Chennai Floods: Why SMEs Need Business Continuity | SupportBiz

Managing Growth

Chennai Floods: Why SMEs Need Business Continuity

 
The recent Chennai floods devastated many small and medium businesses which didn't have a business continuity plan.
For a perennially water-starved city, Chennai floods in December 2015 was a rude shock at several levels. Apart from loss to life and property, it dealt a crippling blow to the industries in the city and its suburbs, destroying stocks and infrastructure. While larger organisations were able to resume business due to having continuity plan in place, most MSMEs not only faced greater damage, but heavy losses. Their greatest challenge is to resume their business from scratch.
 
Quick facts (Culled from media and SMERA Ratings) 
  • Over 20,000 MSMEs damaged 
  • Livelihood of more than two lakh workers at stake
  • Nearly two per cent of potential per capita income of the region has to be foregone
  • Overall business loss estimated at Rs 15,000 crore 
  • Of this, MSMEs bore expected to have lost Rs 1,700 crore
  • The losses cut across industry segments
     
MSMEs are typically entrepreneur driven, and the focus is on building a business and making it grow. While there is sun and calm, the only worries for the entrepreneur are to make sure there are enough customers and drive revenues. Calamity is often not factored into the business plans. The business continuity plan is also viewed as an expensive investment, not meant for them.
 
 
 
Recent events have shown that risk management must be made central to any business of any size, and should be reviewed and updated periodically. An effective business continuity plan should envisage different scenarios and their impact on the business – right from stock loss to communication breakdown, no availability of transport facility and damage to infrastructure, including IT. 
 
Roles and responsibilities should be clearly enunciated and emergency procedures clearly delineated. A clearly defined purpose, detailed scoping of the plan along with clarity in role are the fundamentals to business continuity management. Since SMEs have limited resources, focusing on the essentials, mitigating risks and limiting the damage will form the crux of the plan. Review and update the plans periodically.
 
A business continuity plan not only protects MSMEs during disasters but also assures clients of a business’s robustness, enhancing business prospects. While cost of implementing a plan has been a deterrent, the consequences of not having a plan are far graver.
 
(Meera Srikant is a freelancer)

Photo Courtesy: laxman (freeimages)