Why does your business need a backup plan? Scottish solicitor

Recent occurrences have once again demonstrated how crucial it is for companies to make sure that they have suitable backup plans in place to recognise and manage the main risks that concern them.

The majority of large organisations have complex business backup plans, while smaller companies and startups may not always have this kind of support. It is true, though, that banks and investors will pay more attention to these strategies as part of their due diligence if these companies look to raise capital in the upcoming months and years.

When choosing between rivals, suppliers and current and potential consumers will also be examining their supply chains to identify any flaws. When determining the amount of coverage to provide and the corresponding premiums, insurers will also consider a company’s emergency preparation. Finally, if something goes wrong and the management team is seen as being unprepared, there are reputational concerns for the company to take into account.

Every firm may confront distinct risks when implementing a contingency plan, but the following fundamental inquiries will apply to all:

People: Does the company depend on the availability of the abilities of a select group of crucial employees, or perhaps just one? Who can temporarily or permanently take their place and replace them?

Ownership/management: Is there a suitable plan in place for the succession of ownership? Do the shareholder agreements and articles of association reflect this?

Finances: Is the company dependent on a single bank or investor? Is there enough headroom and what additional banking and financing options are available if needed?

Property: What occurs when access to business premises is impeded by damage or regulatory restrictions? Are documents backed up and stored safely? Do they have the required tools and employment policies in place, and can workers work from home?

Customers and suppliers: Does the company’s survival and prosperity depend on a single client or vendor? Do current agreements and standard operating procedures need to be revised to make it more clear who is responsible for what in the event of specific events?

Technology: Do you have suitable backup and disaster recovery strategies in place, and do you test them frequently? Is the hardware I have now adequate, or do I need to invest more?

Insurance: Does the coverage provided by the current policy suffice?

Once a plan is established, it should be periodically evaluated to make sure it still meets the needs of the company. As the firm grows, there will be new risks that arise and old risks whose prominence will change over time.