7 May 2012

Small businesses need crisis management plans - survey

6:58 am on 7 May 2012

A business professor says small businesses need to be better prepared for times of crisis, and could learn valuable lessons from firms that survived the Canterbury quakes.

A survey conducted by Massey University, found fewer than one in 10 small and medium sized firms have a formal written crisis management plan.

Massey University director of small and medium enterprise research David Deakins says that level of unpreparedness is worrying given 68% of smaller firms were considered particularly vulnerable to crisis.

He says the Rena running aground on the Astrolabe Reef off the coast of Tauranga is a good example of an unexpected, unplanned event which could affect a business, or it could be a natural disaster that hasn't been planned for.

Professor Deakins says with that high degree of vulnerability, a business is unable to trade, it affects the cashflow and there's a danger that some businesses could close as a result.

He says 43% of firms surveyed had faced some sort of crisis in the last five years, and not surprisingly, firms in Canterbury had learnt the importance of continuity planning.

Professor Deakins says by contrast those businesses that are outside Canterbury are relatively unprepared.

He says there is the potential to identify how Canterbury firms have responded, what measures they have put in place and what they have learnt and then to disseminate that information to firms around New Zealand.

Professor Deakins says that could be combined with a support programme ... "looking at what measures were taken, which were successful, which firms have survived, why they survived and using that to provide an experience in crisis management planning for firms".

Professor Deakins says it could particularly help SME, or small firms with limited resources, to learn low cost methods which enable them to plan for unexpected events.

He says developing crisis plans doesn't need to be expensive or time consuming for business owners, and can involve basic steps like figuring out how they'll communicate with customers and staff, or backing up financial records.