Will you be a business that survives and thrives despite the market’s uncertainty?


Global factors will inevitably affect your brand, unexpected challenges require brands to be agile in thinking and create robust contingency plans. The most recent challenges being the impact of the coronavirus, which will unfold throughout this whole year. It’s already reverberating across all luxury lifestyle and fashion brands, and retailers from top to bottom. These unexpected global crises will force the fashion and lifestyle industries to completely rethink their plans. Undoubtedly it will send businesses who were under prepared over the edge.



Whether you were already looking at how to make your lifestyle or fashion business more digital, relevant and resilient, a brand that is currently challenged by the shift to digital or a fashion and lifestyle business operating in switched to survival mode as a result of current global crisis, you know the leaders inside the business need to keep a cool head. Standing still is not an option.

We are passionate that you don’t lose the heart of your business. If there ever was a time to act, it’s now. Book our structured half day, contingency planning interactive workshop, created specifically for lifestyle and fashion business leaders and decision makers.


If you are a time poor business leader or CEO, and are looking for external expertise and support to help you and your team to help them think differently, then this workshop is for you. It has been designed for the boardroom of creative, lifestyle and fashion businesses trading over £5m revenue pa and their C Suite leadership team. It’s a perfect introduction to Joanne’s bestselling book, The Fashion Switch and her powerful 5 step ALIGN framework. Work through the five foundations together with dynamic team exercises. Giving you the foundations for your contingency plan, aligning leadership team thinking and direction.



Andy Birley CEO Lucan

We are a multi award-winning consultancy with 20 years of UK and international expertise dedicated to helping established and owner led fashion and lifestyle businesses to navigate and solve very real challenges. Our powerful five step fashion brand alignment principle helps you seize future opportunities, unlock your brand’s hidden value and build a resilient and successful business.


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contingency plan for clothing business

4 Steps to Creating a Business Contingency Plan

contingency plan for clothing business

BY Ben Pollack

contingency plan for clothing business

When audiences think of Back to the Future, they remember Michael J. Fox’s performance. Yet, Fox – and his iconic “life preserver” vest– wasn’t the first choice for Marty McFly.

Universal Studios actually filmed another actor as the main character for several weeks. When that didn’t feel right they switched to Plan B: Fox. The rest is history.

Having a Plan B, otherwise known as a contingency plan, makes continuity possible. Whether it’s for a movie cast or a natural disaster, having a contingency plan in your back pocket allows for quick shifts and flexibility when potential setbacks or issues arise.

A Deeper Dive: What Is a Business Contingency Plan?

A business contingency plan, or Plan B, is a backup plan you can use if there’s a disruption in your company’s operations. Because of COVID-19, our minds tend to jump to worldwide disasters, but Joe Spector, Founder and CEO of Dutch , warns that more common risks are issues like “data breaches, loss of staff or customers, or declining business relationships.”

And it’s because these issues are so common that they are often overlooked as needing a contingency plan. But disruptions, transitions, and adaptability take time and money, and having a plan in place will help mitigate any potential upsets so your business can continue to run as smoothly as possible.

Shifting From the Traditional Risk Management Approach

To ensure your company is ready for the unexpected, your leadership must adopt a strategic contingency planning process. It makes sense to have backup plans, but did you know that only 12% of business leaders considered their companies prepared for 2020? Because pandemics, natural disasters, and data breaches aren’t predictable, it’s critical to have backup plans in case any major disruption occurs.

Leaders are in unique positions to challenge traditional approaches and implement tools and practices that take a modern look at risk assessment and risk management. Mark Shinkman, Vice President of Gartner’s Risk and Audit Division, attributes the absence of COVID-19 contingency plans to antiquated methods. He explains, “This lack of confidence shows that many organizations approach risk management in an outdated and ineffective manner.”

These outdated and ineffective practices involve department leaders assessing risks and creating contingency plans unique to their teams. However, this siloed approach fails to look at departmental risks that could impact the company as a whole. As a result, companies are ill-prepared to address crises that spread into other departments.


Traditional contingency planning favors department-level risk management, which can negatively impact the company.

Traditional Risk Management Implications

Most risks can impact your entire organization. If your departments work together, you can more easily understand these risks and develop a proactive plan. However, the traditional, siloed model will leave teams scrambling.

For example, unexpected turnover, furlough, and leave all affect staffing levels, which in turn influence a department’s ability to deliver on goals. If you don’t have a contingency or succession plan in place, other departments besides your People team may be affected.

This particular siloed planning process could result in:

Looking at risks from a holistic view eliminates the traditional risk management tunnel vision. As a leader, you can make this happen. Encourage your departments to collaborate with others in the company so they can see the overlap in crises. With this high-level view, your departments will be better equipped to keep your company running in the event of a crisis.

To create a successful, aligned contingency plan, it’s important to analyze your potential risks, plan responses, and manage recovery efforts when crises occur.

