Should Small Business Owners Plan For Business Interruptions?

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Should Small Business Owners Plan For Business Interruptions?

Prior to 2020, the concept of planning for business disruptions existed. It was considered prudent to plan for such eventualities because, after all, disruptions in a business could cause serious loss of revenue, key assets, or even key persons in the business. It was universally accepted that the chief potential causes of business disruptions were fires, floods, and maybe a severe blizzard. But 2020 arrived and so did Covid-19.


Covid brought with it a new wrinkle into the paradigm of business disruptions. Even if we had the hindsight of the Swine Flu one hundred years prior, it was given short shrift because pandemics are so rare and the effects of the 1919 Flu were largely forgotten. So, there were no discussions or considerations of planning for such a phenomenon, among business experts, industry leaders, or in business schools. This is new territory and we have had to learn as we go along.


But this begs the question: How do we plan for disruptions caused by pandemics on a scale presented by Covid-19? The jury is still out on this one and we are still unsure of the answer. However, I believe that going forward, planning for large scale epidemics would be part of the standard considerations along with Fires and Floods.

The key considerations for small businesses beyond accepting government help, which has proven to be less than one hundred percent reliable, should be to save money for a rainy day. I know it is easier said than done for small business operations that often struggle to get financing. However, those businesses that are in a position to save money should have a rainy-day fund. That would help to take care of payroll and rent if the need arises. Another consideration should be to be flexible in your thinking and to be able to recognize opportunities that may arise out of your present difficulties.


There is a story that a CPA in California related to me very early in the pandemic about a tailor and how his quick thinking caused him to survive. Business had plummeted and his revenue had been reduced to a trickle. The only masks available then were the standard surgical masks and there was a shortage of those. He decided to start making masks from cloth. Cloth masks were not in our imagination at that time. The masks were such a hit with his customers that his business was able to survive and even thrive — a complete reversal of fortune. Now cloth masks are being sold by the largest retailers and are more popular than the standard N95 masks. But prior to this the idea came from a nondescript tailor in Southern California who was merely trying to survive.


There is another story of pivoting that I heard firsthand. A professional chef and caterer whose business was struggling came upon the idea to produce wines with her own personal labeling. The wines were made from fruits popular in the Caribbean like mango and sorrel. She advertised them on social media. The results were astounding, even beyond her initial optimism. I called her to order a few bottles for myself for the holidays. They were totally sold out. She was getting orders from out of state that she did not have the capacity to fulfill. Again, this story illustrates the importance of pivoting, preferably, to something related to your business if the need arises. It may save your business or even make it thrive.

Chester Peters

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