What Is a Business Continuity Plan? (BCP) and How To Create One

Discover the essentials of business continuity planning, ensuring your organization’s resilience during disruptions and safeguarding critical operations.

If you’re starting a business, you need to plan for the worst. You’re managing your Instagram account and a fellow business you’ve interacted with in the past asks you to check a link for them. You click on it and realize too late that it’s a spoof of the account you’re familiar with and it’s a phishing scam. Now what?

A business continuity plan is a vital document that outlines the steps an organization must take to ensure its critical functions continue to operate during an unforeseen disruption. 

Learn about the key components of an effective plan, best practices for developing a robust strategy, and the importance of testing and updating your plan to maintain its effectiveness.

What is a business continuity plan (BCP)?

A business continuity plan (BCP) is a set of processes that ensure a business can sustain operations during an unexpected event, such as a fire, pandemic, or cyberattack.

Business continuity plan vs. disaster recovery plan vs. contingency plan

A business continuity plan centers on what to do during the disruption—the Plan B for when things go awry. 

A disaster recovery plan, by contrast, focuses on the “return to normal” from an unexpected event. Disaster recovery is how you get back to Plan A.

A business contingency plan specifically focuses on the response to specific, unexpected events or emergencies that could negatively impact a company’s operations. For example, what happens if an ecommerce website’s servers go down during Black Friday Cyber Monday (BFCM). That backup plan is the contingency plan. It’s a proactive strategy, detailing the steps a business will take in case of unforeseen circumstances to ensure it can continue to function or quickly resume critical operations. The plan includes identifying potential risks, assessing their impact, and developing specific actions to mitigate those risks.

What are the four Ps of business continuity?

The four Ps of business continuity are:

1. People. Ensure the safety and well-being of employees and stakeholders.
2. Processes. Maintain business operations and procedures.
3. Premises. Secure work locations if primary sites are unavailable.
4. Providers. Manage relationships with key suppliers and service providers.

Key components of a business continuity plan

A successful business continuity action plan includes the following elements:

1. Scope and objectives. A BCP outlines the departments, functions, and locations it will cover. It also highlights the plan’s objectives, like minimizing downtime, protecting assets, and ensuring employee safety.
2. Risk assessment. A thorough risk assessment identifies potential threats and vulnerabilities.
3. Business impact analysis. A business impact analysis (BIA) identifies the potential consequences of disruptions.
4. Recovery strategies. A BCP highlights the recovery strategy for each critical function, focusing on the necessary resources, personnel, and technology needed to restore operations. It includes a company’s recovery time objective (RTO), or the maximum time IT systems can be down after a failure before irreparable damage occurs.
5. Incident response plans. A BCP features detailed incident response plans that are specific to different disruptions and include communication protocols, roles and responsibilities, and emergency management procedures. It’s also helpful to include contact information for all important parties. 
6. Training and awareness. A BCP isn’t complete without ensuring employees understand their roles and responsibilities within the business continuity action plan.

The benefits of a business continuity plan

• Reduce downtime
• Protect critical data and assets
• Build customer trust
• Ensure compliance

As a business owner, you have enough immediate concerns to worry about, let alone issues that may or may not happen in the future. However, it pays off to think ahead. Here’s why:

Reduce downtime

Every minute counts when disaster strikes. A BCP acts like a roadmap, guiding your business through the chaos so you can focus on getting back on your feet. A well-constructed BCP can help you assess the situation and activate appropriate response protocols, allocate the right resources and personnel to critical functions, and transition to backup systems or alternative work locations.

For example, rather than face a weeks-long slowdown in the aftermath of a natural disaster, a manufacturing company with a solid BCP might be able to ramp up production at an unaffected facility within hours.

Protect critical data and assets

A thorough BCP helps safeguard a company’s most valuable assets and data by identifying critical data and systems and implementing backup and redundancy measures. 

Think about a financial services company that has encrypted, off-site backups of all client data. If a cyberattack happens, and a robust BCP is in place, they can quickly restore operations without compromising sensitive data. 

Build customer trust

How a company responds to a crisis can make or break its customer relationships. A BCP helps you maintain service levels during disruptions and communicate proactively with clients so you can continue to meet and exceed customer expectations.

For example, an ecommerce brand with a BCP might be able to reroute traffic to backup servers during a distributed denial of service (DDoS) attack so customers can continue shopping. 

Ensure compliance

Many industries have regulations that require businesses to have continuity plans in place. A BCP can help companies meet specific industry standards (like PCI DSS requirements for payment processing), and demonstrate compliance to auditors and regulators. 

