Over the past 18-months the unthinkable happened – the world not only suffered a black swan event caused by the global pandemic but South African business suffered the second this past week as protests and largescale looting took place in KZN and Gauteng.  For Europe, the second occurred as Germany, Austria and Belgium suffered devastating floods, destroying entire villages.

According to the Investopedia definition “a black swan [event] is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight.”

Thinking of the global pandemic and the resulting international lockdown which has been in place since March 2020 which, not only disrupted, but crippled multiple businesses and in some cases, entire industries, for example, hospitality and tourism, restaurants and bars to name a few, the question is whether they had prepared for such an event by having a Business Continuity Plan in place and/or some form of Disaster Recovery Plan.  That said though, a SME Disaster Recovery plan is usually short term, for example 3-months as they are generally not capitalised sufficiently to provide a longer-term option.  Larger businesses, such as banks etc, are generally able to put provisions in place for 6-12 months and historically, even plan for the next 5-years but that is the exception rather than the rule and is usually a regulatory requirement.

In hindsight, let’s look at what a small business needs for a Business Continuity or Disaster Recovery plan.  Firstly some form of financial provision should be in place, particularly for a business which sells a product. 

Let’s deal with the capital provision and calculate exactly what the provision number should be.  For a manufacturing factory which had been looted, you may need to provide for:

1. Replacement of manufacturing and operations equipment;
2. Raw materials to produce the products;
3. Alternative premises;
4. Office furniture;
5. Replacement computer equipment i.e., printers and laptops – in fact, I recommend that laptops are standard equipment for relevant staff and that they take these home every day  and the business should insure these;
6. Salaries for 3-months – the maximum time it should take to get your factory back in production – and yes, this is doable if your BCP is accurate – the pandemic excluded.

As an entrepreneur and someone who knows his/her business, you should have a few more points.  However, I caution that you be realistic and only provide for the most essential things or your provision will not deliver as planned.

Get your database and all IT, based in the cloud, i.e., Dropbox, iCloud, Google Drive and so on.  This should be an option even if you hold your own servers on site.  Computer hardware is then merely a tool to access your database and software and your IT staff can get your business back online within 24 hours.

I recommend that:

1. Your business database is stored in two cloud storage options and not on computer desktops at all (very NB!!);
2. Staff should recall and save files directly to one dedicated storage as part of their daily tasks and IT should save the day’s work in that cloud storage to the second cloud storage at the end of each day.

Think on this:

Will your competitors be as well prepared to go into full production within 3-months? 

Can you monopolise the market until they do?

That said though beware:

Do not overcharge, it will damage your reputation and when your competitors go online, you might find your clientele moving allegiance.  Always be fair – try not to recover all your losses from already distressed clients, everyone is going through hard times.

In a nutshell:

1. Identify the scope of the plan;
2. Identify essential functions;
3. Identify main business areas;
4. Identify dependencies between various business zones and departments;
5. Determine acceptable downtime for each essential function;
6. Create a plan to continue operations;
7. Cost points 1 – 6 carefully;
8. WRITE your BCP – get it on paper;
9. Share it with relevant staff and make sure that each of them have a written procedure for their specific actions in the event of a disaster.
10. Funding for disaster recovery in the case of the pandemic, could come from your insurance – take the Business Continuity insurance it will increase your premium, but it is worth it.  Alternative funding could come from your own provisions, I encourage businesses to save a third of their profit each month for just such an event as the looting of businesses.  This will be dealt with in depth in a guide which will be posted to www.fourstrings.co.za shortly.

VERY IMPORTANT!!

During normal day-to-day business, practice the BCP – physically practice – get staff out of the office and run through the procedures.

I hope you are able to reinstate your business, South Africa desperately needs you.