Ten Tips for Catastrophe Planning

Catastrophe planning

For many smaller businesses coronavirus is a disaster. The welcome news last week was that the government was able to open a scheme for the self-employed as well as the existing schemes for limited companies.

With all these schemes, there are some who will miss out; while others will be put off by the paperwork or the need to wait for contact by their local authority or HMRC. Whatever the situation all business leaders now need to make decisions in the most uncertain of times with catastrophe planning.

Emotional Responses

Catastrophe planning has 10 core steps at the point that the disaster has begun:

Step 1. Shit happens. This is a purely emotional response along with why me and why now? Here, just channel the energy into taking control to then take action.

Step 2. Adopt the Stay Calm: Stay Positive approach. The worst could happen but that doesn’t mean that it will. If you remain calm, you’re more likely to think things through and avoid silly errors.

Become a Planner and Cashflow Expert

Step 3. Create a plan. But remember this is a plan, not a policy and certainly not a big strategy. It’s a series of actions you can start immediately that are specific, measured and achieveable.

Step 4. But be flexible in the plan. With the current coronavirus crisis many previous assumptions will now be false. Rock solid contracts may just disappear. Good planners are good communicators because they test their assumptions through conversations and relationships.

Step 5. In planning, be objective when considering what is essential, what desirable and what can and really must go. The best way to look at this is to consider that you will have no income. How do you reduce your costs to the absolute minimum in this scenario? What reserves do you have for how long to support this?

Step 6. It’s always better to cut a little deeper earlier to avoid having to revisit cuts. Psychologically the first blow is the only blow, so all can move forwards.

Step 7. Recognise that some income is better than no income for a business and individual. Communicate with your clients and with your suppliers.

Step 8. Treat others as you would expect yourself to be treated. Sometimes, it’s not a case of the whole contract or no contract. Typically, they might be scaled back to a minimum of both cost and delivery. What there must be is certainty on payment and delivery.

Communicate with Honesty

Step 9. Now is the time to be open and honest as the general crisis provides an acceptable reason. This includes discussions with employees. Most people don’t just work for pay. If individually they accept a 20% cut and you’re eligible, furlough the staff you don’t need, so they’re ready to come back when the crisis ends. If they’re not employees have the discussion however hard it seems and then decide what the next step is.

Step 10. Be sure that you only take your fair share of the overall burden financially and mentally. As a manager you set the plan and explain the reasons and expectations to give others certainty.

Final Thoughts

It’s worth remembering the research which proved that the best and most well-known companies are often forged in adversity. Why, because they take the decisions and are prepared to come out strongly when the situation improves.

Alternatively consider that catastrophe planning prevents a disaster from becoming much worse later.