According to KPMG’s Global Business Continuity Management Program Benchmarking Study, nearly 60% of businesses experienced a severe weather event between 2013-2014 that caused them to activate back up plans to keep their businesses running. Especially in construction, where weather is poised to affect operations at any time, having some kind of plan for dealing with severe weather is a necessity, not a luxury.
However, according to the Federal Emergency Management Agency, 40% to 60% of small businesses never reopen their doors after a disaster. Another take on that from the U.S. Small Business Administration puts business failures after a disaster at 90%. In either case, the outlook is not good. A big part of surviving unexpected events is to have given them some thought, and to have planned for them.
A continuity plan is a marketable commodity. It tells your clients and partners that you’ve invested in the unthinkable.
While cold weather may seem like a minimal hurdle in need of little to no attention, only 32% of American workers rate their employers with grades C, D, or F in their preparedness for winter weather, according to survey results reported by FM Global, international insurance provider. Imagine the consequences of this amount of ill-prepared employees on your jobsite should disaster strike.
While weather related incidents did increase 9% percent from one KPMG study to the next, other high level risk on the rise is the loss of electricity, which increased 5% from one survey year to the next.
So why don’t businesses have continuity plans? It turns out about a third of the time it’s merely due to disinterest. Over 16% of respondents to a 2015 Continuity Central survey cited lack of top management buy-in and support as a big challenge in developing business continuity plans. Another 16% of respondents said lack of business unit support, the low priority assigned to continuity, and apathy, impeded continuity efforts at their organizations. Therefore, tackling the apathy regarding business continuity is a big step toward getting a plan in place.
Continuity as an Asset
A continuity plan is a marketable commodity. It tells your clients and partners that you’ve invested in the unthinkable. Many government contracts require a continuity plan, so if you have one in place you don’t have to scramble to create one when you find a project you want to bid on. If you want to improve your bonding eligibility and maybe even the cost of your insurance, having a continuity plan will help.
Continuity for Recovery
When you don’t have a continuity plan it takes longer to get the business functioning again after a disruption. The costs while business is down extend beyond just lost business. For construction firms, downtime affects the project schedule, which in turn affects claims. Your business suffers from uncertainty and that leads to a loss of confidence. Taken together, it’s more difficult to recover, and it takes more time to earn back confidence from clients and partners.
Continuity as Insurance
If you rely solely on insurance to help you recover from a disaster, you will likely lose more than you realize. Insurance probably won’t get back lost business, and probably won’t help you recover market share or recoup the influence you lost in your specialty.
A very large part of financial planning involves planning for risk. There’s no way to totally avoid risk, and construction is a very risky business. That’s why continuity planning is essential to your financial stability.