Make a business continuity plan: A must-have for successful businesses

Make a business continuity plan: A must-have for successful businesses

Kim Mercado
By Kim Mercado
Sep 7, 2023
9 min read

The adage "hope for the best, prepare for the worst" is more relevant than ever when owning a business. While you'll want to stay optimistic and excited for the future, ensuring your business is prepared for all situations that could affect how it operates is smart.

A business continuity plan can help you navigate a business crisis and help to reduce anxiety and stress.

What is a business continuity plan (BCP)?

A business continuity plan identifies critical business processes and outlines strategies to minimize the impact of disruptions. 

Events that could impact your business might include:

  • Water damage from burst pipes or a leaky roof
  • Broken or malfunctioning equipment
  • Theft or vandalism to your business site and/or assets
  • Illness, injury or death of key personnel
  • Natural disasters, such as fires, hurricanes, tornadoes, earthquakes or floods
  • Security emergencies, such as terror attacks and active shooter events
  • Accidents that damage business property
  • Sabotage, such as cyber attacks and hacker activity
  • Damage to infrastructure, such as power, communication or transportation services

According to FEMA, about 25% of businesses do not reopen after disasters. Businesses with solid continuity plans are more prepared to survive incidents like these, allowing organizations to maintain operations, serve customers and protect its reputation.

Business continuity plan vs. disaster recovery plan: Is there a difference?

A business continuity plan and a disaster recovery plan are both essential components of an organization's overall resilience, but they serve different purposes.

A BCP focuses on the overall continuity of operations during and after a disruptive event. It’s a broader plan that contains contingencies for processes, financials, assets, employees and company stakeholders that could be affected by the business disruption.

A disaster recovery plan focuses on the logistics and procedures immediately following a disaster and usually includes instructions anyone can follow. Disaster recovery plans are narrower and don't account for all contingencies.

Both plans are crucial for organizations to mitigate risks and minimize downtime in the face of unforeseen events.

How to create a business continuity plan

The business continuity planning process involves assessing your potential risks, identifying the factors most crucial to continued business operations and finding contingencies for those elements.

 It also involves implementing preventative measures that will help minimize the damage if something goes wrong.

1. Business continuity risk assessment

List of all the possible threats and vulnerabilities to your business's smooth operation. Dependencies to consider:

  • Geography. Do you live in an area prone to a certain type of weather event or natural disaster, e.g., hurricanes, flooding, earthquakes or tornados?
  • Utilities. What are your requirements for telecommunications, electricity and running water services? Can your business function during a power outage or a water shutoff?
  • Transportation and supply chain. How much does your business depend on access to transportation? Or what would happen if you couldn’t access certain products?
  • Property. What will happen if your office or key equipment is damaged, destroyed or inaccessible?
  • Cybersecurity. How much does your business depend on information security? What might happen if someone hacked into your system?
  • Employees. Who are your key personnel, and what functions do they fill in your business? What would happen if they suddenly didn’t work for you?

For more information on assessing your risks, read: Risk assessment: The biggest risks small business owners need to consider

2. Make contingency plans

Now, next to each risk you’ve identified, write down a few possible solutions or contingency plans.

For example, if your internet service stops working, can you temporarily move somewhere else with internet access? This might mean working out of your home, a coffee shop or a hotel. Or if one of your key employees suddenly falls ill, is there someone in the company who can stand in for them until you find a replacement?

In creating contingencies, consider the following:

  • Can critical business functions like operations and sales return after an unexpected event? How will this impact your customers and employees?
  • How will you meet the demand for your products or services if your assets are damaged or employees are unavailable?
  • How will you operate if your office or worksite is impacted? Will employees work remotely or at an alternate site? Which team members are your responders?
  • What is the likelihood of this risk occurring?

Remember: Prevention is better than a cure. Your BCP should include preparedness measures, not only recovery strategies. 

For example, suppose your company handles sensitive material from your clients. In that case, you should have a robust information protection system to prevent hacking and cyber attacks. This might include having data backups in the cloud or a local data center.

Or, if you live in an area prone to earthquakes, choose an office space that meets the local earthquake safety regulations and plan your office space to ensure that furniture and sensitive items are properly secured.

3. Check on available financial resources

One of the most important reasons to create a business continuity plan is that it’s expensive to recover from a crisis or outage. Even something as simple as an internet outage causing downtime might cost a small business $137 to $427 per minute.

But if the disaster is something more significant that may force you to temporarily close your business or make large purchases, you'll need a plan for accessing funds. 

This could mean accessing the cash reserve in your bank account, filing insurance claims or applying for financial relief in the event of a disaster. Include what to do, whom to contact and any relevant information in your contingency plan.

4. Create a communication plan

Your plan’s success will largely involve communication with various groups, including employees, partners, vendors, service providers, customers and more. You’ll want to identify who matters the most in various situations so you can prioritize how, what and when you communicate with them.

For example, if a water main break down the street has caused a water shutoff in your salon, whom should you contact and how? You might contact your employees first to explain the situation and have them contact their clients to reschedule appointments. You might also put a sign on the door for walk-ins.

Create a list of contact information for your employees and most important stakeholders. While a digital list is fine, keep a hard copy available in case of a power or internet outage.

5. Review your insurance

Business continuity plans are not the only kind of business risk management you should consider. Another important component of your business continuity program is business insurance

Insurance is one way of ensuring an unexpected event won't financially ruin your business. It can help pay for property damage, medical costs, replace equipment and protect your business against costly lawsuits.

Now that you've assessed your largest risks, you might review your existing business insurance for sufficient coverage or protect your business with other policies if you feel you need more protection.

Test your business continuity strategy

The only way to be sure the business continuity plan is thorough enough is to test it. You can test it in several ways:


The simplest way is to read your plan with your staff and locate any weaknesses or points you may have forgotten to consider. This is more of a review than a test, but it ensures that all your employees know what to do.


A walk-through is a more thorough way to test the plan. Pick a specific disaster scenario and ask your employees to verbally walk through that scenario. How would they know something was wrong, and how would they respond? You can go through multiple scenarios, looking for anything you missed.


This is the most foolproof way to test the plan, but it may be impractical for some small businesses. Have your staff enact the scenario and practice their responses — just like a fire drill.

How NEXT helps small businesses thrive

NEXT specializes in business insurance for small businesses and self-employed workers. We offer a fast and easy online process for creating custom insurance packages for thousands of types of small businesses.

Our 100% online application lets you get a quote, choose your coverage and get your certificate of insurance in less than 10 minutes.

Got a question? Our team of licensed, U.S.-based insurance professionals are standing by. 

Get a free instant quote from NEXT.

Make a business continuity plan: A must-have for successful businesses


kim mercado
About the author
Kim Mercado is a content editor at NEXT's blog, where she writes and edits posts for small business owners. She enjoys helping entrepreneurs solve their business challenges and learn about insurance. Kim has contributed to Salesforce, Samsara and Google.

You can find Kim trying new recipes and cheering the 49ers.

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