A bank, for example, can show a tested BCP during a regulatory examination to avoid sanctions and maintain its licenses. 

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How to create an effective business continuity plan

1. Identify your biggest risks
2. Identify your most at-risk business functions
3. Establish tasks
4. Detail actions for each vulnerability in your plan
5. Set mandatory training timelines
6. Identify potential preventative measures
7. Ask for feedback

1. Identify your biggest risks

What are the biggest threats to your business? In what ways is your business currently vulnerable? The answer will vary depending on the nature of your business. For example, if you run a small software company, you’re likely going to be more concerned with server disruptions than a brick-and-mortar candle shop that gets a small fraction of its revenue from online sales. 

The most common business risks or threats include:

• Natural disasters, fires, and power outages
• Public-health crises
• Cyberattacks or terrorism
• Data loss
• Economic downturns
• Bankruptcy, bad credit, or cash-flow issues
• Legal disputes, government regulations, and licensing cancellations
• Workplace accidents
• Technology failures, including platform or point-of-sale system crashes

The most at-risk assets include:

• People
• Inventory
• Company property
• Brand trust and customer relationships
• Licensing agreements
• Data centers
• IT infrastructure
• Supply chain

You can identify the most pressing risks to your business by modeling future scenarios. Or you could focus on preventing a specific type of disaster you’ve already experienced, while still reflecting on others that could disrupt operations.

2. Identify your most at-risk business functions

After identifying the risks most likely to affect your business assets, determine which functions directly support those assets. In some cases, you may control those functions directly; in others, you may outsource management. For example, if you run a dropshipping business and a third-party logistics company manages your inventory, you lose some control over that asset. Building strong relationships and business processes with your partners can mitigate risks to those assets.

Crucial business functions that are most often impacted include:

• Product manufacturing
• Order fulfillment
• Service operations
• Data protection
• Customer communications
• Finance, including accounts payable or receivable

Determine which services are most important to the operation of your business that are in danger of failing in the event of an emergency to narrow your focus. 

3. Establish tasks

Before picking colleagues to help execute your business continuity plan, create a set of responsibilities to assign. Responsibilities could include:

• Business continuity steering. These individuals have specialties in various aspects of your business and can catalog all potential risks or assets in the business continuity plan. After you create the plan, these individuals should meet quarterly to assess the plan for accuracy and ensure company-wide knowledge of it.
• Business continuity management. Manages the daily responsibilities of the business continuity plan, such as training, crisis management, safety assessments, and expectation setting with business leaders and those on the business continuity team.
• Business continuity wrangling. Rally others to execute instructions directly from the business continuity plan to rollout the tasks needed.

The number of stakeholders and providers you need to do these tasks varies based on the size of your business. Remember when you’re in the planning phase and establishing tasks that having more than eight responsible people may slow down the process of shipping a complete business continuity plan.

Backup stakeholders can be helpful for transitory periods, such as an employee exit, a change in leadership, or a merger.

4. Detail actions for each vulnerability in your continuity plan

Once you have a list of potential fixes, structure them into if-then statements, with a list of potential solutions. A continuity plan for a server crash might look something like this:

If our server is down during a holiday weekend sale, then we can continue to increase our revenue by:

• Directing our email audience to our online store’s app since it is hosted in the cloud
• Selling products via social media platforms, such as Instagram

You may also want to start thinking about a recovery plan—how to get back to “normal” or avoid another crisis. Did your BCP include a backup server hosted in the cloud? If so, you can revert to a time prior to the server crash. Will you need a merchant cash advance or loan to keep operations running? In this example, the outcome may be to upgrade your hosting solution or switch to a platform that includes hosting.

5. Set mandatory training timelines

Once you have a plan for addressing issues as they arise, train stakeholders and/or employees to ensure alignment. You can train employees when they’re first hired and include quarterly drills thereafter.

While not central to business continuity planning, consider training all employees in fire safety, CPR, and other health and safety risks. The best-case scenario is not needing your continuity plan.

6. Identify potential preventative measures

After creating your plan, note the primary vulnerabilities in your business. For example, you may feel most vulnerable about your dependency on a single third-party manufacturer. In this case, you might research other options to diversify your manufacturing partners. 

7. Ask for feedback

Asking for feedback from stakeholders throughout the company can ensure there aren’t any missing gaps. The goal is to create a detailed plan that takes into account all potential risks and explains how to continue business operations despite them.

Business continuity plan template

Here’s a business continuity plan example template from Ready.gov, an official website of the US Department of Homeland Security. 