1. Assess Potential Risks to Your Company

Contingency planning starts by acknowledging the risks that your company faces. After all, you can’t create a backup plan if you don’t know what you’re trying to overcome.

Invite department heads, team leads, and/or employees to anonymously participate in a risk assessment. Have respondents identify risks they believe are important and encourage participants to include both internal and external sources. Next, have them rate those risks on their likelihood and severity. Include a rating scale of one to 10, with one being low likelihood/low impact and 10 being high likelihood/high impact. It may be important to provide examples of each ranking to better calibrate results.

Once responses are in, gather leadership and additional department heads or team leads to review the responses and ratings. Use a risk assessment matrix or scatter plot to visualize the severity of each risk.

matrix and scatter plot for contingency planning

These visualizations can help your team identify urgent risks and determine an appropriate course of action.

Prioritize your results by reviewing the following:

2. Consider Business Continuity Options and Their Implications

As you move forward with creating your contingency plan, consider how a particular course of action will target your crises and impact your workforce and company.

Acknowledging the trickle-down effect these risks—and your response to them—will have across your company, while being transparent in your collaboration practices, empowers your leaders to figure out how to respond on the department level. Furthermore, collaborating on crisis responses also provides your department leaders with an opportunity to voice concerns and share how each crisis would impact their teams.

Business Contingency Plan Template

For a business contingency plan example, let’s say that a few of your team members live in tornado country. It’s very possible that a natural disaster could affect them and their workflow, resulting in disrupted communication between team members and customers.

The customizable business plan template below can guide your team through problem solving your potential scenarios and responses.

image of Contingency Plan-Template

Download your editable contingency plan template here .

3. Create and Practice Your Contingency Planning Guide

After collaborating with teammates and assessing potential risks, it’s now time to solidify your contingency plans.

As you compile your plans, make sure to include the steps your teams took to assess the risk, the various scenarios you drafted (even ones you may not have selected), and recommendations for how often leadership should review the plan.

You can go into as much detail as your team feels is necessary. Some companies might draw up a minimalist table view to make triggers and actions visible, while other companies may rely on thorough documentation to capture all aspects of their contingency plan.

How much detail you put into a guide will also depend on the factors in play. A data breach, for example, would involve specific team members and stakeholders with specific recovery strategies outlined. But a natural disaster that takes out the main office would involve a number of stakeholders and a broader plan to manage resources. Your approach will ultimately reflect the needs of your company and the complexity of the risk.

An additional (but equally important) component of your contingency planning guide is communicating it to and training your employees through mock simulations. Spector advises that your people should not only know their specific roles and responsibilities when the plan goes into effect, but also if and when adjustments are made “in accordance to changes in organizational processes and technologies.”

4. Revisit Your Contingency Plans

It’s important to revisit and refresh your contingency plans not only when processes and technologies change, like Spector mentioned, but also when positions are backfilled and roles and responsibilities shift.

You may also find that your team struggles to enact the plan. Shinkman warns that some people “tend to deal with emerging risks by just assuming they will go away and instead focus their attention on what is most important today.” But when those seemingly small problems aren’t addressed, they can quickly become larger, more serious issues down the road.

To successfully revisit your plans, cycle back through the above steps with your team to identify the best course of action. If you need to reassess a threat that wasn’t high risk before but has since become urgent, enlist your leadership team to talk through where the risk falls now. Then, proceed to create a new contingency plan or revise your existing one.

A Documented Contingency Plan = A Proactive Approach

Although you don’t want to be fear-driven, remember that disruptions can happen at any time. It’s therefore important to have a plan – any plan – in place.

You might opt for a stable enough plan that’s ready to go at a moment’s notice. You may choose to invest more time in making your contingency plan iron-clad. That’s the beauty of revisiting and refreshing your plans: risks and responses constantly change, and you have the ability to shift and further solidify your reactions.

One part of contingency planning is having a solid headcount planning strategy. Ready to ease its complexity?

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Family Clothing Business Plan

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Strategy and implementation summary.

The company has developed a strategy that will ensure the long-term growth and success of ReHabiliments in the apparel industry.  This strategy will continue to evolve and initially includes:

5.1 Competitive Edge

The debut of the FUBU Corporation in 1992 was based upon the a slogan, “For Us, By Us” (FUBU), that expressed the founder’s purpose of creating a line of popular clothing designed for African-Americans, by African-Americans.  At the time of FUBU’s inauguration, numerous clothiers were targeting black consumers for their urban wear; however, none of these companies was black-owned or operated.  The company’s earliest collection consisted of T-shirts, rugby shirts, hockey jerseys, and baseball caps, all embroidered with the FUBU logo.  By 1999, the company reported an annual sales volume of $200 million from its menswear business and $150 million from its licenses.  What had originally begun as a clothing line for African Americans had developed into a multi-cultural base of customers, all wearing FUBU’s clothing.

