When operating and building a business, experienced business owners expect the unexpected. Disruptions to your business operations could bring significant losses or financial damage to your company. However, entrepreneurs and business owners who develop a business continuity plan (BCP) can be one step ahead when problems arise.

Learn about BCPs, including what they are, why you might need them and how they work, in our overview. 

What’s a business continuity plan?

All companies can experience business disruption. Sometimes disaster strikes without warning and harms business operations more than expected. Being prepared for these disruptions can help you hedge against unfortunate situations and mitigate risks. 

A business continuity plan (BCP) is a set of actions and processes—generally outlined in a document—that helps ensure stability in the face of operational interruptions. This document helps proactively solidify processes and procedures to keep operations running in the event of an unexpected disruption.

Companies should write business continuity plans to encompass a wide variety of unexpected occurrences. These may include:

• Natural disasters
• Power outages
• Public health emergencies
• Civil unrest
• Cyberattacks
• Supply chain issues
• Reputational damage
• Acts of terror

How to create a business continuity plan

Business continuity plans can look fairly different from company to company. However, at a high level, business continuity plans should encompass clear policies, recovery strategies and contingency plans for restoring critical business functions and quickly returning to normal business processes. 

Key steps to creating your plan:

1. Assess and identify vulnerabilities. Work across your teams to create a business impact analysis. This analysis should include disruptions that could be disastrous and the impact they could have to finances and operations. Consider covering:

• Vital business functions: An outline of critical business operations that need to be maintained in the event of an unexpected disruption.
• Possible threats to vital business functions: A list of the most likely threats specific to the business. A business impact analysis and risk assessment can help identify potential threats.

2. Create and prepare your plan. Businesses will need to focus on their steps to recovery, response, communications and the roles and responsibilities of team members who will  implement plans. BCPs should include:

• Responsible parties: A continuity team, or a list of employees and team members responsible for executing the business continuity plan.
• Policies for averting and recovering from business disruptions: These policies outline specific operational and contingency plans that detail approaches and processes for restoring critical business operations.
• Contact information for key employees, first responders, vendors, etc.: A list of business continuity team contacts who will help enact contingency plans and restore business operations.

3. Test and train. After creating your plan, train continuity teams and test it out. Even a well-crafted plan can fall short if employees haven't practiced implementing it. You should:

• Outline methods for testing business continuity policies: An overview of the process for testing a business’s contingency plans to make sure they will work in the event of a disaster or emergency.

4. Update your plan. These plans can and should be “living and breathing” documents that are consistently reviewed and updated as needed. Ensure there is a plan to regularly evaluate, test and re-evaluate plans.

The actual contents of a business’s continuity plan will vary depending on the business. Businesses often perform a risk assessment and business impact analysis to identify the largest and most likely potential risks to their operations, and develop the best path to business recovery.

Business continuity plans vs. disaster recovery plans

Business continuity planning is often part of the same conversation as disaster recovery. The two concepts work hand-in-hand. Though sometimes used interchangeably, the terms are not exactly the same and knowing the differences is important.

Here are some key differences between the plans:

Business continuity plans

• Precise, proactive plans for how a business will act during and after disaster scenarios or unexpected business disruptions
• Cover a range of scenarios, both minor and major
• These plans can focus more on prevention and preparation at a holistic level

Disaster recovery plans

• Proactively outline processes for responding in the event of a disaster
• Document how a business will respond to a major catastrophe so it can return to safe, normal operations
• Covers information technology and data security, as well as plans to restore both data access and access to data backups after a disaster

Why are business continuity plans important?

Business continuity plans are an important part of a company’s overall risk-management strategy. They provide a foundation for a business’s approach to disaster preparedness and emergency management in all contexts. A BCP is one step towards building your business resiliency when uncertainty is in the future.

Without a sound business continuity plan—and associated documentation, such as a disaster response plan—a company may find itself scrambling to regain stability in the aftermath of an unexpected event. Business continuity plans exist to provide a path back to stability and generally help in the mitigation of both short-term and long-term risks.

As comprehensive proactive protection, other documentation in the risk-management realm, like succession plans, should complement business continuity plans. The more angles from which businesses can shore up their operations in the event of an emergency or disaster, the more effectively they can mitigate risk. In fact, doing so can help protect your business’s profitability during a catastrophe.