PSU Insight

Writing Your Business Plan

Battling the OOPs Factor (Contingency Plans)

Having a set of written procedures is very helpful in running your business effectively and efficiently. Unfortunately, defining the steps you take when some anticipated event occurs just isn’t enough. You also need to define what you’ll do when the unexpected happens. You need contingency plans.

Of course, you can’t anticipate every possible crisis that might occur, but there are a variety of problems that you should be prepared for. Some possibilities include —

  • What will you do if your computer crashes? What if it takes a week to get it repaired? What if you lose all your data?
  • What will you do if you lose power or phone service for more than a few hours?
  • What if the stock market drops and your investments turn into losses?
  • What if a competitor announces a product or service similar to yours.... for half the price?
  • What if an airline strike stops you from flying to an out-of-town speaking engagement?
  • What if a drivers' strike in your overnight delivery service brings shipping services to a crawl?

The characteristics of your particular business will determine which problems are likely to be troublesome.

  • If you live along the Gulf Coast of the U.S., you probably don’t need to have a snowstorm-preparedness system in place. But it would be a good idea to know how you’ll storm-proof your business when a hurricane strikes.

  • If you only use your computer for word processing, you can probably survive a computer failure (or a prolonged power failure) without a problem. But if you operate an e-commerce site and you depend on accessing the Internet dozens of times a day, you need an alternative in case your computer system is unusable.

Some people don’t like to develop contingency plans. “After all,” they protest, “I hate to spend time worrying about something that isn’t likely to happen.” It’s certainly true that you should spend most of your time on your financial plan, your marketing plan, your product plan and other aspects of your business plan.

But is it worthwhile spending a few hours developing contingency plans that can save you days — or weeks or even months — if the “unthinkable” does indeed happen? That’s not a waste of time, that’s a smart investment!