one

Every busi­ness has sin­gle points of fail­ure. We some­times see weak points in crit­i­cal sys­tems un­til they fail. Com­mon ex­am­ples in­clude on­ly one per­son knows how to run pay­roll, on­ly one ven­dor sup­plies a crit­i­cal prod­uct, on­ly one lap­top has key files, on­ly one per­son has ad­min ac­cess to busi­ness ac­counts, on­ly one lo­ca­tion can ful­fil or­ders, on­ly one em­ploy­ee un­der­stands a core sys­tem, and on­ly one fam­i­ly mem­ber holds the key cus­tomer re­la­tion­ships.

The so­lu­tion is not to du­pli­cate every­thing overnight. The so­lu­tion is to iden­ti­fy the most dan­ger­ous de­pen­den­cies and re­duce them one by one.

Re­view in­sur­ance

Many of us are un­der­in­sured or unin­sured. There is a fa­mous say­ing: In­sur­ance is like a para­chute; get it be­fore you need it, cause when you need it, you can’t get it! See in­sur­ance as a strat­e­gy, not an ex­pense. Ar­eas to re­view may in­clude prop­er­ty cov­er­age, busi­ness in­ter­rup­tion cov­er­age, cy­ber li­a­bil­i­ty, equip­ment break­down, key per­son cov­er­age (for suc­ces­sion), gen­er­al li­a­bil­i­ty, pro­fes­sion­al li­a­bil­i­ty, em­ploy­ment prac­tices li­a­bil­i­ty, work­ers’ com­pen­sa­tion and com­mer­cial ve­hi­cle. Choose a knowl­edge­able in­sur­ance ad­vis­er who can re­assess your busi­ness needs as they change.

Com­mu­ni­ca­tion plan

In a cri­sis, si­lence cre­ates con­fu­sion. Con­fu­sion un­der­mines long-term re­la­tion­ships. A strong com­mu­ni­ca­tion plan should iden­ti­fy who speaks for the busi­ness, which chan­nels to use, and what mes­sages to send first. Pre­pare ba­sic tem­plates in ad­vance for com­mon sce­nar­ios: tem­po­rary clo­sure, de­layed ser­vice, al­ter­nate op­er­at­ing hours, sup­ply dis­rup­tion, and em­ploy­ee re­port­ing in­struc­tions.

Plans on pa­per are equiv­a­lent to the­o­ry. While plans are im­por­tant, ex­e­cut­ing what is filed away is more crit­i­cal. If a fire breaks out, do all em­ploy­ees know how to use an ex­tin­guish­er? The­o­ry must meet prac­tice. Test­ing sys­tems and do­ing drills can make your or­gan­i­sa­tion more re­silient. The best con­ti­nu­ity plans are not cre­at­ed once and for­got­ten. They are main­tained as part of nor­mal busi­ness dis­ci­pline. Up­date your re­sponse to sce­nar­ios and use the agili­ty that small busi­ness­es pos­sess to bounce back from a dis­as­ter.

Saj­jad Hamid is an SME & Fam­i­ly Busi­ness Ad­vis­er and a Fel­low of the Fam­i­ly Firm In­sti­tute. He can be reach at en­tre­pre­neurt­nt@gmail.com or on LinkedIn at www.linkedin.com/in/saj­jad­hamid