To be an apt entrepreneur, one has to be aware and capable of adapting all the suitable perks that will ultimately ensure the maturation of their venture. Moreover, one of the keys to success is the ability to satisfy your clients’ demands and projects on time, within the allotted budget and scope, and notably, meeting customer expectations.
Understanding the project management lifecycle and incorporating the right project management tools will go a long way in ensuring your startup handles all its projects effectively and successfully. Unfortunately, some things can be out of your control and may not neatly follow the script. Unexpected things that firms don’t plan for might ultimately sideline projects.
That’s where having a contingency plan comes in handy. An apt entrepreneur or project manager is always aware that any project might end up tanking even in the good times or when business is booming.
As a result, they embrace the fact that they ought to have a contingency plan or a plan B to minimize the impact of unforeseen circumstances and ensure any projects carry on without disruption.
This masterpiece elucidates a contingency plan, its benefits, and a step-by-step guide for creating an ideal contingency plan for your startup’s projects.
What Is A Contingency Plan?
In brief, a contingency plan or a scenario plan is a course of action designed for an outcome other than the usual plan. It’s a plan devised to help an organization respond effectively to an unfortunate future event that may or may not happen.
Essentially, a contingency plan is a ‘Plan B’ or backup plan to be put in place when things occur differently than anticipated. Consequently, it reduces business risk, hastens disaster recovery, and ensures the smooth execution of business processes.
Note that a contingency plan is not similar to a crisis management plan. Instead, it’s a proactive strategy to prepare for any disruptive events. Also, you can only create contingency plans for identifiable risks. That is, it’s almost impractical to plan for a risk you haven’t identified before partaking in any project.
Finally, and most importantly, contingency plans aren’t necessarily helpful during unfavorable events. There are positive contingency plans designed to capitalize on strategic opportunities. For instance, what to do if your startup receives an unexpected sum of money or other resources.
A typical example of a contingency plan is to back up website data if your startup’s sites get hacked.
The ideal contingency plan for your startup primarily depends on your venture’s industry and location. This enables you to make plans for natural disasters, financial or labor shortages, market crashes, high customer churn rates, and what to do if a client doesn’t settle payments on time.
Why Is A Contingency Plan Important?
The essence of any contingency plan is to allow an organization to return to its daily operations promptly after an unseen event. Without a scenario plan, you expose your startup to a vast pool of avoidable risks. Also, there are minimal chances of completing a project without a relevant contingency plan. Here are other benefits of contingency planning:
- Minimizes loss of production in case of business disruptions such as power outages or natural disasters. For instance, your contingency plan might include emergency generators for power.
- An efficient contingency plan helps avert panic. On the occurrence of a disaster in your startup, there is a high likelihood your team members will panic if there is a lucid plan of action to follow. On the contrary, employees can move into recovery mode quickly instead of awaiting instructions with a contingency plan in hand.
- Increase awareness. With a contingency plan, you can evaluate all possible scenarios and consequences, strengths, and shortcomings of any project. In turn, you will have more organized prevention, resolution, and recovery strategies.
- Finally, comprehending all the intricacies of your startup and, significantly, performing a complete analysis of possible threats and solutions enhances your confidence and employees’ assertiveness about the venture’s trajectory.
How To Create a Contingency Plan
Proper research and brainstorming are the backbones of any effective scenario plan. Still, when creating your startup’s contingency plan, prioritize the following sequence of events:
1. Pinpoint All The Risks
As already outlined, it’s almost impractical to create a contingency plan without first knowing what you are planning for. Have a sit down with your team and figure out any potential scenarios that can impact the upcoming project. Also, you might consider scrutinizing former risks you experienced handling other projects. The objective is to identify all possible risks, small or huge, those with the least likelihood of happening.
2. Analyze The Severity
Upon identifying all the possible risks, prioritize them based on their potential impact. For example, which risks have the most significant implications for your project? Next, prioritize the risks by judging how likely the risk is to become a reality. For example, highly likely and very unlikely. Then, evaluate how impactful the risks would have on your project. This process makes it easier to focus your efforts on the upcoming steps.
3. Come Up With Appropriate Actions
Since you know what to plan for, figure out how to combat the surprises if and when they come along. For example, some problems might have several ways to solve them. As such, it would be best to involve your startup’s team members to determine the most relevant ideas.
4. Get Approval of The Plan
Once you are satisfied with the contingency plan, get the plan approved by the relevant stakeholders. The contingency plan should be in place concurrently with the project plan. The best practice is usually to submit your project plan alongside the scenario plan.
5. Share The Plan With Your Team
A contingency plan that stays on writing might as well be futile and a waste of resources. You have to communicate your plan to all employees and stakeholders. A scenario plan can only be effective if appropriately shared with the relevant parties.
6. Review The Plan
Constantly revisiting and making appropriate adjustments to your startup’s contingency plan will go a long way to ensure it’s fit for purpose, regardless of the stage your project is at. In addition, it’s vital to update the contingency plan as new employees, software, or different options enter the picture.
Ultimately, it all comes down to whether your startup has a contingency plan for all of its projects. Brainstorming any potential risks your startup might experience before handling projects and, importantly, developing effective strategies to combat the situation will ensure you successfully handle projects. Still, it would be best to have the right project management tools such as Praxie to help you create an ideal and efficient contingency plan.