The underlying foundation of ReHabiliments, and its clothing line is based upon the principle of harmony – harmony of thought, harmony of purpose, and harmony in humility.  The company’s name, ReHabiliments, and its clothing line, ReHabiliments Apparel, are competitive advantages in themselves.  The name is not attached to any particular group of customers, which allows the company entry into different segments of the apparel industry.  Another competitive advantage stems from ReHabiliments’ partnership with the entertainment industry and the use of mainstream celebrities in advertising and promoting the company.

In a market where consumers are barraged by advertising and marketing campaigns delivering an onslaught of lifestyle and fashion messages, a brand name is a powerful weapon.  Established brand names, with a quality image, make the consumer’s shopping experience easier and faster.  For manufacturers, brands build consumer loyalty, which translates into repeat business.

5.2 Marketing Strategy

People want to think of themselves as belonging to a group that they admire or respect, and will dress as they think a member of that group would dress.  Although they may believe their object is to reflect their individuality, the differences they stress in choosing a clothing style are really between their own chosen group, and all others.

The “message” of clothing is therefore directed primarily to its wearer.  People associate the way they dress with the way they feel.  For many individuals, their choice of clothing may not be the most becoming outfit they could wear; however, they are expressing their membership in a class of other people with whom they feel a connection, expressing it to themselves and to whomever may be looking. 

ReHabiliments’ marketing strategy is based on the following:

ReHabiliments’ brand and marketing message are not directly attached to any particular group of customers, but rather to a diversified community of consumers who believe in humanitarianism and equal opportunities and choices for everyone.  The company does not simply offer products that clothe the body, but rather products that clothe the soul – clothing that supports people, either directly or indirectly, through difficult situations.

The company’s primary marketing strategy is to establish itself as the “Apparel Company of the Future.” With management’s deep roots in humanitarianism coupled with a firm belief in harmony and honesty in business and advertising, ReHabiliments will greatly increase the marketability of its apparel line.

5.2.1 Pricing Strategy

ReHabiliments’ pricing strategy remains competitive with all other high quality apparel companies , but offers much more in terms of meeting the company’s mission and purpose for existing.  As a general rule of thumb, 50% of each garment’s cost is consumed in actual manufacturing, divided among labor and materials.  The other 50% is allocated overhead and shipping expenses.*  Average mark-up is 40% of cost.

Currently, all of the company’s products are on target in price, as compared to other similar branded apparel.  ReHabiliments with regularly monitor its operating expenses, delivery costs, cost of sales, trade discounts offered, damage allowance, hazards, and other variables to ensure that the company’s pricing strategy remains competitive with industry standards and expectations.

*Note: overhead includes non-payroll operating expenses as well as purchase and replacement of production equipment, included here as part of start-up assets.

5.2.2 Promotion Strategy

ReHabiliments’ brand is a competitive advantage in itself, as it is not directly attached to any particular group of customers and allows entry into different segments of the apparel industry.  In addition, the company has an established marketing strategy that relies upon celebrities, market specific advertising, product promotion, and “giveaways” that have established ReHabiliments’ presence in the apparel industry.

ReHabiliments will depend upon several promotion strategies to reach new customers.  These strategies include:

5.2.3 Distribution Strategy

The primary distribution channel in the apparel industry is still the bricks and mortar store, augmented by catalogues and direct selling.  The incredible success realized by other industries in Internet e-commerce has not followed into apparel.  Existing limitations from product licensing and distribution agreements to fit and trial issues have stunted the growth of the industry in the Internet space.  The most successful players tend to be those with a ‘click and mortar’ strategy such as The Gap, or those companies with a strong background in catalogues and direct selling such as Lands’ End.  The fit and trial issues and difficulties with color and texture perception on computer monitors, however, continue to be issues that keep Internet sales relatively low compared to the total market for companies.  Another area to see some success is that of off-price and discount clearing houses like Bluefly.  This is an example of how the inefficiencies of the existing industry model for apparel has spawned a whole new category of retail both on-line and off-line in factory outlets and clearing houses. 

ReHabiliments has several potential methods of penetrating the Tri-State Area market.  They are, from least resource-intensive to most resource intensive:

ReHabiliments will begin with options 1 and 2, above, and open a store when we have the available resources and growth to warrant it.  For now, the company plans to use a direct sales force, the entertainment industry, retailers, and the Internet to reach its target markets.  These channels are most appropriate because of time to market, reduced capital requirements, and fast access to established distribution channels.

5.2.4 Positioning Statement

For men, women, and children seeking clothing with style, selection, differentiation, and “substance,” ReHabiliments offers a unique clothing line that is affordable, trendy, exclusive, and fashionable while meeting both the physical and emotional needs of the consumer.  Unlike ReHabiliments’ largest competitor, FUBU Corporation, the company offers affordable, trendy “ReHab Your Wardrobe-ReHab Your World” clothing that promotes the principle of harmony and dedicates a portion of the company’s clothing proceeds towards ongoing humanitarian efforts.

