Tips for Developing Business Emergency Plans

Friday nights are typically spent winding down the week by trying to organize the chaos of corralling small children. A bit to my surprise, my wife remarked, “there are police cars in front of the house, what’s going on?” True enough, when I looked out the window there were actually 4 police cars in the vicinity of the house – two in front, one more on the east corner of our street, and the fourth on the north corner. Obviously, something was up. With that much of a police presence in our quiet neighborhood, there was something wrong.

Immediately, I began giving instructions to my wife and oldest child. Blinds were closed, doors locked, and a few other steps were taken. However, we still didn’t know what was happening. So, I went outside to speak with one of the officers. The officer informed me that a manhunt was ongoing in our neighborhood for a suspect who had committed a crime in the next town over and was attempting to escape through our area.[Bad news for the suspect because there is no way out of our neighborhood unless you have a rope and grappling hook.] By the end of my conversation with the police officer, a helicopter’s searchlight had started illuminating neighbor’s yards. I returned to the house to give my wife the update and to post to our community’s internet discussion board.

The thought of a criminal jumping through backyards and perhaps attempting to create a hostage situation in order to get some leverage with the police scared me. We have done plenty of emergency planning in our house with respect to fire routes, medical supplies, an alarm system, and other possible scenarios, but the possibility of repelling a home invader brought things to a different level. The one thing I wish I had that night were curtains. Yes, curtains, because one set of windows were not covered and this criminal might have looked inside to see a potential opportunity of seizing small children for his advantage. [Granted, he would have to first deal with an armed Marine, but anything can happen.] If we had curtains on those windows, then this ne’er-do-well might never see the opportunity. Fortunately, none of this came to pass and the criminal was apprehended shortly after dogs were brought into the area.

Business Strategy: Preparing for the Unexpected

After a day of reflection about Friday’s events, I thought more about emergency planning for a business. Some things are simple, such as fire extinguishers and regular data backups. However, what happens if the key decision-maker is incapacitated? Accidents and illnesses happen all the time. Should your commercial business be completely sidelined if the CEO or sales manager is out indefinitely?

Emergencies, Unforeseen Conditions, and Decision Making

Usually, a business’ decisions are made by its board of directors (for corporations) or its managers (for LLCs). Executive officers will typically have authority to make day-to-day decisions for the business. Authority to make these decisions is established in an LLC operating agreement or corporate by-laws. Most all of these documents will discuss the company’s regular decision-making process. Thinking strategically and attempting to plan for the future requires revising these key business documents to include succession or contingency planning.

For example, several years ago, a single attorney owned a highly successful Miami law firm. There were approximately twenty lawyers in that firm that had its office in one of the prime locations in downtown with views overlooking Miami Beach and Biscayne Bay. Unfortunately, this attorney suddenly took ill and died shortly thereafter. The firm dissolved because there was no succession plan in place. While the other attorneys continued their respective practices, the unity of the former firm was gone.

Business Survivability and Continuity

In general, LLCs are not continuous entities that can be survived by a member’s heirs. Granted, there are ways to somewhat ensure perpetual ownership; however, that is beyond the scope of this article. In contrast, corporations are “continuous” entities whose shares can be freely transferred.

While the death of a corporate officer, shareholder, or in the case of LLCs, members or managers is a tragic and possibly sudden event, there are other potential emergencies that businesses can address and plan for before they occur.

Employees, Materials, and Supply Chain Disruptions

First, what happens if the key supplier of parts or materials suddenly is unable to make deliveries? Second, if a particular employee has to take a leave of absence, who will cover them? Third, your number one customer who had committed to purchase goods or services from you for the next six months – shuts its doors. Where do you turn?

Some of these examples can be addressed through smart business planning. With respect to employees, redundancy of expertise and training can eliminate some of the friction when one person has to cover for another. For the top customer who goes out of business, the smart folks in business development will have been working on both getting new customers and finding ways to make the #2 and #3 customers into the #1 customer long before the unthinkable happens. Similarly, if the main supplier can’t provide you with materials, who else can?

Let’s Talk Business Strategy

Taken together, emergency planning represents one aspect of strategic thinking for your business. Working through these issues requires taking an honest assessment of the business’ capabilities, weaknesses, strengths, and vulnerabilities. Sometimes, these issues can arise in some of the most unlikely places.

As a business law firm, Yolofsky Law works to help businesses identify possible problems and put in protocols to assist with dealing with emergencies. To learn more about how we can help, please contact us online or call 305-702-8250.