Business continuity planning helps keep key processes running so your company can function during a crisis. Effective strategies prioritize events based on their impact on your revenue, customers, and compliance.
Learn how to write a business continuity plan for your small business with our step-by-step guide. We break down simple ways to assess risks, analyze impact, and test your continuity strategy.
What is a business continuity plan, and who needs one?
A business continuity plan explains how your company operates during and after an emergency to minimize disruption and loss. It outlines who handles essential duties and time-sensitive tasks, like running payroll or switching to a backup supplier. Business continuity planning involves regular tests and updates to ensure all steps can be completed quickly and accurately.
Risks threaten nearly every small business and solo entity. Indeed, 91% of respondents to PwC's 2023 Global Crisis and Resilience Survey experienced “at least one disruption other than the pandemic” (a 22% increase since 2019). Cyberattacks and supply chain disruptions top their list of biggest concerns.
Therefore, all-sized companies benefit from having a business continuity plan. However, corporations in some industries must create a BCP. For instance, the Financial Industry Regulatory Authority (FINRA) requires member firms to maintain plans under Rule 4370.
How to build a business continuity plan in 9 steps
Although business continuity plans vary according to industry and company size, most include similar sections. A solopreneur without employees will have a less extensive guide than an entrepreneur with multiple locations and a large staff.
1. Identify critical business functions
If your operations were stopped tomorrow, what functions must keep running for your company to survive the next 48 hours? What about a week? This answer is the foundation for your business impact analysis (BIA).
Create a list of essential activities and processes that affect your cash flow, customers, or legal compliance. Examples include payment processing, customer communication, order fulfillment, and service delivery.
2. Map the dependencies each function relies on
Mapping dependencies helps you see where a failure, such as a broken laptop or a ransomware attack , could stop operations. Put a one-page dependency table together in a spreadsheet to visualize dependencies and find where you’re over-reliant on one person, device, or vendor.
Consider what’s required for each function, such as:
- Tools and software.
- Equipment and hardware.
- Staff or contractors.
- Vendors and suppliers.
- Data sources.
- Location-specific needs.
3. Conduct a business impact analysis (BIA) with templates and risk scoring
A business impact analysis helps determine the impact if a critical function were to stop. Estimate the consequences to decide which activities to restore first. You can enter processes into a spreadsheet, a business impact assessment template, or an online risk scoring tool.
Assess the following:
- Maximum allowable downtime (MAD): List the hours the function can be unavailable before seriously harming your business, like 24 hours for invoicing or three hours for phones.
- Financial: Estimate how much you lose per hour or day, such as $70 an hour in missed billable time or $300 a day if your website doesn’t work.
- Customer: Determine customer impact on a low to high scale, with low being a short, unnoticeable delay and high affecting them immediately.
- Legal: If delays cause compliance problems or break a contract, mark them as high priority. These include customer data breaches and missing payroll.
- Operational: Decide how important the activity is to operations. Anything that stops multiple business processes and disrupts business as usual is high-impact. If you can still operate for a short time, it’s medium.
You can also add a column for "Likelihood" to occur based on general estimates. Assign scores (one to five) to each function’s category and total them. Restore services or create workarounds for the highest scores first during a disruption.
4. Decide which risks are most likely to disrupt operations
A risk assessment shows what events could affect your business and helps prioritize planning scenarios. You can assess risks using financial software, online risk assessment tools and templates, or project management platforms. Consider which ones have the highest likelihood and impact on operations. Think about situations such as internet outages, a recession, cyber incidents, or a business owner's illness.
5. Develop business continuity strategies and backups
When looking at each major risk, what keeps your company running? Walk through business continuity at every level, including vendors and supply chains, power, internet, communication, and data. Think about backups or redundancies you could use to keep downtime to a minimum.
These include requiring service level agreements (SLAs) from core providers or switching to a recession-proof business plan. Physical locations and even home offices may consider generator access or a backup ISP.
The key to creating a resilient business is having a tested strategy in place so you can take action before, during, and after issues arise.
