If Something Happens: Business Continuity Planning
A simple plan for illness, disaster, or losing a key person, so your business, team, and family are not left guessing.
Picture this: you are in the hospital for three weeks. Who runs payroll? Who knows the password to your bank, your point-of-sale system, or the supplier portal? Who can legally sign a check?
For many small businesses, the honest answer is no one. A business continuity plan answers those questions in advance, so a bad month does not turn into a closed business.
Key person risk
Key person risk is the danger that losing one person, often you, stalls the business. It can also be a top salesperson, a lead technician, or the only employee who knows the books. Start by naming those people and what only they know or do.
Two common responses: cross-train so at least two people can handle each critical task, and consider key person insurance, a life or disability policy the business owns that pays the business if that person dies or cannot work. The payout can cover hiring, lost revenue, or debt payments during the transition.
Disability is more likely than you think
Owners often plan for death and forget disability, which can last months and leave you alive but unable to work. Disability income insurance replaces part of your personal income. Business overhead expense insurance helps pay rent, utilities, and staff while you recover. Your personal and business plans should work together here.
Disasters and disruptions
Fires, floods, storms, and long power or internet outages close businesses every year. Know which risks apply where you operate, and check whether your insurance includes business interruption coverage (see Business Insurance 101). A cash cushion carries you through the gap before any claim pays.
The access problem
Your bank will not let a spouse or employee into your business account just because you are sick. Unless they are already an authorized signer or hold a power of attorney that covers business matters, they may be locked out exactly when bills are due.
Documents and access
- Authorized signers: add a trusted second person to business bank accounts, with limits if you prefer.
- Power of attorney: a durable power of attorney lets a named person act for you if you are incapacitated. An attorney can tailor it to your business.
- Passwords: store logins in a business password manager with an emergency access feature, so a designated person can get in if needed.
- Ownership documents: operating agreement, bylaws, and buy-sell agreement should say what happens if an owner cannot serve. See Planning Your Exit.
- Key contacts: accountant, attorney, insurance agent, bank, major customers, and suppliers.
Build a simple continuity plan in an afternoon
- 1
List critical functions
Payroll, paying bills, collecting from customers, ordering supplies, and anything that stops revenue if it stops.
- 2
Name a backup for each
Assign a primary and a backup person to every critical function, and schedule time to cross-train.
- 3
Fix access
Add authorized signers, set up emergency access to passwords, and talk to an attorney about a power of attorney.
- 4
Review your insurance
Check business interruption, key person, and disability coverage against the risks you listed.
- 5
Write it on one page
Put the plan, contacts, and where documents live in one place. Keep a printed copy and tell your backups where it is.
- 6
Test and update yearly
Walk through a scenario with your team once a year, and update the plan when people, accounts, or locations change.
Owner story
Luis broke his leg badly in a fall and was off the job for two months. Because his wife was already a signer on the business account and his dispatcher had cross-trained on invoicing, jobs kept running and payroll went out on time. The one gap: the fuel card account was in his name only, which took a week of phone calls to sort out. It went straight into the plan.
Illustrative composite, not a real customer.
Your continuity checklist
0/8 doneWords to know
- Key person insurance
- A policy owned by the business that pays out if a critical person dies or becomes disabled.
- Authorized signer
- A person the bank allows to write checks and make transactions on an account.
- Durable power of attorney
- A legal document letting someone act for you, which stays valid if you become incapacitated.
Finished reading?
Track your progress through Stage 6: Protect & Plan.
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