Author: Bayan Academy

Abstract

The COVID-19 pandemic highlighted the fact that disasters do not select whom it strikes, and in the Philippines, the vulnerability of MSMEs has been put on the spotlight. Trying to keep afloat on uncharted waters hasn’t been the best strategy, causing thousands of businesses to close down. As these realities surfaced, business continuity planning (BCP) proved itself to be a top priority for every entrepreneur moving forward. The simple framework in this case study can guide entrepreneurs with a step-by-step approach in crafting their business plan equipped with a strong risk management layer, which essentially is the C in BCP. More than a systematic series of steps, nurturing a proper mindset is essential, as this is a crucial ingredient in building a future-proof business. With the call for innovative and transformative solutions, a technological shift is necessary to drive businesses ahead of future crises. 

Introduction to Business Continuity Planning

COVID-19 struck the world at lightning speed which left no room for a planned reaction. This is how disasters usually strike, disrupting regular programming and causing unprecedented changes in just a blink of an eye. As an immediate response to the pandemic, tough containment measures were implemented across the Philippines which severely disrupted the economy. These containment measures “have paralyzed the economy, resulting in the losses of incomes, jobs, and investments, and disruptions in domestic value chains.”, according to a report by the World Bank. However among all sectors, “the biggest economic casualty has been micro and small enterprises.”

Disasters and crises do not select who wins or who losses, so it is upon the entrepreneurs to arm themselves with proper planning and tools on how to ensure their businesses stay afloat, even more so, thrive in times of unprecedented attacks. At the onset of the COVID-19 pandemic, a contingency and recovery plan has proved itself to be a top priority of every entrepreneur. This is where Business Continuity Plan (BCP) comes in.

The International Labour Organization defined BCP as “[providing] opportunities not only to cope with adverse events, but also to develop a stronger strategic approach that will improve overall business operations and processes.”  In essence, a BCP is a contingency plan with an overarching goal of making an enterprise viable and resilient in the long run.

It is a common misconception that BCP equates to a crisis-coping plan. It is not about scrambling to develop solutions for an already pressing problem. BCP is a futuristic plan. It is an outline of action plans and measures on how to cope with various potential adversities that might affect an enterprise. It is an entrepreneurial discipline that is integral in ensuring a future-proof enterprise. 

A business continuity plan is an integral component of any business plan. The integration of a strong risk management layer is what makes the “C” in BCP, wherein potential risks are forecasted and contingency plans are laid out to eliminate or mitigate these foreseeable risks. A simple framework shown below can serve as a guide in the process of creating a BCP.

In creating any business plan, there are two approaches to strategic planning according to Dr. Eduardo Morato, Jr. First is the Top-Down approach which begins with the end goal; while the second is the Bottom-Up approach which begins with the environmental analysis. Whichever process is to be adapted, defining the end goal is a critical step in strategic planning. Where does the enterprise want to be in the next few years? In this framework, the first step is for the enterprise to develop its VMOKRAPI: Vision, Mission, Objectives, Key Result Areas and Performance Indicators.

The second step is to assess both the external and internal environment to understand factors that may favorably or adversely affect the enterprise. This assessment should yield opportunities and threats from the external environment, while strengths and weaknesses should surface from the internal environment analysis. A SWOT (strengths, weaknesses, opportunities and threats) analysis must be conducted to generate strategies that are in line with the desired results. 

Simultaneous with the SWOT analysis,  forecasting potential risks for each strategy should come into play to allow the entrepreneur to select the best strategies to be adapted. Once best strategies are selected, preventive measures must be put in place to equip the business with action plans to continue to thrive in times of adversities.  

Crafting a BCP requires a certain art of thinking- infusing critical, futuristic and creative aspects. In formulating a BCP, three approaches will be discussed: Futuristic Thinking, Risk Management and Potential Problem Analysis.

Critical Approaches: Futuristic Thinking

Building foresight is a critical approach to see the future horizons of a business and have a better grasp on managing possible scenarios, both favorable and adverse. However, imagining the future is not an easy task for everyone. Some people tend to dwell in the past, while some resist new knowledge, thinking they already know too much, also known as educated incapacity. One simple, yet overlooked approach to nurturing a futuristic mind, is to think as a beginner; to see things in a new way.

In the book FutureThink by Edie Weiner and Arnold Brown, four techniques surfaced in nurturing a futuristic mind. The first technique is to look through alien eyes, which means stimulating the mind to see alternate realities and challenge existing assumptions. The second technique is to look at trends and counter trends which entail seeing both sides of a trend and finding opportunities in the extremes. The third technique is to substitute the spiral for a pendulum, which is a metaphor for looking at trends as ever evolving, rather than remaining the same, like the constant left and right swing of a pendulum. Finally, the fourth technique is to keep in mind that the extremes inform the middle. This shows the potential emergence of new realities stemming from extreme or opposing trends or way of thinking.