5.3 Sales Strategy

ReHabiliments’ sales team will be tasked with generating sales leads on a local, regional, and national basis.  They will also be responsible for establishing connections with other wholesaler and retail outlets.

A key factor in the success of ReHabiliments will be its distribution.  The company plans to use the following retail distribution channels:

Consumers buy apparel from a variety of retail outlets.  In 1998, discount, off-price, and factory outlet stores accounted for 30% of apparel sales, specialty stores accounted for roughly 22%, department stores for 18%, and major chains for 17%, according to data from NPD Group Inc.  The remaining 13% was sold through mail order and other means.

Differences exist in the distribution mix for men’s, women’s, and children’s items.  For example, more women’s apparel is purchased in specialty and department stores than is the case for men’s apparel.  Men’s apparel is more prevalent in discount stores and general merchandise chains.  In the children’s segment, a considerably higher portion of apparel is purchased in discount stores.

Catalogues are another important method of distribution.  Consumers have less time to shop, and for some, catalogue shopping offers a more convenient and pleasant alternative.  In 1996 (latest available) an estimated 13.3 billion direct mail catalogs were printed in the United States – more than 50 for every man, woman, and child in the nation.  According to NPD Group, approximately 6% of apparel retail sales were through direct mail/catalogs in 1998, representing a 29% decline from 1997.

The distribution channel that has received the most attention recently is the Internet.  Although it now represents only a small portion of apparel sales, this distribution channel has the most potential for growth.  Consumers like the convenience of being able to shop from anywhere and at anytime they wish.  Manufacturers with websites use them for marketing and informational purposes.  With expected technological advances in hardware, software, and data pipelines in the future, shopping for apparel should gain popularity.

Currently, however, due to technological and infrastructure limitations, consumers are not fully satisfied with the speed, quality, security, and cost of Internet shopping.  Another hindrance to wider acceptance is the fact that consumers cannot see and touch the product.  Although some manufacturers have started to sell directly to consumers on the Internet, many of them are being cautious not to alienate their retail (brick-and-mortar) customers.  ReHabiliments expects these issues will be resolved eventually, which will make the Internet an important method of distribution in the future.

5.3.1 Sales Forecast

The following table shows our projected yearly Sales revenues.  Cost of Sales here represents only inventory purchases (including shipment of inventory from abroad); totals for labor, shipping, and overhead can be found in the Profit and Loss statement.

We anticipate moving a higher number of products through wholesale contracts with retailers, but the higher price we can charge with direct sales (Internet and, eventually, retail) means the revenue streams from these lines will be roughly equal.  We are forecasting 50% of sales values on a cash basis, and 50% as accounts receivable.

Family clothing business plan, strategy and implementation summary chart image

5.4 Strategic Alliances

ReHabiliments currently has strategic alliances with both Music Records and the Entertainment Group.  These alliances are critical to the company’s marketing strategy, as they provide the exposure for the company’s apparel line and associate ReHabiliments’ products with celebrities.  Celebrities are valuable strategic allies, as they receive free apparel for their participation in interviews, concerts, and music videos.

Current and potential product line representation and advertising contracts are as follows:

In addition, ReHabiliments has a promotional collaboration with one of the hottest disc jockeys in America, “Degas VanGO.”  He travels throughout the world entertaining listeners, aged 13 to 40, on New York Radio 107.5 WBLC, FM.  Degas VanGO has his own radio show and is very well known.  He is well connected in the music industry, which is one of ReHabiliments’ primary target market areas, and has used his connections to forge a relationship between ReHabiliments and Virgin Records America, Inc.

Through our affiliation with Degas VanGO, Virgin Records has allowed ReHabiliments to use their famous logo on promotional items, such as leather jackets, hats, and T-shirts.  This affiliation sends a very powerful message to investors and customers alike.

ReHabiliments has the earning potential to become the fastest growing, most universally accepted clothing line since FUBU.  The partnership with Degas VanGO is the golden key to countless hundreds of thousands of dollars in sales, as well as a direct promotional channel.

5.5 Milestones

The following table lists important program milestones, with projected start and finish dates, the names of the individuals in charge of completing each milestone, and budgets for each milestone.  The milestone schedule indicates the company’s emphasis on planning and implementation of the business.

What the table doesn’t show is the commitment behind each milestone.  ReHabiliments’ business plan includes complete provisions for plan-versus-actual analysis, and the company will hold monthly follow-up meetings with key management to discuss any variances and to plan a course of action to resolve those variances.

Family clothing business plan, strategy and implementation summary chart image

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contingency plan for clothing business

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The Easy Guide to Creating a Business Contingency Plan

Updated on: 2 November 2022

How to avoid disasters? Be prepared for them. 

When things are going well, you often forget to plan for the bad times. But when disaster strikes, you could lose everything in a heartbeat.

