What is your Plan B?

As the baseball season began, my beloved NY Mets got off to a fast start.  They found a way to win the first 4 games in part because their star 3^rd baseman, David Wright was hot, hitting for a .583 batting average and an on base percentage of .647.  Suddenly, disaster struck!  Diving back to first base, David broke the pinky on his right hand and is out indefinitely.  The Mets replaced him at 3^rd base with a lesser player and promptly lost the next game.

The Mets troubles are not unlike those of most businesses.  If a key player in any business is unable to perform, the business must find a way to continue and hopefully flourish.  In business, the key player could be anyone including suppliers, customers, skilled workers, your computer systems, even you.  The loss of any of these players, even temporarily, can have a devastating effect on your business.

A very important part of business management is finding ways to mitigate the risk to the company brought on by the loss of a key player.  The more contingency planning you do today, the smaller the crisis when the inevitable happens.  Securing your business does not have to be an expensive undertaking, (although at times the risks involve may justify large expenditures), but is instead all about assessing the severity of the risks and your tolerance for the losses that can accompany them.  Here are some examples:

• Let’s imagine a situation where a key supplier of a component part loses her factory in a fire.  She calls you to deliver the bad news that your last order had not yet shipped and that she expected to be unable to start shipping again for 8 to 12 months.  What will you do?  Do you have alternate (secondary, tertiary) suppliers who can pick up the slack?  How long can you continue to operate?  What will it cost you? Higher costs? Lost revenue? Angry customers?

• Imagine a situation where your business partner dies suddenly of a heart attack.  What will it cost to replace him in the business?  Do you have a buy/sell agreement in place?  Do you really want to be in business with his spouse?

• Imagine if a tornado destroyed your offices.  How long will it take to get back up and running?  Do you have your computer systems backed up and your data stored off site?  How current is your backup?  Will your customers be impacted? 

I am sure that you can think of many more examples that apply to your business. Developing a plan will position you to deal quickly with these issues and keep you in the game.