Testing your business continuity plan

• Test your BCP using scenarios
• Frequency of testing
• Engaging key stakeholders
• Updating the plan based on test outcomes

You’ve worked hard to create a business continuity plan, but your job isn’t done yet. Your BCP is a living document that needs regular check-ins to stay in shape. Here are factors to consider as you test and maintain your BCP:

Test your BCP using scenarios

Set up a process that tests your business continuity plan at regular intervals. Testing typically involves exercises that evaluate the systems and procedures documented in the company’s business continuity plan. Then, do a post-mortem review of the scenarios you went through to spot opportunities for improvement. Look for any gaps in your BCP that might come up should a disaster occur.

Focus on:

• Identifying any gaps or weaknesses in the plan. Where did we fumble?
• Assessing the effectiveness of communication procedures. Did everyone get the memo?
• Evaluating the response times for critical business functions. How quickly did we get back up and running?
• Determining if recovery time objectives (RTOs) were met. Did we beat the clock?

Gather feedback from participants about what worked well and what didn’t. Every insight is an opportunity to strengthen your BCP and increase your company’s resilience to disruptions.

Frequency of testing

Testing a BCP is not a one-size-fits-all answer. It depends on your organization’s size and complexity. Generally speaking, aim to test once a year as a small business. Every business should do an annual review to make sure everything is up to date, and a business should plan to do a review when a business goes through a material change (think a new product launch, leadership change, service changes).

Industries where business operations change at a fast pace and business-critical systems need constant support might consider testing every quarter. The goal is to find a balance that keeps your team prepared for a possible looming crisis without overwhelming your team. 

Engaging key stakeholders

Testing your BCP isn’t a solo sport. For the best results, bring the right colleagues together. Key stakeholders often include: 

• Management team members
• IT department representatives
• Department heads
• External vendors or partners

Make sure all aspects of your business are represented. Having a plan in place and keeping stakeholders apprised of annual reviews will help prime colleagues to implement the BCP during a real disruption. 

Updating the plan based on test outcomes

After analyzing your test results, it’s time to put those insights into action. Review any procedures that didn’t work as expected during the test. Modify any unclear steps and add detail to any procedures that cause confusion. 

Compare actual recovery times from the test against your established RTOs. If RTOs weren’t met, investigate the reasons and adjust either the objectives or the recovery processes. You’ll also want to update contact information for key personnel and incorporate any new business processes or technologies that could have helped.

When to develop and implement a business continuity plan

Key moments to consider developing or updating a BCP include:

• Business expansion. When your organization expands its operations—by adding new locations, products, or services—update the BCP to accommodate these changes.
• Technological advancements. As you incorporate new technology or significantly upgrade existing tech, revise the BCP to address potential vulnerabilities and ensure the continuity of operations.
• Changes in leadership or key personnel. When there are significant changes in leadership or key personnel, update the BCP to reflect new roles and responsibilities and update contact information.
• New regulations or industry standards. As new regulations and industry standards are introduced, review and update your BCP to ensure compliance.

Invest in business continuity management 

Outside factors can hobble business performance and customer trust. By creating a business plan ahead and thinking through the risks carefully, you can reduce the impact crises have on your business. 

With the business continuity planning process above, you can improve risk management and protect your business’s critical systems for years to come. 

Business continuity plan FAQ

What are the four P’s of business continuity?

The four P’s of business continuity are:

1. People. Ensure the safety and well-being of employees and stakeholders.
2. Processes. Maintain business operations and procedures.
3. Premises. Secure work locations if primary sites are unavailable.
4. Providers. Manage relationships with key suppliers and service providers.

What is a BCP checklist?

A BCP checklist helps companies guarantee they’ve covered all aspects of business continuity planning. It typically includes: 

• Risk assessment and business impact analysis
• Critical business functions identification
• Disaster recovery plans and procedures
• Emergency response protocols
• Communication plans
• IT disaster recovery procedures
• Testing and training schedules
• Plan maintenance and update procedures

What are the five components of a business continuity plan?

1. Risk assessment. Identify potential risks to the business and assess their likelihood and impact.
2. Business impact analysis. Determine the effect of each identified risk on the business.
3. Disaster recovery plan. Develop a plan for recovering essential systems and processes in the event of a disaster.
4. Disaster recovery procedures. Establish the steps necessary to execute the disaster recovery plan.
5. Testing. Regularly test the plan to ensure it is updated and effective.

What are the three elements of business continuity?

The three elements of business continuity are risk assessment and business impact analysis, recovery strategies, and incident response planning. These elements work together to identify potential threats, outline recovery processes, and establish procedures to manage business disruption effectively.