Anchoring on the past becomes a barrier to learning an abundance of new knowledge, which will result in getting stuck and becoming stagnant. As Dr. Morato puts it, “you can no longer manage the past, that’s done with. What you can do is manage the future.” 

Critical Approaches: Risk Management

Entrepreneurs often overlook the importance of forecasting risks due to their overflowing passion and positive perspectives. However, choosing not to see the risks doesn’t mean they won’t exist, just as how the world did not anticipate an onslaught of a pandemic that would change the dynamics of how people live. 

         To prepare a resilient business, here are four steps an entrepreneur can follow to assess and manage risks. To be able to manage risks, one must first forecast potential risks, thus making this the critical first step. Take a bakeshop owner as an example, where fluctuating costs of raw materials and an influx of competitors can be potential risks. The second step is to determine which risks have the highest probability of occurring in your business. With the seasonality of selected raw materials, volatility in costs should be expected. The third step is to determine the probable implications to the enterprise should the risks indeed occur. More than the rise in production cost, supplies of raw materials may be scarce. The fourth step is to create preventive measures as a strategy to eliminate or reduce potential risks. In the example given, the bakeshop owner can source alternative raw materials which are less price sensitive, or reassess pricing strategy to consider an allowance for cost fluctuations. 

Critical Approaches: Potential Problem Analysis

         Creating contingency plans is not a hit or miss exercise, but requires in-depth research and analysis to make informed and well-justified decisions. To arrive at such decisions, critical thinking must come into action.

Critical thinking is purposive thinking. Its purpose is to understand a situation in order to settle an issue, solve a problem, or seize an opportunity. It is about making a highly-informed choice that would allow the attainment of the objective or the desired result. Critical thinking comes in handy especially in developing strategies and preventive measures.

Creating strategies and preventive measures are not mere bullet points of back-up plans, but a full operational plan on how the business can, not just survive but thrive, despite risks that may arise. There are five filters of information to aid in practicing critical thinking: relevance, importance, magnitude, urgency and doability. Relevance pertains to  defining  the scope of information that must be considered in  decision making. Importance pertains to the critical variables which consist of the most important data, facts and figures out of all the relevant information. These are factors that will significantly affect the desired end result, either favorable or not. Magnitude reflects the scale of effect of the consequences and implications of variables such as, trends, directions, movements, and patterns involved in the decision making. Urgency refers to timing. It is about determining the best time to take an action or a decision. It may also be about making the best decision possible at a given point in time. Finally, doability is about evaluating the capacity, competency and willingness of the entire organization and its stakeholders with respect to a course of action or decision point.

Even with these filters of information, there are still decisions that are not easy to make. What makes a decision more complex is the matrix of potential results and effects, both positive and negative. Some factors that make a decision harder to make are the existence of negative values, uncertainties and potential problems.

Negative values are arguments which may arise from a decision that is not favorable for an enterprise, most of which can easily be anticipated by the decision maker, such as additional costs and opportunity losses. Uncertainties, on the other hand, may arise due to the inability of the decision maker to exactly predict, control or estimate outcomes. Most common examples are external factors which are uncontrollable and ever changing. While potential problems are events that may happen following a decision that are unfavorable to an enterprise, both controllable and uncontrollable.

In developing and selecting strategies, the negative values, uncertainties and potential problems of every decision point must be properly recognized, precisely defined and transparently accounted for to the best abilities of the entrepreneur. To aid in choosing the best strategy, four steps may be followed. First is to identify all the negative values, uncertainties and potential problems, or negative factors, of a decision. For instance, an entrepreneur wants an e-commerce platform developed to adapt to the shift in the technological landscape. High costs in developing the platform, lack of expertise, and ever changing tech landscape are some of the negative factors to be considered. Second is to determine the most important variables that would affect the negative factors. Technological expertise, internet infrastructure and learning curve are some of the critical variables that may pose problems in choosing the strategy. Third is to determine which negative factors would have the greatest impact on the desired outcome of a decision. The lack of technological experts in the enterprise can heavily impact the desired outcome as the entire strategy is rooted in shifting the business to a new technology model. The final step is to figure out how to reduce the negative factors. To address  the lack of technological experts within the enterprise, one preventive measure is to outsource from industry experts and adapt tried and tested technology tools.

Before any contingency plans can be developed, an entrepreneur must understand where these potential risks come from. In order to drive out these potential risks, an in-depth situation assessment of both the external and internal environment must be conducted.  

