What is a Business Recovery Plan, and do I need one?
Simply put, a business recovery plan contains a set of actions to help a business get through challenging times. The plan acts as a strategic tool to help business leaders make better decisions during a period of difficulty, which could ultimately save the business, and its reputation.
Regardless of how businesses have been affected, a recovery plan will have a positive impact on how the businesses progresses. Whether the business has been subject to increased pressures due to rising demands or the business has been completely shut down due to COVID, there are numerous learnings to be implemented as we move forward into the business recovery phase.
What is included in business recovery planning?
The items outlined below provide a framework to create a business document that starts the business recovery phase. The plan will specify immediate actions to be taken to try and prevent insolvency, mitigate risks, avoid business interruption, and protect business assets.
- Summary Statement this is typically written after you have completed the initial draft of the plan as statement that wraps up the impact COVID has had, the plan to address the impact and key areas of focus
- Budget if you are an owner or shareholder defining what you need from the business is an important first step as this may reduce the strain on cashflow. Following this, the business budget should include the following:
- Gross Revenue
- Gross Profit & Gross Profit Percentage
- Overheads
- Net Profit before Tax
- Tax
- Net Profit after Tax
- Drawings (not included in wages)
- Asset purchases or sales
- Local principal repaid/(drawn)
- Other cash movements
- Increase/(decrease) in cash
- Business Key Performance Indications (KPI’s) there should be no more than 5 KPI’s identified. These could include weekly sales, gross profit by product, cash position etc. Having real-time digital reports of your business data and KPI’s will provide significant insight to business performance which will enable agility and real-time problem solving.
- Top 5 Opportunities think about the ways your business has had to adapt and consider if they could be ways to improve moving forward. Many businesses will be considering if the same premises are required, if all the roles are as critical to the business as previously seen or if new lines of revenue have been identified that could be pursed.
- Top 5 vulnerabilities honesty is essential here. Only when the real risks have been identified, can they be really addressed. When your top 5 have been identified, the next step is to highlight those that are the critical challenges (should be no more than 2 or 3) for an additional and more immediate focus. These may be things like deciding on whether selling the businesses is necessary, liquidating part of the business or securing sufficient financial support to trade through the next 3 months.
- Risk Analysis the best way to do this is to complete a risk register which assesses the possibility of each risk and the consequences for your business if the risk is not managed.
- Actions & goals (30, 60 & 90 days) these goals need to be SMART ensuring each action is assigned to someone responsible for completion (considering competency levels).
I have created a business plan, what now?
The more sustainable and robust you can make your business now, the better. Use your business recovery plan to help guide you through these challenging times.
For the first 6 months at least, schedule a review of the plan to take place every 30 days to ensure progress and hold those with assigned actions to account. Ensure challenges that arise are managed with quickly to enable effective implementation of the business plan. After 6 months it may be time to reduce the reviews to quarterly.
As a business leader, whilst this is easier said than done, try to focus on what can be done now rather than what may happen in the future. Working in the now will make you more affective and keep you focused on what influence you can have on the business today.
Where can I get support with my business recovery planning?
There are numerous options for support from GOV.UK who provide business advice and financial advice, to LI forums whereby businesses share their experiences along with any tips they’ve picked up along the way.
If you are looking for specific support to create a business recovery plan, contact us on 01296 681341.