An earthquake can bring your whole shop to the ground, your biggest client can choose your competitor over you, your system suddenly can crash making you lose important data etc. There are endless possibilities of disasters if you really think about it. 

That’s why lack of a plan can be a disaster of its own. 

Let’s see why you need a business contingency plan and how to create one in a few simple steps.  

What is a Business Contingency Plan? 

But first, let’s define what a contingency plan is. 

A contingency plan is a proactive strategy that describes the course of actions or steps the management and staff of an organization need to take in response to an event that could happen in the future. It plays a significant role in business continuity , risk management and disaster recovery. 

It helps you stay prepared for unforeseen events and minimize their impact. It also outlines a plan for carrying out the normal business operations after the event has occurred.  

It’s also known in names such as plan B, backup plan, and disaster recovery plan. In case your primary plan doesn’t work, it’s time to execute the plan B.

Benefits of a Contingency Plan 

Without a contingency plan you’re opening yourself to unnecessary risks. Here are some important benefits of a contingency plan that you cannot look away from. 

How to Make a Contingency Plan 

An effective contingency plan is based on good research and brainstorming. Here are the steps you need to follow in a contingency planning process. 

Step 1: List down the key risks

Identify the major events that could have a negative impact on the course of your business and on the key resources, such as employees, machines, IT systems etc. 

Involve other team heads, subject experts, and even outsiders like business consultants to get a deeper understanding of things that may cause problems and jeopardize the direction.

Use a mind map to organize and categorize the information you gather from the brainstorming session with the staff. You can easily share this with everyone in the organization to get their input as well.

Mind Map for Risk Identification

Step 2: Prioritize the Risks Based on Their Impact 

Once you have created a list of all the possible risks that could occur in different areas of your business, start prioritizing them based on the threat they pose. 

The risk impact probability chart is a handy tool you can use here. It helps you evaluate and prioritize risks based on the severity of their impact and the probability of them occurring.

Risk Probability and Impact Matrix

Step 3: Create Contingency Plans for Each Event

In this step you’ll create separate plans that outline the actions you need to take in case the risks you identified earlier occur. 

Consider what needs to be done in order to resume normal operations after the impact of  the event. 

Here you’ll need to clarify employee responsibilities, timelines that highlight when things should be done and completed after the event, restoring and communications processes and the steps you need to have taken in advance to prevent losses when the event has taken place (i.e. insurance coverage). 

You can use a visual format here to highlight the course of actions. It would be easier for everyone to comprehend.

Business Contingency Plan Example

Step 4: Share and Maintain the Plan 

Once you have completed the contingency plans , make sure that they are quickly accessible to all employees and stakeholders. 

Review your contingency plans from time to time and update them as needed. And it’s a best practice to inform your employees of the changes as well, as it may include updates to their roles and responsibilities.  

What’s Your Take on Contingency Plans?

That is how you make a detailed contingency plan. List down the major incidents that could harm your business operations, prioritize them based on their impact and probability, create an action plan explaining what you should do in case they occur, and review and update them frequently. 

What is the contingency planning process at your organization? Let us know in the comments section below.

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What Is A Business Contingency Plan & How To Create One

Business Contingency Plan

It is the question that haunts business continuity professionals throughout their careers. Of course, there are a million possibilities that might occur at any time. But creating a business contingency plan at least helps you to prepare for the unknown.

Here, we take a look at the basics of business contingency planning , as well as how to create a plan for your own organization.

What is a business contingency plan?

A business contingency plan is a course of action that your organization would take if an unexpected event or situation occurs.

Sometimes a contingency can be positive—such as a surprise influx of money—but most often the term refers to a negative event that affects an organization’s reputation, financial health or ability to stay in business. Examples of a negative event include fire, flood, data breach and a major IT network failure.

Contingency plans are an important part of your overall business continuity strategy because they help ensure your organization is ready for anything. Many large businesses and government organizations create multiple sets of contingency plans so that a variety of potential threats are well-researched and their responses are fully practiced before a crisis hits.

Think of contingency planning as a proactive strategy, whereas crisis management—the other piece of the business continuity puzzle—is more of a reactive strategy. A contingency plan helps to ensure you are prepared for what may come; a crisis management plan empowers you to manage the response after the incident occurs.

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How do i create a business contingency plan.

Creating a contingency plan requires a bit of research and planning. However, working ahead on each plan will be worth it in the long run.

To create a contingency plan for your organization, follow this five-step framework:

1. Identify/prioritize your resources.

First, do a little research throughout your organization to identify and prioritize the resources that your organization cannot do without, such as employees, IT systems, and specific facilities and physical assets.

2. Pinpoint the key risks.

Next, identify the potential threats to these critical resources. Meet with employees, executives, IT and other key personnel to gain a holistic idea of the events that could impact your resources. If necessary, consider bringing in a consultant who specializes in identifying risk.