External Environment Assessment 

The external environment covers everything outside the immediate control of an enterprise. This encompasses four levels: (1) the macro environmental factors - social, political, economic, ecological and technological - which can be referred to as SPEET; (2) the industry, sector and area that the enterprise is participating in; (3) the market which the enterprise is serving; and (4) the micro market or the consumers directly targeted and tapped by the enterprise.

The first level is the macro environmental factors, or the big picture, which covers social, political, economic, ecological and technological factors. These are conditions or trends that exist, external to a business, which affects the economy as a whole. Social factors touch on demographics and behavior of consumers.  Political factors include laws or ordinances that vary according to cities, provinces and countries, as well as influences of political powers. Economic factors include supply and demand, market prices, interest rates, purchasing power and many more. These generally indicate to the overall economic well being of a country, which may affect business performance at any given time. Ecological factors cover natural resources and its management and conditions. Finally, technological factors carry risks due to high levels of uncertainty. As technology enhances business landscape with innovation, digital solutions, automation, Artificial Intelligence to name a few, the unfamiliar, untried and untested side of technology poses high possibilities of risks. From acquiring new machinery and equipment, operating systems to specialized softwares and facilities. 

The second level are three major slices of the big picture: the industry, sector and area environments. Industry is a “group of companies that are related based on their primary business activities”. Businesses and enterprises can be classified according to raw materials, end products and services or business function in the economy. Sector is “a classification of individuals, groups or institutions with a similar set of traits and similar needs.” While area refers to the context of the geographical location which the enterprise is participating in. 

The third layer is the market environment. This covers trends and patterns that affect the supply and demand of products and services, as well as variables that affect the traits, characteristics and consumer behavior in a given market that an enterprise serves. Purchasing power, rise of alternative products and services and changing business landscapes are just a few of the variables that heavily affect supply and demand and alter market conditions.

Lastly, the fourth layer is the micro market environment. This layer is within the market environment, however, it focuses on “the locations or specific customer groups which an organization wishes to serve.” This layer encompasses the demographics, psychographics, customer behavior such as needs, wants and preferences and consumption patterns. 

Internal Environment Assessment 

As much as looking outward is important, so is looking inward. This is where internal environmental assessment comes in. The in-depth assessment encompasses a ten-level analysis approach which covers the four major management functions of a business – marketing, operations, human resource and finance. To put it simply, Dr. Andy Fererria shared a simple approach in understanding the four pillars. Marketing is about making a promise; operations is about keeping the promise; human resource is ensuring people can deliver the promise; and finance is about funding the means to deliver the promise. 

Marketing touches on the strategies which the enterprise employs to sell their products and services to their desired market. This encompasses strategies, activities and programs that establish an enterprise’s character and how they want to be perceived by the market. Potential risks include substandard quality of products, inaccessible sales channels and ineffective marketing programs and materials, to name a few. 

To better understand potential sources of risk under marketing, it is imperative to have a good foundation of the seven factors that comprise the field of marketing: positioning, product (or service), packaging, place, price, people and promotion. Positioning refers to the strategies employed that define the enterprise’s unique selling proposition. Product is the actual product or service offered by the enterprise which addresses needs or wants, or serves a purpose for the target customers. Packaging refers to how a product or service is presented to the market. This includes, but is not limited to, the physical packaging of a product, how services are offered,  and the process of developing packaging that adds value to the product or service. Place refers to the geographic location, accessibility, distribution and sales channels of the product or service. Price refers to the pricing strategy for a product or service. People refers to people involved in making a product or service and making it available to the market. Finally, promotion can also be referred to as advertising. These are strategies, activities and programs that aim to effectively market a product or service to achieve the end goal of becoming a profitable enterprise.

The second function is operations. Operations management ensures that the products sold and services rendered to the customer’s go through the best input-throughput-output processes with the least inefficiency and the maximum productivity. This function encompasses work processes, operating systems, overall management and operating conditions. Potential problems may arise from poor operating systems, unskilled workers, poor working conditions and inefficient workflow to name a few.

Human resource, the third management function, is essentially the heart of an enterprise. However, without good people management systems, problems are bound to happen. Incompetence, underperformance, resignations, lack of integrity and theft are some common risks which may happen to any enterprise. The HR function is broken down into eight Rs: recruitment, retooling, routing, retaining, resonating, reviewing, rewarding, and recycling.

