Running a business is both exhilarating and scary. It’s exhilarating to have total intellectual and artistic freedom to do what you want as you earn a living. It’s scary because all the responsibility falls on you as the business owner.
Expect that you will have a few “how the heck did that happen” moments. These moments can arise from many situations. Perhaps you discover that a trusted employee has stolen company money or property. Perhaps you learn that a key supplier has gone bankrupt just as you are about to enter your busiest season, leaving you scrambling to meet your sales goals while searching for a replacement supplier.
Planning can make all the difference between failure and success for your business. Planning involves taking three key steps:
- The first step is to ask “what if” questions. What if my key supplier suddenly disappeared? Asking this question means that you will immediately begin looking for a backup supplier. Or it could mean that you decide to use several suppliers at all times so that you have an existing relationship and can quickly ramp up orders to the surviving supplier. This type of planning is a component of what the pundits call your “business continuity plan”. A good business continuity plan works in conjunction with a good disaster recovery plan or emergency response plan.
- The second step in planning is to buy insurance to cover your risks. If you have employees, it is always a good idea to get a policy that covers employee dishonesty. These policies can restore you cash flow while your former trusted employee is living in the islands on your money. At least your business won’t fail due to the sudden, acute loss of cash. These days, most insurance companies offer package deals on property and casualty insurance that cover the basic liability risks faced by any business. A basic P&C package can be supplemented with a “rider” that adds more coverage for specific risks. Your agent or broker can help you decide which coverage best fits your company’s risks.
- The third step in planning is to remember that your advance planning will probably not fit the crisis that you face in your “how the heck did that happen” moment. No matter how well you plan, something will boondoggle in unexpected ways. But having a plan means that you can improvise a solution. An existing plan can be tweaked to fit the unexpected and that will save your business. Not planning in advance is a guarantee of failure for your business.
If you follow the three key steps outlined here, I believe you will have the basics for a good corporate compliance plan. After all, the point of a corporate compliance plan is to sort out all those boring back-office details that make the difference between failure and success, when you find yourself asking, “How the heck did that happen?”