When building business systems, it is essential to recognize that contingencies outside the scope of the system will happen. For example, your phone answering system may include how to handle telemarketers or salespeople. But what if a salesperson met the VP personally at an event and now wants to continue their conversation? A contingency could be made: if the caller states where they met the executive, they can be put through to the VP’s direct line.
Every business runs across contingencies. Some are predictable. Others are circumstances that have yet to be considered. The question is, how does one plan for contingencies in advance and then include them in systems?
Business Success Consulting Group CEO Adi Klevit recently interviewed Byron McFarland of The McFarland Group, and they discussed how his group plans for the unexpected. The McFarland Group helps business owners transfer company ownership internally. This is an extensive process that is filled with potential risks. So, Byron has thought through contingencies for just about every circumstance that could occur.
Though the discussion was specific to contingencies around business sales, it is something we can examine and expand upon in this article.
How to Include Contingency Planning In Your Systems
If you have built business systems, you’ve encountered contingencies that don’t fit the process. Some of these events can be solved rapidly with a quick note of “If __ happens, do ___.” Others are tricky and may need an additional system.
For example, you may document the service delivery process to a customer. It works well when the customer is satisfied with the result of your work. However, what do you do when you have an unsatisfied customer? Is it going to be as simple as giving them a refund? What if you have delivered your services over a period of months, or your customer has suddenly changed their mind and become dissatisfied? A refund may not be enough or it may cause your business too great a loss.
Even if the solution is a simple refund, where does that money come from? Are you going to create an accounting procedure in which you hold all funds from a client for a particular period after delivery of service on the off chance that they need a refund?
This contingency may spin off into its own process.
With the complexity of some contingencies in mind, let’s define a five-step process for examining potential contingencies and ensuring you are covered on a risk-adjusted basis.
Five Steps for Including Contingencies in Every System:
1. Brainstorm (with your team) to determine possible roadblocks.
Get your system-building team together for a meeting about contingencies. Determine what circumstances you need to solve, then head to step 2.
2. Select at least three possible solutions to these roadblocks.
An example that Byron gave in the interview was:
Let’s say a business owner plans to sell their business to someone on their executive team. The owner and the team member may write out and sign an agreement or have a tacit agreement. However, what if something happens to the buyer?
One option is for the business owner to buy life insurance for that buyer as a hedge against loss. Another is to invest financially in the team member to ensure they are incentivized to continue the deal – even if their partner gets a fantastic offer or career opportunity that requires a move. Another is to carry excellent health insurance for employees, ensuring their health and recovery from injury or illness is a top priority.
Presenting these three solutions allows the business owner to make an informed choice. They can mitigate risk by picking one or more options – or they can decide the risk is worth the savings. They may also have their own ideas; for example, they could choose to sell the business not to an individual executive but to their family so that the company becomes family owned. That spreads the risk without costing the business owner more money.
You can plan now that you have named a circumstance and laid out several solutions. What solution do you want to put in place? In what circumstances will it be used? You may find that a solution you’ve decided upon actually solves more than one problem, which means putting it in place is even more vital for your company’s efficiency.
4. Get all of the pieces into place.
Now that you know what you need to do, it’s time to do it.
- Add the contingency to the system.
- Lay out the process for resolving the contingency.
- Set up or purchase anything necessary to ensure the process works.
- Run through the contingency process.
- Modify it as needed.
5. Continue to build your system with the contingencies noted.
Don’t let contingencies stop you from building your business systems! Keep building and growing with the contingencies and any other processes noted – and made accessible.
Building and implementing processes and procedures is vital for growing and scaling any business. Get in touch with the experts here at Business Success Consulting Group for your no-cost initial evaluation.