3. Draft your contingency plans.

Ideally, you would then write out a contingency plan for each of the identified risks. However, it’s best to start with the highest-priority threats—usually those that are most likely to occur and would have the biggest impact. Then, over time you can work toward drafting plans for each lower-priority risk.

As you draft each plan, ask yourself what steps would have to be taken for the organization to resume normal operations. Consider things like communications, employee activity, staff responsibilities and timelines (what needs to happen when). Then, create a step-by-step plan for each risk.

4. Distribute your plans.

Once each plan is completed and approved, ensure that every employee and stakeholder has easy access to it. For this important step, you might consider leveraging  an issue and crisis management app , which provides contingency plans and related documents directly to each employee on his or her mobile device.This approach replaces the traditional hard-copy ring-bound folders and ensures that each employee has access to the most recent plan immediately should the worst happen.

5. Maintain each plan.

Be sure to keep each plan updated as your organization goes through changes, such as hirings and firings and the adoption of new technologies. In addition, rehearse implementation with stakeholders on a regular basis to ensure that each team member knows their role.

What contingencies do you think are most likely to affect your organization? How are you currently preparing for them?

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Use a Risk Assessment to Prioritize the Issues you Need to Manage

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Build a Crisis Management Plan Using These 4 Key Steps

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You Don’t Need Just a Plan

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Example of a Business Contingency Plan

What Do the Initials LLP Stand for After a Company's Name?

List of small business risks, difference between mergers and joint ventures.

Every business depends upon certain "givens," which range from retaining key personnel, to emergency planning, to credit arrangements. But what happens when a relatively young CEO is killed in an accident or when an earthquake destroys a company's headquarters? Or, when a line of credit is unexpectedly cancelled? There are practically an infinite number of things that can go wrong and negatively impact a business.

There are even unexpectedly good things that can be disruptive – a classic instance is the small business that gets a huge contract far beyond the company's current ability to fulfill it. Contingency plans lay out what should happen when one or more of these unexpected events occurs. Every business – large or small – needs its own unique contingency plan.

The following examples deals with how SEC requirements for contingency plans can affect a business.

What's the Problem?

Every contingency plan answers a question about a problem. In this instance, the SEC requires each Registered Investment Advisory firm to have on file plans that assure that the business can go forward and deal equitably with its client investors in the event that the head of the firm becomes unavailable through death, serious illness or accident. The question is simply: How will the firm handle client needs when the head of the firm becomes unavailable?

Information and Data Availability

The first thing the SEC requires is that there is will always be some means of clients being able to access their information in the firm's accounts, importantly the record of each client's current equity holdings, but also essential documentation related to tax advice and retirement planning. The contingency plan deals with this need in two ways:

This two-step data availability plan guarantees that if, the firm's building is destroyed, the information remains fully available offsite, both to the firm and, independently, to its clients. Since the firm's correspondent brokerage has the same SEC-mandated information availability obligation as the advisory firm, client records kept at the brokerage are also available at an offsite location maintained by the brokerage. Thus, client records are stored and continuously maintained at at least four separate physical locations and on the cloud.

Alternative Communication Means Between Advisors and Clients

The SEC also requires that each firm has in place an alternative means of communicating with clients. Having alternative means available allows the firm to continue to handle client accounts in a timely way in the event of a catastrophe. In addition to the firm's email address and telephone number, the firm maintains a mailbox in another city and periodically reminds each of its clients of that alternative address. The head of the firm also has a dedicated cell phone account separate from the firm's business telephone account or his personal cell number and makes sure that every client knows that independent number.

Alternate Communications Between Advisor and Employees

In this small firm, only the principal has authority to trade on behalf of its clients; therefore an alternative means of communication between the principal advisor and a single clerical employee isn't required to ensure that the business can continue without interruption. If the firm had multiple registered advisors handling client accounts, alternative communication means similar to those required for the principal advisor would be required and in place.

Regulatory Reporting Requirements

Because the business records are stored in more than one physical location and are also stored on the cloud, where they are available regardless of the advisor's location. As long as the advisor is in reasonably good health and of sound mind, no physical disaster or emergency is likely to impede the firm’s few and occasional regulatory reporting obligations.

If the advisor is seriously ill, dead or of unsound mind, the advisor’s wife – a well-established marketing professional – has instructions in place to notify clients, all of whom are personally known to her. She is also instructed in how to terminate the business as a registered institution, with notification to the SEC. At that point, the business will cease and the clients will assume responsibility for their own accounts with a minimum of disruption.

Access to Funds in the Event of Firm Termination

Clients have continuous and unimpeded access to funds and records at all times through the firm's correspondent broker.

The Takeaway for all Types  of Contingency Plans

This particular contingency plan for a small registered investment advisory service provides good information about contingency plans generally:

This particular plan addresses two issues common to many contingency plans: data loss and leadership incapacity. Other issues contingency plans often address are:

I am a retired Registered Investment Advisor with 12 years experience as head of an investment management firm. I also have a Ph.D. in English and have written more than 4,000 articles for regional and national publications.

