Gregory Hamel reports:
"Starting and running a small business is an inherently risky practice because there is no guarantee that a new venture will attain profitability. Unforeseen events or disasters can be especially harmful to a business...A contingency plan is a business document that lays out a course of action a business will take in response to future events...The purpose of a contingency plan is for a business to have a specific set of instructions in place if certain events that may interrupt normal business operations occur. For example, a massage business might plan to move operations to a different location if its main location is damaged by a natural disaster. Similarly, a pizza shop might plan to start an aggressive advertising campaign if a competing pizza shop opens nearby...The contents of a contingency plan can vary significantly from one business to another based on the business model and the types of goods and services they provide. Nevertheless, the plan should contain a list of possible disasters, emergencies and threats plus a set of instructions that detail how the business will respond to each one. A contingency plan should also cite which managers or employees are responsible for carrying out the plan's instructions. For example, a restaurant's contingency plan might call for its owner to lay off workers and to stop ordering materials and equipment if it loses its physical location due to a fire. The plan might then call for scouting then leasing a new location and rehiring a reduced amount of staff, only returning to the pre-disaster staff level when business establishes itself in the new location...A contingency plan allows a business to respond to disasters and threats quickly and deliberately, which can potentially save time and money...Certain organizations offer resources to business owners, such as templates for contingency plans that can serve as examples or frameworks to create new plans."
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