Business continuity planning: Preparing for disruptions
Protect your operations, finances, and team by building a business continuity plan before disruptions hit.
Written by Kari Brummond—Content Writer, Accountant, IRS Enrolled Agent. Read Kari's full bio
Published Saturday 27 June 2026
Table of contents
Key takeaways
- Develop a business continuity plan to keep operations running, bills paid, and employees safe when unexpected disasters strike.
- Identify risks, develop continuity strategies, decide who's in charge of each process, and outline a communication plan. Then, test and revise so you're ready to roll.
- A plan protects your business's employees, finances, and reputation; it should help you thrive, not just survive when disaster strikes.
What is a business continuity plan?
A business continuity plan (BCP) is a documented strategy that outlines how a business will continue operating during and after an unplanned disruption, covering risk assessment, communication protocols, recovery procedures, and testing schedules.
A business continuity plan is a plan to keep your business up and running through unexpected events that disrupt operations, like natural disasters, power outages, public health emergencies, civil unrest, supply chain issues, acts of terror, and reputational damage. It outlines what your business will do to continue operations, minimize financial losses, and protect its reputation during these types of events.
But continuity planning doesn't just have to focus on disasters. You may also want to develop plans for recessions, supplier disruptions, staffing challenges, and even succession plans in case the owner becomes unable to run the business.
The US Census Bureau has information on local data to help you plan for an emergency.
Why a business continuity plan matters
Bottom line, these plans matter because they protect your business; they reduce the risk of an unexpected emergency or event shutting you down or seriously harming your business. According to FEMA, 40% of small businesses impacted by disasters will close within a year. A 2024 U.S. Chamber Foundation study found that only 26% of small businesses have a continuity plan in place. When disaster strikes, continuity plans:
- Minimize financial losses. Business continuity helps to keep revenue flowing in, but you also minimize losses by planning how you'll cover damages, keep on top of bills, and deal with supply chain disruptions
- Protect your reputation. The way you respond to disasters shows your customers who you are and what your business stands for. A well-planned reaction and speedy recovery paint you in a positive light
- Keep employees safe. It's not just about the business's bottom line; planning for disaster also keeps your employees safe physically and financially
- Safeguard regulatory compliance. The right plan can help you stay compliant, whether you're a financial advisor worried about data security in a cyber attack or a restaurant trying to stay compliant with health codes during a water outage
The purpose of a business continuity plan is continuity, but just continuing operations is a pretty low bar. A solid plan speeds up recovery and helps your business thrive, not just survive.
The Federal Emergency Management Agency has more on business continuity planning.
What a business continuity plan includes
You may need a different business continuity plan for each risk that you identify, but you don't necessarily have to start from scratch each time, as a lot of elements tend to overlap.
A business continuity management plan should address the following:
- Communication: Who do you need to alert (management, employees, customers, emergency personnel, key stakeholders, and so on), when, in which order, and how do you reach them?
- Responsibility: Who's responsible for each step in the plan, and who's next in line?
- Reactions: What will you do when disaster strikes? How will you maintain critical operations? This is the core of the plan
- Recovery: Once you get through the disaster, what do you need to do to get back to operations as usual?
- Testing: How often do you need to test the plan? How will you test the plan? And what's the revision process after the test?
The IRS offers resources for business continuity planning for small business.
How to create a business continuity plan
Creating a plan starts with research and analysis, followed by drafting and planning, and finally testing and revising. Here are the steps to follow.
1. Identify the risks
Think about threats like natural disasters, cyber-attacks, power outages, and so forth. Don't get overwhelmed; identify the most significant threats to your business, based on both their likelihood of happening and how much they'll affect you, and start with the most relevant threats first.
2. Perform a business impact analysis
A business impact analysis (BIA) is a process for determining how each identified risk would affect your operations, revenue, and resources. Consider exactly how each event will affect your business. Will it put your property or equipment at risk? Will it prevent customers from reaching your store or employees from getting to work? Will it shut down your computer systems?
3. Be creative
You can't predict the unexpected, but the more you consider during the planning process, the better off you'll be.
4. Start to draft the plan
Your plan needs to include your planned reactions, who's responsible for each step, communication processes, recovery strategies, and testing procedures.
5. Workshop it
To get the full benefits of a business continuity plan, don't limit planning to your internal team. Reach out to consultants, insurance providers, or even colleagues who've been through disasters before. Talk about your strategy and get their insights on how to improve the plan.
6. Test and revise
Business continuity plans aren't static; they're dynamic. Test them, look for weaknesses, and revise as needed. Changes in threats but also internal changes ranging from new computer systems, to expanded staff levels, to different configurations with office furniture, can all affect how well your plans work.
Use a business continuity plan template to help you get started.
Tips for small business continuity planning
Small businesses face unique challenges when it comes to continuity planning. With limited staff and tighter budgets, the stakes are often higher, and there's less room for error. The Small Business Administration recommends that every business create a response plan tailored to its specific needs and operations.
If you're a sole owner or operate with a very small team, your plan should address what happens if you're personally unable to run the business. Identify a trusted person who can step in to handle critical tasks, and make sure they have access to the accounts, passwords, and contacts they'd need.
Cloud-based tools can make a big difference for small businesses. Storing financial records, customer data, and key documents in the cloud means you can access them from anywhere, even if your physical workspace is unavailable. This also reduces the risk of losing important data to hardware failure or damage.
Remote work readiness is another practical step. Even if your team normally works on-site, having a plan for how everyone can work remotely during a disruption keeps operations moving. Test your remote setup before you need it so you're not figuring it out during a crisis.
Business continuity plan vs disaster recovery plan
Business continuity management plans tend to be broader and focused on more threats than disaster recovery plans. Disaster recovery plans focus specifically on natural disasters or cyberattacks and often even more narrowly on IT disruptions. Business continuity plans, in contrast, position a business to get through a wider range of disasters, and they never focus exclusively on IT.
However, these definitions aren't standardized, and differences often depend on who you ask. For example, you may hear that business continuity plans are focused on getting through a disaster, while disaster recovery plans are focused on recovering after a disaster. When it comes to emergency preparedness, businesses should consider both types of plans.
The National Institute of Standards and Technology defines business continuity plans as plans to survive significant disruptions.
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FAQs on business continuity planning
Business continuity planning is a critical part of protecting your business. To make sure you're ready for anything the world throws your way, review these FAQs.
Who should own a business continuity plan at a small business?
Continuity planning and disaster recovery needs to come from the top. The owner, executive team, manager, or other senior leadership should own the business continuity plan. The plan's owner is responsible for developing, testing, maintaining, executing, and reshaping the plan.
How often should you test a business continuity plan?
Test your business continuity plans at least once a year, but consider more frequent testing based on the risk and internal changes such as new leadership teams, significant numbers of new employees, new locations, or other changes that affect how the plan will play out.
How long does it take to create a first business continuity plan?
It varies, but plan for at least two weeks if not several months. Developing the plan takes anywhere from eight hours to a full week: think meetings to assess risks, talk about strategy, and research best practices, followed by drafting, reviewing, and revising the written plan. Then, testing, training, and updating the plan after you see it in action can take a couple of weeks to a few months.
Is a business continuity plan required by insurers or lenders?
Sometimes, but it depends on the type of business and what's covered by the insurance plan. Insurers and lenders often require business continuity plans from businesses in highly regulated industries such as healthcare and finance. Insurers also require continuity plans for policies with business interruption clauses and disaster recovery plans for cyber liability coverage.
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