6. Create business continuity response procedures
This step is what keeps your business operating when your standard setup fails. It’s like having playbooks for each disruption so you don’t have to think about what to do.
List high-impact situations and document the following:
- Triggers: What activates the business continuity plan? It could happen when a business owner is hospitalized or when a payment processor is down.
- First hour actions: What are the minimum steps to stay operational? These include working at an alternative location or using a backup payment provider.
- Roles and responsibilities: Who switches to backup tools, manages vendors, controls finances or payments, and communicates with clients?
7. Establish clear communication procedures
Your business continuity communications plan explains how you coordinate work, reassure customers, and run your business during disruptions. Along with a contact list, the document outlines how you will communicate if your email or your business phone system is down, and who will update employees, customers, and vendors (and how often).
Create messaging templates, notifications, and automated workflows to reach people faster. This is important for remote teams, as the sooner they know which backup procedures to follow or when software will be available, the sooner they can get back to work.
8. Document backup and recovery basics
As part of emergency preparedness planning, you should be backing up and testing restore files. This section of your business continuity plan discusses how to access online backups, restore files, and which ones to bring online first. It also lists locations for offline copies.
9. Test, train, and maintain your BCP
Test and update your business continuity plan at least once a year. Conduct tabletop exercises by walking through a scenario and ensuring everyone understands their role. If payment processing goes down on invoicing day, is your current BCP clear and up to date?
Train staff on the steps they’re responsible for, and check quarterly to make sure your backup tools and systems work. Create a checklist to confirm backups are valid and alternative vendors are still available. Track basic metrics like how long it takes to restore operations after an incident (your RTA or actual recovery time). Update your business continuity strategy when technology systems, suppliers, or teams change.
Emergency planning: Business continuity vs. disaster recovery
Preparing for emergencies helps you develop disaster recovery and business continuity strategies. But different types of plans have distinct purposes. The key to creating a resilient business is having a tested strategy in place so you can take action before, during, and after issues arise.
Here’s how emergency preparedness, business continuity, and disaster recovery plans differ:
- Emergency response or action plans: EAPs protect people and are required for some workplaces. Response plans stabilize critical situations so recovery or continuity can begin.
- Business continuity plan (BCP): Continuity planning prioritizes keeping your store open and running (using backups or work-arounds) regardless of the circumstances.
- Business recovery plan: After stabilizing your business through response and continuity strategies, your recovery plan returns it to normal operations.
- Disaster recovery plan (DRP): This strategy focuses on restoring technology, information, and infrastructure.
How small businesses benefit from a business continuity plan
Assessing threats and having an actionable plan helps your company survive a recession, natural disaster, or power outage. A business continuity plan improves your resilience, making your organization more stable, trustworthy, and competitive.
Here are a few ways business continuity planning benefits your company:
- Increases organizational awareness: Going through the planning process can alert you to insurance issues, unknown risks, or supply chain concerns. It also encourages your staff to take their roles seriously and understand what’s expected of them.
- Reduces financial risks: Having strategies to resolve employee, supply chain, or location problems can decrease downtime, allowing you to continue to generate revenue during an emergency.
- Prevents customer dissatisfaction and improves trust: Communication issues and business disruption can lead to clients turning to your competitors. Remaining operational means you can fully support customers in their time of need and keep their trust when you need it most.
- Improves employee relations: Instability can lower worker retention rates. A BCP shows your staff how and when you will communicate during a crisis. Also, you can engage them during the process to demonstrate their importance to your small business.
- Ensures small business compliance: Regulations and obligations exist no matter what goes on with your company. Your business continuity plan explains how you will meet industry standards and comply with employment laws following an emergency.
Business continuity plan tips and resources
Learn how to respond, continue, and recover after disruptive events using free resources and tools. You can explore different types of Small Business Administration disaster assistance, complete an online risk assessment, or use free BIA templates.
Here are additional business continuity planning resources:
- Free business continuity plan template (PDF).
- Small Business Readiness for Resiliency Program.
- Free risk assessment table (PDF).
- SBA disaster relief loans.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
