Preparing for the worst
Risk planning should be priority for entrepreneurs
Risk is always a factor in launching a business, although not all entrepreneurs recognize the potential for peril that could bring operations to a grinding halt.
Extreme weather, a mass power grid failure or even an incident of gunfire unleashed amid an urban centre can paralyze a small business for days, or even longer.
Such risks coupled with the increased dependency on technology render up-to-date contingency planning and emergency preparedness an integral New Year's resolution for business sustainability.
Jonathan Davids didn't have to endure a bona fide disaster to realize he needed a far more specialized service to ensure his Internet-based media business, Soko Company, would survive an emergency.
With clients that include Unilever, Ford and Johnson & Johnson along with three well-patronized sites of his own, Mr. Davids switched within two years of his launch to a mainframe server provider based in Texas that has ample back-up locations.
"Any Web site needs to have 100% 'up' time," Mr. Davids says, explaining that an initial server provider he'd retained near his home base in Toronto failed to accommodate the volume of traffic his sites began drawing, never mind the prospect of a catastrophe.
"The public has very little tolerance for a Web site that's gone down. I want the peace of mind that my Web sites are safe." So well-equipped is his new Texas provider that during a series of weather-related power outages across North America in 2006, Soko's Web sites remained up and running on a continual basis. "In the last three years, we've had zero downtime," he says.
Under the Soko banner, Mr. Davids operates three flagship Web sites: Soko.com,a lifestyle resource with information ranging from health to relationships; LiveDress.com,which connects shoppers with retailers; and DriverSense.com,which is filled with automotive information. Each site is updated regularly with articles by contributing writers. Besides searching for service stability, Mr. Davids also recently purchased various insurance policies to cover any liabilities that may arise connected with
content published on his sites. "It was just in the last year that we looked into different kinds of insurance," he says.
"Even though we publish disclaimers, what happens if someone decides to sue us? A lawsuit could drain our business."
He acknowledges that many younger entrepreneurs may not consider insurance or contingency planning a priority at the outset of a business launch.
"But I would say that insurance and ensuring that your company, whatever it is, is available to consumers when you say it will be and having a contingency plan so you are reliable is important," he says.
Ann Wyganowski is an emergency preparedness and contingency planning expert who runs a Toronto-based consulting firm, HZX Business Continuity Planning, and serves as president of the Toronto Disaster Recovery Information Exchange.
She acknowledges that specialty insurance and contingency planning are not always a high priority for smaller business operators.
"Everybody thinks it won't happen to them," she says of the potential for a catastrophic incident. "That's human nature."
Ms. Wyganowski suggests that entrepreneurs could be better informed of how certain incidents could affect them and what types of planning measures are required.
"What I see is a lot of confusion between business continuity and emergency preparedness," she says.
Emergency preparedness is the immediate response to take care of personnel and assets at the premises in the event of a disastrous incident - a plan that could even save lives.
"In the event of a shooting near your business, do your employees know what to do?," she asks, whilenot mentioning such an incident occurred in downtown Toronto three years ago. "Are they going to run and take a look? That could endanger their lives." Ms. Wyganowski helps businesses to assess risk based on geographic location and operations, and develop a response that will be executed properly.
Business continuity "is about protecting your business after people and assets are safe and taking steps to make sure business will run and recover," she says.
Governments are increasingly requiring their suppliers to have contingency plans that comply with guidelines set out by the Canadian Standards Association, Ms. Wyganowski says. "If you are a smaller company and want to work with government clients, they will want to know if you're CSAZ1600 compliant," she says, citing the document guidelines for federal contingency planning standards.
While a contingency expert can recommend measures or factors to consider, plans should be developed by entrepreneurs themselves and rehearsed to ensure they are practical in application. "I have never done two business continuity plans that were alike; every business is different," Ms. Wyganowski says.
To get started, she recommends entrepreneurs peruse information available through the Web sites run by Emergency Management Ontario, the Canadian Centre for Emergency Preparedness and Public Safety Canada.
The Insurance Bureau of Canada also has resources for risk management and preparedness as well as means for entrepreneurs to ascertain whether they purchased the appropriate coverage, says James Geuzebroek, IBC's media relations manager.
"In a world fraught with risk, it's important for business owners to have the right insurance coverage in place," Mr. Geuzebroek says. "It's not just about property loss. Liability coverage, for instance, provides important protection at a time when society is increasingly looking to the court system to settle conflicts.
"Also, business owners should consider the costs of not being able to operate their business for a period of time. For this, there is business interruption coverage."
The IBC includes a commercial insurance section on its Web site, and Canadian entrepreneurs with questions can find their regional IBC office under Contact Us.