People might tell us that the key to life is a positive attitude, but as much as we don’t want to think about it, sometimes the worst really does happen. Recent research by Legal & General indicated that 40% of small businesses would cease trading within a year of losing a key person, and yet few owners understood these risks when asked.

Planning for difficult times is vital for any business; large international organisations do it as standard, but it’s just as crucial for small enterprises and even self employed individuals – perhaps even more so, since fewer people will possess expertise in each area of your business.


To help you develop a small business continuity plan, or check that your existing crisis management strategy is up to scratch, we’re going to ask eight questions to help you think of as many possibilities as possible, and ensure that your business continuity plan of action covers your bases.

We’ll cover two tests at a time, and recommend that you go away and think about each pair before returning for the next. This sort of exercise is best dealt with in chunks – try to tackle a huge list of “what might go wrong” in one go, and you risk feeling overwhelmed, and tempted to skip through it all without being thorough. Take it step by step, and think each scenario through, and you’re more likely to produce a well-thought-out continuity plan that will keep your business afloat in times of trouble.

[Test 1] What would be affected if..?
Let yourself be a doom-sayer for a while, and ponder everything that could go wrong, whether or not it’s within your control. Identifying risks is the first step to effective business continuity, since without understanding potential risks and vulnerabilities, you can’t put the necessary plans, protection and insurance in place.

Risks might be internal or external, and could include changes in the economy, changes to Government legislation, power failure, the water gets turned off, the internet goes down, all your staff get hit by the same contagious illness, breaks in the supply chain, fire, flood, acts of terrorism – if you can name it, there’s a chance it could happen.

For each of these potential risks, you must then think realistically about how likely they are to occur, and the potential impact if they did. What procedures do you have in place already to reduce the risks? Are there any you can eliminate altogether? The Health and Safety Executive has a lot of free information (click here) to help with risk assessment.

[Test 2] Who else must I worry about?
Setting up a small business with a friend or colleague may seem like a good idea at the time, but what happens if something in that relationship changes? Shareholder Protection Insurance is undersubscribed in the UK, but is incredibly useful in terms of formalising the rights and responsibilities of shareholders should anything drastic such as the death of a shareholder occur.


Key Protect’s Aaron describes how it works:

…say a business is owned by two partners who both own equal shares and draw a wage; if one passes away, their spouse could legitimately turn up and demand the same wage, despite being unable to do the same job. Or they could demand the value of the deceased’s shares, which means the other partner would have to raise cash to buy them out… or, if they wanted to, they could even sell the shares to a competitor, if the latter made a tempting enough offer for them.


So SPI guards against this, and is written in trust, so is good for both parties (the money is protected; for example, the spouse of deceased can’t hand over their shares and then have the living business partner say “actually I’m going to keep the money & there’s nothing you can do about it”). Being in trust also means it doesn’t have to go through probate, which can be a lengthy process – so beneficiaries get it straight away, and don’t have to worry about how they’ll care for dependants in the middle of what is already a difficult time.

Even if you’re a sole trader, you may not be the only person affected should anything go wrong. Do you have dependants who rely on your income to pay the bills? If you do, Income Protection (IP) may be part of your business continuity plan. IP pays out if you are unable to work, offering protection against a drop in income.

The Which? guide tells you how much you should expect to pay for income protection, and how to avoid common pitfalls. You’re also welcome to contact the team at Key Protect for up-to-date and obligation-free intelligence about current best value products and recent innovations.

Once you’ve spent some time on the first two, move on to tests three and four, here.

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