Every year more than half a million small businesses fail, with approximately 22% closing their doors within their first year. Success, defined by lasting beyond five years, is achieved by only half of all businesses. Beyond simply having a competitive edge, superior product, or adept management, successful businesses often navigate significant challenges, adapting and evolving in unforeseen ways. Resilience is the defining trait among these thriving enterprises. Alarmingly, 95% of business leaders acknowledge the need to enhance their crisis management capabilities. If you find yourself in a similar position, your business may be vulnerable to the next catastrophe.
Business resilience vs. Business continuity
Business resilience and business continuity share similar principles but diverge in their focuses. Business continuity centers on maintaining operations seamlessly, even amidst adversity or natural disasters, with plans and procedures in place to ensure normalcy and exceptional customer service. For instance, a small retailer might store extra supplies to fulfill customer orders and establish alternative material sources to tackle supply chain disruptions.
On the contrary, business resilience extends beyond mere operational continuity during crises. It encompasses a company’s capacity to adapt and rebound from disruptions, ensuring sustained growth over the long term. Resilient businesses are adept at navigating unexpected challenges and often emerge stronger. They achieve this by innovating and adapting in response to adversity. For example, a business might devise new processes to manage supply chain disruptions or diversify its revenue streams by offering online services or new products to offset any losses incurred during the disruption.
Business resilience examples
COVID tested businesses large and small, and only the resilient made it out.
In March 2020, the pandemic shuttered over 53% of Indian businesses during the lockdowns, and roughly 400k closed permanently by June 2020. And guess who fared the worst, the small-business owner.
Here are a couple of examples of businesses that were resilient during and after the pandemic:
Hula Global is an apparel manufacturing company the business was doing well until the coronavirus pandemic hit the country. Karan says, to run the business operations and tide through the hard times, he diversified its business into manufacturing PPE kits, N95 masks, face shields, etc., to meet the rising demand for such products in the country.
HOMESCAPE Founded in 2013 by Manoj Khandelwal, the Bengaluru-based company is a co-working space. As most people started working from home due to the coronavirus, the company came up with an initiative called ‘HOMESCAPE,’ to provide furniture to people working from home. providing them with comfort and ease at the same time.
But a pandemic isn’t the only challenge that businesses have faced over the years. They’ve also gone through recessions and, in certain areas, natural disasters.
For example, Sally Day, director of Saltoria Marketing, a UK virtual marketing agency, and her then-partner, launched their business in July 2020. Given the nature of the pandemic, the two designed a flexible and agile model to ride the unpredictable waves of the business landscape.
Offered multiple packages to suit businesses at whatever point they were at (e.g., one-off projects or monthly retainers),” says Day. “This meant we weren’t restricted by one way of working or charging and could work with the business’s objectives and budget. Our retainers are built to be on/off for maximum flexibility too, so people don’t feel bound to long and expensive contracts.
They outsourced many tasks to experienced freelancers from various marketing disciplines to build a team.
This allowed them to:
- Build a bespoke team for each project/client experience.
- Be truly flexible by only paying freelancers for what they do.
- Keep costs low and client fees competitive Cherry-pick the best talent for each project.
How to build business resilience
Building business resilience involves creating systems and processes that make it easy to respond quickly, effectively, and efficiently to unexpected disruptions.
According to McKinsey, these are the five ways businesses are building resilience:
Creating resilient operations
Companies are redesigning their operations and supply chains to be more flexible and resilient. This includes having global and regional suppliers and cross training their workforce to manage different areas of the business in the event of workforce shortages.
Adopting Industry 4.0
Going digital is an affordable and agile way to maintain productivity and connectivity with each other and customers. Those that haven’t already are digitizing their operations to make them more efficient.
Allowing spending transparency
Companies can improve their spending strategies by increasing transparency around capital and expenses. For instance, tech-based methods speed up cost transparency, reducing the effort of performing calculations manually from months to weeks or days. Other digital approaches may include procurement spending analysis, inventory rebalancing, and capital spending diagnostics.
Embracing workplace automation and technology
More companies are allowing employees to operate remotely using collaborative tools. Businesses are also using automation to remove repetitive tasks to allow workers to be more efficient. This shift will require training employees to use new technologies.
Becoming agile
Fast-changing shifts in consumer demands and industry structures requires businesses to adapt fast. This may include reimagining how you run your operations to bring value to customers. Some examples include rapid product development, customer experience innovation, and digitization.
These are just some of the options businesses can employ to maintain resilience. The key is finding what works for your business and customers, so you emerge from challenges stronger and more competitive.
Steps to create a business resilience plan
Creating a business resilience plan is essential for any organization looking to ensure its long-term success. Here are some tips for creating a comprehensive, effective plan:
Identify potential risks
Before creating your resilience plan, understand the types of disruptions your business is susceptible to. This might include natural disasters, cyberattacks, supply chain issues, or economic crises. In compiling a list of risks for your business, consider your industry, competition, geography, and any regulations you may be subject to.
Assess the potential impact of each risk
Once you have identified potential risks, assess the potential impact of each one and prioritize them accordingly. This will help you to create a plan that’s tailored to your organization’s needs.
Develop a response plan
Create a comprehensive plan for responding to and recovering from disruptive events. This plan should be as detailed as possible, including details such as who’s responsible for each step and what resources are needed.
Involve all stakeholders in the process
Include all stakeholders, such as employees and investors, in the process to ensure a successful outcome. This way, everyone knows their role in responding to disruptive events.
Test the plan
Regularly test and practice the plan to ensure it’s up to date and effective. This can be done through drills, simulations, tabletop exercises, and more.
Review and update the plan
Your business resilience plan should be a living document that’s regularly reviewed and updated. As your business evolves, so will your risks, and your plan should be flexible enough to adapt to these changes.
Continuously monitor the environment for changes
Monitor external factors such as regulations, technology trends, customer needs, and the competitive landscape to anticipate potential risks.
Once you have a business resilience plan in place, you can focus on monitoring how well it works.
How to measure business resilience
Measuring business resilience will determine how well your business will stand against whatever life throws its way. To effectively measure your business’s resilience, assess the following areas:
Response time
Monitor how quickly your business detects and responds to disruptions. This includes both internal responses, such as IT security threats, and external responses, such as natural disasters or economic crises.
Recovery time
Assess how quickly your company recovers from disruptions. This includes restoring services, retrieving data, and returning to normal operations.
Adaptability
Evaluate your organization’s ability to adjust its operations to changing circumstances. This includes adapting processes, adjusting budgets, and responding to new regulations or customer needs.
Risk management
Monitor how well your organization can identify and address risks. If you struggle to manage risks, then there may be gaps to fill or better management processes to put in place.
Financial stability
Evaluate how well your business maintains its financial well-being during a crisis. The ability to generate consistent revenue, maintain cash flow, and manage expenses is critical during unexpected events.
Supply chain
Evaluate your business’s ability to maintain a stable supply chain during unexpected events. If your suppliers are unreliable, consider adding new or additional options to your network.
Employee morale
Identify how well your organization retains employees during a crisis event. If it struggles, then it could be that employee morale needs improvement.
PROGREC, empowers businesses to build resilience by providing comprehensive solutions designed to withstand and adapt to disruptions. We offer strategic consulting, robust risk management frameworks, and innovative technology integration to ensure your operations remain agile and responsive in the face of unforeseen challenges. By transforming potential threats into opportunities for growth, we help you navigate uncertainty with confidence, fostering a culture of resilience that permeates every level of your organization.