The events of the last several weeks have left a lot of small businesses vulnerable. With the onset of COVID-19, many businesses are either unable to operate under social distancing mandates or have seen a significant drop in business as events have been canceled on a massive scale. For many small businesses like home sharers, their livelihood is dependent on the travel industry, which has without a doubt been one of the hardest-hit industries as a result of COVID-19. This brings us to the importance of having a business continuity plan.
Business Continuity Basics
Disasters rarely have the common courtesy to RSVP, which means that when a large scale disaster strikes like the recent goings-on, many people are caught off guard. This is where a business continuity plan comes in handy
Definition
A business continuity plan also is known as BCP, is the process of having a system in place to combat potential risks to the business. A BCP allows a business to maintain function and also quickly recover after a disaster.
Objectives
An economic downturn often follows a disaster. It could be a natural disaster or a large scale pandemic like the one we are facing right now. As a result, many businesses have had to close or drastically reduce their operation. A BCP is important to help a business continue to operate, protect its assets, deal with human resources, and protect business partners. A BCP outlines procedures for a business to follow when faced with opposition.
Why Make a Business Continuity Plan
A business continuity plan is a strategy for maintaining operations and recovering through a disruptive event. A proper BCP addresses every aspect of your organization, including IT, human resources, accounting, and more. Having a plan in place is important because it allows your business to react quickly to unexpected events.
Preparing for the Worst
Life happens and often delivers some low blows. When a business is prepared for a rainy day, a business continuity plan can help them recover quickly. Unfortunately, many businesses don’t plan ahead, which can make recovering an uphill battle. Unexpected events can derail both large and small organizations, but having a plan in place can make weathering the storm a little easier.
How to Get Started
The best time to create a business continuity plan is before there is an issue. However, if you don’t have the luxury of planning ahead of time, now is as good a time as any. The first step is to outline your business processes. It is important to be able to identify areas of your business that would be vulnerable, your critical business functions, allotted downtime for critical functions, and a strategy to maintain operations. Address all aspects of your business, consider supplies, equipment, data security, and personnel.
Things to Consider
Some important things to consider are possible downtime, and which functions of your business are crucial. In addition, it is a good idea to be able to test the effectiveness of your plan. This involves strategizing with key personnel, walking through the plan, and testing it. Look for weaknesses and areas that could be improved. Some key areas that may be the most vulnerable include:
Asset Damage
If your business relies on business assets like vehicles and real estate, it is important to make sure they are well taken care of. Assess for any potential hazards that could cause damage to your assets. For example, if a big winter storm causes unusually cold temperatures, your pipes could be susceptible to freezing, which in turn can lead to burst pipes. As a preventative measure, make sure your pipes are properly insulated.
Check Your Insurance
Insurance is crucial to protect your business and your assets. In the event of a disaster, an insurance plan is what can make or break the situation. Make sure you have ample coverage and check for any exclusions.
Communication Lines
Have a plan for keeping communication lines open with key personnel. When faced with disaster, communication is the key to maintain operations.
Make Sure Your Data Is Safe
Make sure you have a good system in place to back up your data. Back up important financial data, client information, and other pertinent business information. It is important to make sure your data is secure but also accessible.
Get Help with COVID-19 Tax Planning
As the days go on, COVID-19 is quickly becoming more serious. With that in mind, there have been certain provisions put in place by the federal government to help small businesses during this time of need. The IRS Notice 2020-17 is one such provision that can help small businesses by deferring tax payments until July 15. This includes federal income tax payments, estimated tax payments, and self-employed taxes. This can all be worked into your tax planning strategy.
COVID-19 disrupted this year’s tax calendar. The IRS deadline changes are a welcome relief for many, but it’s going to complicate the tax season down the road. In addition, the government is rolling out other tax relief programs that you might not even be aware of. Shared Economy Tax can assist with tax planning so you get to the best deal as possible on your taxes. Get started today with a one-on-one strategy session with a certified tax pro, or sign up for our free tax tips newsletter using the form below.