A Business Continuity Plan could ensure that businesses are ready for the changing landscape, including economic or political instability.
Key Highlights
- Business Interruption Insurance can help businesses with various types of disruptions.
- A line of credit or an Overdraft Facility can provide short-term capital to address cash flow gaps.
- Building reserves is an effective strategy for maintaining the status quo.
There has been an observed upheaval in the global order since the year 2020.
From the COVID-19 pandemic shutting down several businesses, to the Russia-Ukraine War disrupting supply chains, and now the Israel-Hamas war adding to the fears of businesses.
It then becomes imperative to insulate your business from interruptions and minimise potential losses.
The requirement for adopting strategies to ensure ‘Business as usual’ is more so for small businesses and medium-sized enterprises that stand to lose a lot more due to business interruptions.
However, given the limited resources they have, they are usually unable to hire technical experts to guide them through the changing circumstances.
To address this concern, we’ve compiled 5 easy and implementable ways through which businesses can safeguard their operations and profits from interruptions and sail through instability.
Get Insured
The most ready-made solution to safeguard your business from interruptions is either getting a holistic Business Interruption Insurance, or insure large transactions individually.
While a Business Interruption Insurance in India offers protection to the net profit of a firm, businesses may not be able to apply for claims unless there is physical damage to the property or machinery as it is not usually sold in a standalone manner.
To cover political risks, the Export Credit Guarantee Corporation of India Limited was formed in 1957 to insure exporters from non-realisation of export proceeds.
Put in place a Business Continuity Plan
A Business Continuity Plan (BCP) ensures that there is a mechanism in place to deal with various types of disruptions.
It is advisable that businesses formulate a BCP to deal with possible disruptions like losing suppliers, non-availability of employees, disruptions in communication, and natural disasters among others.
A robust BCP also helps build trust with your investors and clients, which in turn can ensure that your business remains resilient at times of disruptions.
Save for rainy days
One thing COVID-19 has taught us is that there could be a disruption extending several months, or even years.
It is thus advisable to build financial reserves from your profits to ensure that if the business is unable to function as planned, you have enough savings to sustain for a period of time.
Optimising costs could be one way to increase your savings.
Evolve with circumstances
It is important to ensure agility in your business operations to adapt to changing circumstances.
Optimising your business organisational structure and processes for efficient adaptability can you tide over the dynamic scenarios at ease without resorting to impulsive decisions.
Use Credit efficiently
Using Credit instruments efficiently can help businesses deal with unforeseen circumstances without the need to bring overbearing changes.
Businesses can get a credit line or an overdraft facility to ensure that they have a credit limit available when needed to address cash flow gaps.
Conclusion
While planning for disruption is one thing, implementing the plan is another.
The quote “The man who can do the average thing when everyone else around him is losing his mind”, often attributed to Napolean makes sense in this context.
For a business to sail through economic instability, it is important to stick to the plan they’ve formulated while remaining conscious of the changing circumstances.
