First it was social distancing. Then came temporary shutdowns. Now there’s limited reopening. It’s hard to run a business when the rules keep changing. That’s why it’s important to have a “Plan B.” Some people call them “what-if” or “contingency plans.”

COVID-19 has put the need for contingency plans front and center. But even without a pandemic, the rules can still change. A supplier might disappear, a broken pipe floods your business, or a competitor opens up down the block.

That’s where contingency plans can help. By anticipating change, you react more constructively to changes in the business environment. It also takes a little of the stress off, knowing you’ve got  alternatives up your sleeve. Get started on your Plan B with this information.

What Is A Contingency Plan?

A contingency plan is a game plan for a possible future event. Think of it as a back-up plan to pull out, if you ever need it. It can be as simple as what you’d do if all of your employees called in sick on the same day. Or as complex as having to shut down because of a disaster.

SmallBusinessChron.com gives this example of a contingency plan: If the market crashes, we can cut costs 50% by eliminating these departments, and we can access emergency capital in this contingency savings account.

Contingency plans aren’t always about negative events. They could foresee action you’d take if one of your competitors ceased operations. How would you scale up before someone else fills the excess demand?

Define Possible Events

If you spent your time planning for every business scenario, you wouldn’t have time to run your business. So identify the ones you’re most likely to encounter. Here’s a customizable mind map from Creately that can help you identify potential issues in five key areas. Forbes suggests you also consider these external factors: the economy, technology (cybersecurity), social attitudes, government, competition.

A second filter is to look at the impact each of these events might have on your business. If you already have a back-up generator, then it may not be necessary to develop a Plan B for a major  power outage. Use this template from MindTools to help you assign risk based on two variables—probability and impact.

Formulate Your Plan

Now, develop your contingency plan for each event. Keep it simple—this is your action plan for the unexpected. You want to spring into action quickly. Generally, the plan should cover these areas: what action is needed, who’s responsible to implement, who needs to be informed, what’s the timeline for implementation.

It can be a simple one-page document for minor events. Here’s a more comprehensive template from FINRA.

One of the most important parts of the plan is to identify triggers. At what point do you get out your Plan B and implement it? For example, do you take action if you suspect you’re a victim of cybercrime or do you wait until the threat has been confirmed? Either might be appropriate but you need to know when to pull the trigger.

Maintain The Plans

Keep in mind contingency planning isn’t a one-and-done task. New events come up all of the time and existing ones can change. For example, your internet service provider might offer upgraded firewall protection which lessens the cyber risk you identified. So plan to reassess your contingencies periodically.

In addition, review plans with your staff, that includes training any new employees. They might identify gaps in the plan that you hadn’t considered. It can also save time when you need to implement them.

Change is the one thing you can count on when running a business. Planning for it is the aim of contingency plans. Identify your potential events and start drafting your Plan B.