Recruitment refers to the proper selection and hiring process of people. Retooling refers to the programs, training and development initiatives and practices of an organization for its people. Routing is the proper assignment of people to the right positions, jobs or tasks. Retaining focuses on the capacity of an organization to ensure the productivity and overall positive well being of the people. Organization culture, work ethics and management style fall under this facet. Resonating means to align or be “in tune” with the company, it’s mission, vision, values and goals. Reviewing refers to the proper appraisal of people in accordance with the performance parameters set. Rewarding is the proper compensation and recognition of the people which includes salary, incentives and awards. Finally, recycling is the organization’s ability to reorganize its people and transfer them to other meaningful jobs within the organization or to recycle them back to the outside world.

If risks are not prevented, contained or managed, the profitability of a business is threatened. This is where financial risks come into play. Without proper management of financial risks, a business may collapse. There are seven facets of the finance function that must be evaluated to assess where risks may arise: financing, investing, negotiating, administration, numbers generation, cash management and evaluation. 

Financing refers to the monetary resources needed to fund the enterprise and how and where these will be sourced. Investing means to allocate resources with the goal of generating financial return in the future. Negotiating encompasses securing the best deals, terms and conditions, on all investment and financial transactions to ensure efficient use of monetary resources. Administration refers to the financial processes and overall management. Accounting, budgeting, cashiering, and even purchasing functions are some of the processes that are included in this facet. Numbers generation refers to the gathering and recording of relevant data, proper analysis, reporting and presenting as means of generating relevant insights and information about the enterprise. Cash management refers to the flow of funds, ensuring that all activities are efficient and allows for optimal use of funds, from sourcing until usage of funds. Finally, evaluation refers to the analysis of the performance of the enterprise, past, present and future.

Globe MyBusiness Solutions

The effects of the pandemic have compelled businesses to explore new business models and fast track the adaptation of digital solutions. According to the report by the World Bank, due to the economic growth contraction caused by the COVID-19 pandemic, a business-as-usual approach will not be enough and a transformative solution is imperative to increase the economy’s productivity and competitiveness. “That transformative growth solution lies in harnessing the potential of the digital economy.” 

Even though the digital infrastructure in the Philippines is still at its infancy, technological solutions are becoming more and more accessible to MSMEs. With the help of Globe myBusiness, businesses now have an abundant resource of easy-to-use tech solutions to adapt and become one step ahead of the digital revolution. 

“From 23 million in 2010, the number of Filipino internet users has more than tripled to 73 million in 2020.” With the 300% growth of internet users in just a span of 10 years, online presence is no longer just an option but a prerequisite for every business. Adapting basic communication platforms, such as mobile, landline and the internet will provide an avenue to stay connected with customers and business stakeholders.

Digital transformation entails bringing the entire business model online. Nerve wracking as it may seem, tech models have been developed to seamlessly transition to a digitized business model. Features such as G Suite lets everything be saved in the cloud, which means anyone within the organization can work anytime and can access work files anywhere. With the ability to store all files in a cloud drive, gone are the days scavenging through heaps of physical documents. Having everything in the cloud, going paperless is essentially the next step. The GoCanvas feature allows the creation of customized digital forms and provides a centralized platform to access important data and generate real-time reports. 

The COVID-19 pandemic caused a surge in contactless and cashless transactions. With the social distancing protocols becoming the “new normal”, digital payments are set to replace the cash economy. Features, such as Gcash, can easily provide a cashless avenue to manage funds, financial obligations, employee salaries and incentives, and many more in one simple platform.

However, digitization doesn’t stop with the basics. To foster a competitive business in the new economy, utilizing technology as a means of scaling up will ensure a resilient future. Globe offers a variety of solutions tailored fit to a wide range of needs, such as Shopify Add-On features to maximize e-commerce platforms, Rush Rewards feature to curate a rewards program suited to a specific customer segment, myBusiness Hotel Management System feature which aims to streamline hotel operations and Facebook Ads feature to promote and advertise businesses online, widening the reach and awareness of a business. 

Creating a business continuity plan entails determining future possible scenarios, mainly unfavorable ones, and building strong contingency plans - if and when the scenario would materialize - to eliminate or mitigate these unfavorable scenarios. With how the pandemic shifted the business landscape and economy of the Philippines, digital transformation plays a big role in the future of every business. According to the report by the World Bank, “The transition to a digital economy will make the country more resilient to external and natural shocks like the COVID-19 pandemic.”

This famous idiom which says, “Let us cross the bridge when we get there.” might seem like a positive point of view, but to be a successful entrepreneur, one must be one step ahead of the problems. With the ever changing business landscape paired with unprecedented world events, the more applicable adage that entrepreneurs must hold dearly must be the Murphy’s Law: “If anything can go wrong, it will.” This presumably negative mindset will definitely put an entrepreneur ahead of the game.

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