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Business contingency plan
2020-03-31 /

How to Create a Business Contingency Plan

When an unforeseen disaster strikes, how can you avoid it? You can’t. All you can do is be prepared to face it, stand ground, and get through. As an entrepreneur, you know that a backup plan is vital in every aspect of your business. When faced with a crisis, what you need is a contingency plan to lessen the impact and control the outcome.

In chess, players calculate their every move. For grandmasters, they calculate up to 15 moves to ensure a win. Every move is deliberate, judging from the position of every piece and the prediction of the opponent’s moves.

Your startup is the same. Sometimes when things are going smoothly, plans are pushed behind the back of our minds. Gone are the what-ifs. When disaster strikes, everything you’ve worked for can vanish in a heartbeat. The only way to counter this is to be like a grandmaster, think 15 moves ahead. For your business, start devising a business contingency plan.

What is a Business Contingency Plan?

A contingency plan of a business entails a course of actions that an organization takes on when unexpected events or situations occur. It plays an essential role in minimizing impact or damage that can significantly affect the organization’s reputation, financial stability, and ability to stay in business.

To prevent high losses, you need backup plans from A to Z. Just like a game of chess. Such programs signify that your business is prepared for situations that can shake the stability of your organization.

Why is it important?

What if an earthquake strikes your place? Or a pandemic breaks out? What if you lose your biggest client? Without a plan, your business is wide open to any risk.  That is why comprehensive contingency planning is essential for small and large companies alike.

Following the contingency plan definition, this strategy lists down a systematic move when in crisis. Such a plan eliminates trivial activities, and everyone can focus on what is needed to do. Once the dust settles, you can transition back to normal operations.

For example, the current COVID-19 pandemic. Businesses are gravely affected by this global crisis. A lot of states declared home quarantine to contain the spread of the virus. How can an organization continue operations without its workforce?

Full Scale’s course of action is to let the employees work remotely. In hindsight, the leaders thought of any possible problems that the business might encounter; that is why they issued laptops for each h and every employee so that production never cease amidst crucial situations. You can check out a blog from our CEO Matt DeCoursey on how he handles the COVID-19 pandemic. This is an example of a well-researched and tactical contingency plan. And you will learn how to create one if you read on.

Business contingency plan

How do you create a contingency plan?

For efficient business contingency planning, you need proper research and planning. Here are a few guidelines that can help you with that:

Identify and prioritize your resources

Look within your organization. What are the resources that you deem your business could not do without? They are the resources that you need to prioritize. Resources such as your employees, physical assets, and IT systems are essential to keep the business operational.

Pinpoint the key risks

Identify every potential threat to your resources. This step needs thorough research. The internet is rich with content, especially on business websites. You can read through articles where entrepreneurs share situations and scenarios that put their businesses at risk. Use these articles as the basis of your research.

However, you will also need the perspective of the people in your organization. Ask your employees and stakeholders for ideas on any event that can hinder or create a negative impact on your resources. You can also seek advice outside your circle, a business consultant, perhaps.

Label the risks according to priority

Once you’ve identified every risk scenario or potential threat, a plan will be easy to create. But before that, read through your list. From this, rank each threat according to their urgency or priority.

Create a bar or criteria for ranking. Put at the top the scenario that will most likely occur and has the most significant impact on your business. Then you can work your way down.

Draft your contingency plan

Create a separate contingency plan for each scenario. Outline the order of action the moment the event occurs. What would your response be?

You can easily design the plan if you use a flow diagram. It is more comprehensive and practical.

At the top of the diagram, place the scenario. Under that, draft the counteraction, a response overview. In the corresponding action, assign the people that should be informed and involved in taking action then indicate their key responsibilities. Lastly, write the timeline.

The visual presentation helps to deliver the plan and aid the people involved in proper execution.

Upon making the plan, make sure that you put your mindset on the event, just like a simulation—for example, a security breach of your data. Don’t merely think of a “what if,” think and imagine that you are in the situation. What happens during a security breach? Though you are sure that your security is tight, still think of a situation when your data is breached. After, make an action plan on what you need to do.

Distribute your plans

Make sure that all employees can quickly access the contingency plan. From time to time, review the contingency plan and update them when needed. There will be times that you will encounter new challenges and steps that might not be a success from the previous event. That is why you need to update the plan. Also, keep the employees and stakeholders informed when there are changes.


Don’t overthink when you make your business contingency plans. Yes, it is good to see ahead but not too far ahead. Going back to the game of chess, Jose Raul Capablanca who is a Cuban grandmaster was once asked how many moves he’d look forward to while playing. He answered, “Only one, but it’s always the right one.” In creating your plan, you will see a lot of possible solutions. But you should choose the best step to abate, if not to counter, the impact of risks.

If remote work is one of the courses of action in your contingency plan, then Full Scale can help. We have been helping startups build their software development team quickly and affordably. We have the top talent, excellent facilities, and a well-researched contingency plan. Book a FREE consultation with us and start planning the future of your business.

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