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Solution providers and brands talk to WWD about coronavirus’ current impacts and requisite future planning.

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As coronavirus intensifies and continues to spread worldwide, fashion industry solution providers and brands weigh in on methods for mitigating supply chain impacts, and strategic planning for an unpredictable future. Hint: create a contingency plan.

Nearshore Manufacturing

And that unpredictability may mean manufacturing closer to home — and reliance on robots. Rueben Scriven, lead analyst on logistics for Interact Analysis, a provider of market research for the Intelligent Automation sector, told WWD, “While 10 years ago, a large percentage of U.S. and European apparel manufacturing was outsourced to China and other Asian countries, rising labor costs, shrinking fashion cycles and environmental consumerism have led many apparel retailers to nearshore their manufacturing activities. The coronavirus outbreak will likely intensify this trend as apparel companies look to hedge against future outbreaks and minimize their reliance on potentially risky supply chains.”

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Scriven added that fully automated warehouses and distribution centers are a possible panacea to supply chain disruptions. “Furthermore, to reduce the impact of potential future outbreaks on supply chains, companies may look to automate their warehouses and distribution centers that have particularly high population densities and would cause significant disruption if one was to be temporarily shut down.”

Scriven said JD.com, a Chinese pure-play e-commerce company, operates a fully automated “lights-out” warehouse in Shanghai that employs only four people while fulfilling 200,000 packages a day, challenging the reliability of man verses machine.

Contingency Plans

“A global crisis on the scale of COVID-19 is less ‘if it happens’ than ‘when it happens,’” Sharon Lim, chief executive officer of Browzwear, a digital fashion solution firm, told WWD. “That’s why it’s key that manufacturers build contingency plans to mitigate the impact to their business. At this point, the time frame to prepare for these changes is very slim.”

Lim said whether it’s sourcing or manufacturing, fashion businesses reliant on China are inevitably facing supply issues. “With factories closed and the flow of materials and finished products interrupted, they’re unable to get the products they need. Without contingency plans in place, manufacturers can’t get things like fabric, buttons and zippers [trims], and designers can’t get the samples for their showrooms made and retailers, especially ones who have adopted just-in-time business models, will be without merchandise to sell.”

What brands can do, Lim explained, is investing in digital technologies that take the pressure off of physical dependencies, as well as streamline efficiencies through solution providers to secure a more transparent, tighter supply chain.

“Every company should review their entire supply chain as well as that of their suppliers and make sure they have plan B in place for every piece of fabric, every button and every factory. They should also review their processes to make sure they’re operating as efficiently as possible, and where technology makes it possible, reduce dependence on physical items in lieu of digital ones, for example, using 3-D renderings in place of physical samples in their showrooms.”

Shanton Wilcox, U.S. manufacturing lead at PA Consulting, agreed that planning — specifically, creating a playbook for future crises — is the best path forward for brands. “Companies must determine where they are exposed to these risks and determine the impact of various scenarios. They then need to develop mitigation plans for a few of the most likely scenarios, creating a playbook that is applied should a scenario materialize,” Wilcox said.

“This needs to be a crossfunctional effort, a siloed approach will likely include unintended consequences or unplanned costs that result in additional losses,” Wilcox said. “This only gets an organization through this event, others will come, it’s inevitable. Over the longer term, companies should develop a risk management culture. It should flow from leadership into daily decisions, everyone should be thinking about ‘what happens if.’”

Ronen Lazar, cofounder and ceo at Inturn, an off-price inventory software company, said the “disruption that coronavirus is creating within the supply chain cannot be understated. As inventory is delayed by weeks or months brands should prepare for an onslaught of potentially out of season inventory. The brands equipped to efficiently optimize their inventory in real time are the ones that will be best positioned to weather the storm.”

Shipping Travails

Companies such as Logistyx, a fulfillment software firm, said in the wake of the virus, brands need to reconsider their processes for shipping and inventory reallocation.

Logistyx president Ken Fleming told WWD that during this outbreak, “some transportation modes may not be available to shippers, and they should consider new modes that may offer the best service in light of the crisis. For some, this may mean turning to air or water transportation for the first time. Other retailers have turned to bulk shipping to reduce tariffs and fees as products cross borders in bulk to later be broken into smaller packages to be shipped to stores, for example.”

“Leveraging technology to automate processes and decision-making can help retailers uncover the ideal shipping methods when left to consider different modes of transport and tap into an expanded global carrier network to achieve the best value for each shipment, whatever the product, destination or delivery occasion,” he added.

Fleming also said in response to the coronavirus outbreak, Gucci’s parent company and Logistyx client Kering recently closed 50 percent of its store network in mainland China and is “leveraging Logistyx’s parcel shipping technology to reallocate its inventory to mitigate the impact of the virus.”

