Contingency Plan: Effective Measures in a Crisis + Example

Of the contingency plan of a company your survival in a crisis may depend.

Any contingency plan has to be planned when it is not necessary yet, that is, before an unwanted situation occurs (crisis).

Due to the situation of economic blockade of these weeks, in our company we are applying a series of measurements collected within contingency plans of our clients.

Contingency plan: Do you know what are the urgent measures to take in your company in a crisis? Click to tweet

We must always keep an optimistic outlook, "everything will be fine, and it will pass ", but to get it, it is necessary to do everything in our power.

At Banco Popular we always told ourselves:

"Don't worry, take care"

1. What is the Contingency Plan of a company?

Is a valuable tool based on a risk analysis of a company, before a unforeseen situation or crisis situation.

1.1 Definition of Contingency Plan

A Contingency plan foresees a set of measures and decisions to be taken by your company when it is going through an incident or crisis situation, in order to guarantee its continuity.

1.2 Purpose of a Contingency Plan

It has been thought for let you know the steps you should take, in the face of an unforeseen situation or crisis situation.

Its purpose is to carry out a action plan, running a set of procedures and actions so adequate and effective.

In this way, your risks can be accepted, reduced, postponed or eliminated.

2. Steps of a Contingency Plan and examples

This plan must be dynamic and flexible, which allows modifications against new incidents that could occur at over time.

A contingency plan must be updated and periodically reviewed.

The steps to create it are:

2.1 Evaluation

It is the initial step of analysis. Value:

• Possible risk scenarios in which your company may be affected.
• What activities are priority for your company and its recovery time.
• Quantify the necessary resources: human, material and economic.
• Assign persons responsible in the decision making.

It is impossible to predict unforeseen situations, but parts with an advantage by having a starting analysis. This will help you rethink your options, once the crisis situation occurs.

2.2 Planning

Plan what will be the measures and actions to carry out in your company if there is a crisis situation.

Are prevention measures, whose purpose is avoid any hurt that your company may suffer, determining:

• Main objective: survival.
• Strategies.
• Necessary resources.

2.3 Feasibility

Analyze the feasibility of the measures established in the section of "planning”. Determine your resource needs:

• Humans: essential and strategic.
• Materials: main activity.
• Economic: minimum liquidity equivalent to 3 months of yours fixed costs.

2.4 Execution

The crisis situation has occurred, it is the passage of take action:

• Stabilize the situation.
• Eliminate hazards and threats.
• Anticipate damage
• Alternatives to resume activity as soon as possible.

You will lead to practice emergency measures within your company, aimed at minimize all negative effects of the crisis situation.

2.5 Recovery

Last step of the contingency plan, once overcomes the crisis situation, you have to take measures aimed at restoration of the previous situation to the crisis. If the consequences have been severe, you may need to implement a recovery plan.

3. Contingency Plan Example: CORONAVIRUS - COVID-19

Here is a VIDEO explaining "4 keys to face a threatening situation in your company", a abstract of everything that you are going to read below about the contingency plan of a company.

Due to the situation of economic blockade that we are currently suffering from CORONAVIRUS or CONVID-19 world crisis, I leave you one plan guide contingency of a company that we are applying to our clients.

It is fundamental keep a optimistic attitude and keep the focus of the vision of your business.

Everything is going to be fine and it will pass!

But, you can not block, pass to take decisions and do everything in your power, so that the back to normal, be as fast as possible.

Don't worry, take care!

As you have read, previously, the steps to create a company's contingency plan are:

1. Evaluation.
2. Planning.
3. Viability.
4. Execution.
5. Recovery.

In the current CORONAVIRUS crisis:

If your company does not have a contingency plan, you should act fast!

You will have to do the first four steps at the same time: assessment, planning, feasibility, and execution.

To do this, I suggest the following measures:

Urgent measures that you must take NOW!

3.1 1st Measure: Seek financing

Evaluation:

• Calculate the monthly fixed costs of your company: Salaries + General Expenses.
• Calculate the fixed costs for the next 3 three months.

Planning:

• You need to have that liquidity in your bank account.

Feasibility and Execution:

• If you don't have that amount available, apply for a credit policy in one or more banks, to guarantee your survival in the coming months of economic uncertainty.

Here you have more information on how to find financing.

3.2 2nd Measure: Request aid

Planning and Execution:

Talk to your tax and labor advisor to process all postponements and business aid to which your company can be accommodated.

Most of the grants are already published, although their processing is not working optimally yet.

Here you have more information about:

• ERTE (Temporary Employment Regulation File) of a company.
• Benefit for cessation of activity of a self-employed person.
• Tax deferral.
• ICO loans.
• Guarantee lines to support liquidity.

3.3 3rd Measure: Reduce fixed costs

Planning, Feasibility and Execution:

• Analyze your expense structure, being clear about your variable costs and your fixed costs, to reduce or eliminate, until the recovery of your activity.

3.4 4th Measure: Active Marketing

Planning:

• Keep your posts on the web, blog and networks. It's time to work on your brand and positioning.

Feasibility and Execution:

• Make posts optimistic and consistent with the current situation.
• Reduce your spending on online advertising sale, if there is no option for your consumer to buy your products or services.

4. Conclusions

Take advantage of this period to reflect what points you can improve from your current business model and plan how to do it.

If you need help in these difficult moments, I'm here for whatever you need.

Today more than ever you must work on planning the Financial Strategy of your company, your future will depend on it.

I hope this article has helped you, to have a better financial planning for seize opportunities that exist at all times.

Many thanks for your time, I hope it has been useful and practical. Please, leave me a comment telling me What do you think and if you liked it.

Do not forget to share me on networks. Thanks!

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