Contingency Planning

ext">However solid your business plan, there is noshould be incorporated into it to ensure that IT
way to predict the future, but what you can do is toproblems are minimised in the event of an
plan for unforeseen circumstances. There are a wholeemergency.
host of factors that can have a financial impact on a5. Reduce your outgoings. By looking at regular costs
small business, and in times of economic uncertainty,such as utilities and bank charges, you may well be
it is a sad fact that many small businesses thatable to find many savings. According to research, a
encounter a major disaster never resume trading.UK small business can save around £3,500 each
Steve Jennings from Alliance & Leicester Commercialyear on their banking costs by shopping around for
Bank has the following advice to help businesses tothe best possible deal.
plan for the future to prevent the unpredictable from6. Deal with bad debts. Late payments can be
becoming the unmanageable:crippling, especially if they account for a large
1. Keep a business diary. New legislation can have aproportion of your business’ income, so credit
major impact on your margins, so make a note ofcheck new customers, and dedicate some time each
dates when legislation or tax changes come intomonth to chase outstanding money.
force so that you can prepare well ahead of7. Create a contingency fund. You need to have a
important deadlines.financial buffer in the event of an emergency, so
2. Market changes. Your market can change in adon’t leave surplus funds sitting unused. Set
number of ways from new competitors through toaside regular sums in a high-interest business deposit
changing initiatives within your industry. By keepingaccount. Interest earned on this money can be used
abreast of any changes you can make appropriateto pay for your quarterly VAT or annual tax
adjustments to your business plan, and prepare forexpenses.
the impact of any major market changes.8. Update your business plan. Changes to your
3. Monitor interest rates. Business banking interestsituation can cause your business plan and budget to
rates can change quickly, and are announced on ago out of date relatively quickly. By keeping a record
monthly basis. A rise can have a big impact on yourof actual figures against predictions, you can spot
outgoings and income, so if you are borrowingvariations quickly, and amend your forecasts to take
money, look for a fixed rate, as this will allow you tothem into account.
budget more effectively.9. Insure yourself. Ensure that you have the right
4. Be prepared for disasters. Every business needs atype of cover for your business. By finding a flexible
continuity plan that outlines key members of staffinsurance policy with business interruption, as this will
along with specific tasks, this will allow a swiftprovide for you under circumstances that could
recovery and a quick return to normal businessotherwise result in loss of earnings.
operations. If your business makes use of a10. Arrange an overdraft. With a business overdraft,
computer system, off site storage and back upsyou can get access to short term finance.