“While many brands build a buffer of inventory into their supply chains, now’s the time to initiate a contingency plan to redirecting inventory from shuttered stores to active stores in other regions,” Fleming explained. “This can diminish further fallout and waste while ensuring active stores are properly stocked for back to school and other peak shopping seasons.”

Swift and Strategic Communication

And as apparel brands and retailers learn more about the impacts coronavirus is having on the Chinese workforce, forecasting for back-to-school and the holiday season must be adjusted — especially as the virus spreads to other continents, Susan Pichoff, senior director for community engagement at GS1 U.S., a standards organization, told WWD.

“The crisis is two-fold,” Pichoff explained. “It’s affecting productivity as well as transportation. Factory productivity is reportedly running at less than half of what it usually is (sometimes worse), and the transport of whatever goods that can be made are going to be significantly delayed. Apparel companies must work with partners to gain a full understanding of what will be available in their inventories to sell during their two busiest sales seasons.”

Communication with suppliers in China is critical at this stage, Pichoff added, noting that trading partners “must collaborate across geographic borders to lessen the effects of major disruptions like this on future profits.” Pichoff said global data standards promote agility in times of crisis, emphasizing that, “Standards help create end-to-end supply chain visibility, which means product, location and event-based information can be shared in real-time, and trading partners can better pinpoint products that are delayed or unaccounted for.”

Pichoff said standards are not only an effective risk management tool, but they are also valuable beyond a crisis. “Adopting standards to enhance visibility helps create a nimble supply chain. These standards also help make product data compatible with brand or retailer systems regardless of the solution provider they use — reducing extra wasteful steps associated with translating data from one proprietary system to another.”

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contingency plan for clothing business

Contingency Planning for Retailers and Hospitality Businesses

Business continuity management or contingency planning is about the management of risks which could damage your business temporarily or could result in its failure. These risks can arrive suddenly such as through a storm or burglary, be part of a gradually worsening situation such as unexpected long term road works outside your business or a […]

Business continuity management or contingency planning is about the management of risks which could damage your business temporarily or could result in its failure. These risks can arrive suddenly such as through a storm or burglary, be part of a gradually worsening situation such as unexpected long term road works outside your business or a number of things happening simultaneously. Risks can be managed if you a have a plan in place to cover short or long term difficulties.

What risks?

These can be part of an emergency situation, a natural disaster, a health and safety situation, a new law, a staff or general business issue such as a legal or financial one.

Why is contingency planning so important?

The old expression, failure to plan is planning to fail, sums this up. Most businesses suffer at least one incident or a number of incidents that can affect their profile and profitability and in the higher risk incidents, businesses fail and small businesses are even more likely to fail. In preparing their plan some companies identify ways that they can improve their business anyway and by planning for the unexpected or occasional risk, you will be safeguarding your businesses future.

What specific risks should I plan for?

There will be numerous to consider in preparing for the expected and unexpected, so here are just a few examples-

For some of these, actions can be taken in advance to counter the identified risks, such as fitting a power surge protector to IT equipment, having a battery attached to cash systems for temporary use, servicing equipment regularly or having good emergency call out contracts, installing a CCTV system, identifying good local temporary staff agencies, offering staff free flu jabs, having a secondary broadband supply, planning how you might operate from alternative premises etc

You may remember a few years back there was a petrol tanker driver strike and fuel rationing so emergency services and food suppliers were given preference. This meant people were going out less and supplies within businesses were affected so there was less to sell and businesses were adversely affected.

More recently there was a fire underground in London and businesses in the area were evacuated, initially they thought for a few hours, instead this went on for over a week.

A few years ago there was an outbreak of foot and mouth that affected farmers directly, but also caused American tourists to stop coming here, so businesses relying on tourism such as retail, restaurants and hotels were badly affected, and this went on for weeks.

If yourself as the owner were to fall ill or worse then would your business survive?

What should contingency planning look like?

The plan should contain a list of each risk that you have identified, what should be done and who should do it. It should also be listed in order of things to be addressed immediately, those to be done in the first 4 hours and 24 hours, and those that can be addressed up to a week later. You should include a list of contacts to be called for help or advice such as insurers, trades people, IT service providers, leaseholder, suppliers etc. You may also be part of a news story so you might need to decide who speaks to the press or in some cases, to have a solicitor to deal with any enquiries. It’s not all negative though, as some minor incidents can provide a positive way to promote your business.

So in summary-

Unfortunately common sense is not so common, so you cannot rely on staff doing the best for the business in an emergency and also they might not feel empowered to do what’s required without specific instructions. Also insurance does not cover every eventuality and often there is a delay in paying out anyway so you might not recoup the full costs of an incident. Having a plan will help you deal with a crisis without damaging your company’s brand or reputation and will give your business a much greater chance of survival and keep your customers happy.

Real Life Business Contingency Example

Download this real life example of contingency planning which focuses on what the business would do if the owner was sick or worse. It may seem a gloomy subject but its important to have the plan in place for the survival of the business.

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