How to Build a Business Resilience Action Plan

Business resilience is about thinking ahead and planning for every reasonable scenario.

If you can answer these questions honestly and take action from them, we’re confident you’ll make your business more resilient and be able to put yourself on the road to recovery if the worst should happen.

Start by writing down your business risks and ranking them high to low - you can use this action plan template to help work through this process.

Consider:

• Your cash position due to rising costs such as materials, distribution, energy, salaries.
• Supply chain issues such as getting quality materials on time and within your budget.
• Workforce or people recruitment and retention, openness to change, wellbeing.
• Areas where you might be overly dependent on a single or small number of clients, systems, suppliers or employees.
• Your product/service proposition and whether they are a good fit for the market in terms of price, quality, distribution.
• How well-managed your financial planning is and whether it needs improving.

Thinking through the risks should have given you some great insight into the current health of your business.

If you realised your financial planning needs improvement, start building your resilience there. Poor cashflow management is the top reason that businesses fail, so getting a profit and loss (P&L) and cashflow forecast together is important.

From there, the focus is on doing what you can to mitigate your risks. Generate some ideas on what you could do to increase revenue and reduce your operating costs or at least move some fixed cost items into variable costs.

Think about:

• Making sure you get paid
• Adjusting your invoice terms
• Implementing late payment fees
• Exploring alternative finance options such as investment, a loan or grant
• Lease hire instead of purchasing equipment
• Selling anything you don't need
• Increasing sales
• Reducing overheads
• Software to help you manage cashflow

Prepare or update your P&L and cashflow forecasts

• If you don't already have them, use our templates to generate a profit and loss (P&L) and cashflow forecast.
• If you have them, update existing P&L and cashflow forecasts for the next six to 12 months.
• Establish how exposed you are to rising interest rates and other changes in business finance. For example, if repayments on a loan become more expensive how does it affect your cash position?
• Remember to adjust your expenses for inflation - our recent survey suggested most businesses expect their costs to rise by 11% to 15%
• Apply at least one of these ‘what if’ scenarios to your P&L and cashflow forecast - What if my revenue is 20% less? What if my costs increase by 20%? What if both happen?

From your list of risks, expand on the specific vulnerabilities in your business. Which people, suppliers, customers and systems are key to your business?

From there, consider what actions you can take to address the vulnerabilities. Consider internal and external to your business, using the ideas below to help you.

Changes within your business:

• Consider investing in critical infrastructure or ensure a business continuity plan can be triggered immediately if there is a failure. 
• Consider how you can retain staff without hurting your bottom-line through enhanced terms and conditions, retention bonuses or extending notice periods. 
• Managing your team through change will ensure things are controlled and planned, being careful not to raise expectations but to provide confidence. 
• Consider where you and your team can be more productive and optimise your time.
• Consider a price increase for your customers. 

Engage with external organisations:

• Make arrangements with creditors to manage any debt obligations and look at fixing for a period to give you more certainty and control. 
• Consider engaging with a specialist accountant in business recovery. 
• Renegotiate with suppliers to get better rates and payment terms. 
• You could extend credit terms with your customers to increase revenue - but it does carry risks.
• Consider tax saving opportunities to reduce your overall liabilities.
• Negotiate your VAT payment arrangement with HMRC. 

1. Write out a list of all your current vulnerabilities being specific about which or who are key:

• • People
  • Suppliers
  • Customers
  • Systems

2. From your planning stage, identify which actions you will take to address your vulnerabilities using the action plan. Keep track of which actions you have completed and any follow-up steps.

Once you have completed as many actions as you can, keep up your momentum and your business’s improved resilience by regularly assessing how things are going.

You will place yourself in a much stronger position when you’re applying for any finance or negotiating payment terms if you can demonstrate you are regularly assessing your financial health and resilience.

• Refresh your P&L and cashflow assumptions within 60 days and every 90 days as a minimum thereafter. 
• Assess your sales pipeline and ask yourself is it stable at a minimum viable level, improving or deteriorating? 
• Take time to engage with your team and understand how they are feeling. 
• Consider how you can provide confidence that while you can’t predict what will happen, decisions are being made proactively rather than in an ad-hoc way or in response to a specific problem.