08/10/2009 - 00:00

Contingency plans

08/10/2009 - 00:00

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PLANNING for the unexpected is a critical task that many businesses fail to complete or in some cases even start.

PLANNING for the unexpected is a critical task that many businesses fail to complete or in some cases even start. How would your business cope in the event of a major illness, injury or death of yourself or one of your top staff?

I knew of one business that collapsed unnecessarily after the owner passed away.

This fellow was employing staff and delivering a service to customers. I can't say for sure if he was succeeding, but it certainly seemed that way. When he died the whole operation had to be closed down. The staff had to find employment elsewhere, the customers had to find services and products from a competitor. The premises, equipment and accounts had to be re-leased, sold and closed, the bills paid and credit collected. The expenses for lawyers had to come out of whatever money and assets were available.

The owner of this business knew six months prior that his condition was terminal.

He left behind a wife and two children. Wouldn't it have been more constructive after all his hard work to put a contingency plan in place for the business so it could carry on and continue to make money or, if the family chose, enable it to be sold as a going concern?

What about you? We're talking about contingency plans, which by their very nature are for emergencies that can occur at any time.

Every business should have contingency plans, and they should be reviewed regularly, not after the big bus from the sky has blown its horn at you.

There is a lot to organise in a contingency plan - lawyers, power of attorney, who goes where, who owns what, who does this and what is that?

But there's more than one positive aspect to this exercise.

Let's look at one of these factors which, if done correctly, will ensure things operate the way you want them to, enabling you to leave a gift rather than a messy problem.

The most important part of a contingency plan is the operations manual for the whole business or, in other words, all that stuff in your head such as how to do things, why you do them, your attitude, your visions and what exactly you do. How does the business run?

This process needs more than mere names and titles. While you could tell someone verbally how to do it, the only real guarantee that the information will be around is to write it down.

It's not about simply saying Fred does the financial paper work. It is: make sure clerk number six does such and such with the paperwork which comes from here and goes to there. The information to process it comes from the manufacturer on a Tuesday and must be completed by 3pm on Friday. It is: when the bolt machine breaks down, cut off all power at switch 17 immediately, check for any obvious blockages, then call this number and ask for maintenance and in the meantime utilise the machine operator by getting him to fold cartons down in shipping. Of vital importance, it is: your attitude, the way you feel and act, your future dreams and aspirations. It is: when faced with a choice always lean towards X as a solution rather than Y.

In summary, you are writing down how to do your job including all the little nuances and tricks you do that make your business what it is. By going through this process you will learn what it takes to make things tick without you. It will give you an opportunity to step away from the day-to-day running of the business, and provide a very easy way to teach your successor.

Although it may seem like a big hassle, on the shiny side of the coin you will know more and see more of your business than ever before. Therefore, if that polished oak coffin with the fancy brass handles has to sit on the shelf in the funeral parlour for the next 10 or 50 years you can be content with your business becoming better than you ever thought it could be.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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