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Summer Journal

Volume 27, Issue 3

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Small Business Planning Confidence On The Rise

As a reformed “Slugger,” I understand all too well the consequences of false confidence and how it can decrease motivation to create a plan. As a small business manager myself, I had the unhappy experience of navigating through the pandemonium of my own disaster.

Our business was clipping along at a phenomenal growth rate until the computer crashed. This was no problem, I naively assumed. We did, after all, create back-ups of our main computer system nightly. I never imagined all our back-up files were corrupt.
Our practice at the time was to recycle our back-up tapes weekly and those were corrupt, too. Regrettably, we had never tested our back-up systems and the reinstallation of our data. After six weeks of frantic attempts, we discovered we would be unable to recover our data and everything was gone.

That experience almost put us out of business. We were lucky. We survived.

From that day forward, I have been an advocate of business continuity planning.

In my quest to convert other “Sluggers” through education and research, I discovered the information gained from a survey I conducted (prior to Sept. 11, 2001) left me with additional unanswered questions:

  • What are the reasons decision-makers fail to plan?
  • What are decision-makers’ estimates of the likelihood their business will experience a disaster?
  • Do confidence levels change relative to the comprehensiveness of a business continuity plan?
  • Is there any difference in the proportion of small businesses with a plan in place today (post 9/11) relative to the proportion reported in my earlier study?

Once again, I set out to attempt to answer these questions. I conducted a survey of 148 small- and medium-sized businesses in the Central San Joaquin Valley of California. The results, although indicating a slight shift in attitudes, do not suggest that highly publicized events the past three years have had any significant influence upon the planning behavior of this small business community.

In order to more fully understand the rationale for failure to plan, respondents were asked to indicate their agreement with numerous statements explaining their failure to implement business continuity plans.

The response most often given for lack of planning was, “Business continuity planning is for large corporations with vast resources.” Certainly, the implications of this attitude are fundamental to determining and overcoming the roadblocks to planning. Unless we can find a way to change this attitude, it will be difficult to increase the use of planning within this environment.

Current findings indicate these decision-makers believe their organizations do not need business continuity plans. Misconceptions, regarding the need for, and benefits of, business continuity plans are still present. They indicate that organizations are “too small” for planning and that computer back-ups provide enough protection. They clearly do not understand the scope of business continuity planning nor do they understand the value it provides.

Another roadblock to planning is the general denial that a problematic event will, in fact, occur. I asked respondents if they felt a disastrous occurrence was more likely to occur in their business or a similar business across town. The survey results suggest that decision-makers believe their organizations are less likely to be affected by negative events.

Respondents indicated that a disastrous occurrence is more likely to affect a similar organization “across town” than their own organization. This result is consistent with existing research by Plous and Weinstein, which indicates that people generally predict negative outcomes for others while predicting positive outcomes for themselves.

It would stand to reason that underestimating the probability of disastrous events would decrease the perceived necessity of business continuity planning.

It would appear that time has also influenced respondent confidence levels with regard to organizational recovery. The recent survey found that confidence levels were significantly higher among those with a business continuity plan compared to those without a plan.

This result is opposite the effect demonstrated in the previous study. More interestingly, there is a significant relationship between confidence levels and plan

omprehensiveness. Those with a more comprehensive plan are more confident in their organizations’ ability to survive an event, than those with a less comprehensive plan, or no plan at all.

One would expect that respondents with current, accurate, and comprehensive plans should have higher confidence levels with regard to their ability to recover from a disastrous event than their counterparts who have a less comprehensive plan or no plan at all. Research supports the fact that those organizations with a well-documented plan have increased probability of surviving a disastrous event and, in fact, will recover more quickly.

So, the “Sluggers” in this environment are reporting lower confidence levels than previously reported. Do these reduced confidence levels change planning behavior? Did this shift in confidence motivate and/or increase the incidence of planning?

Unfortunately, it did not. One would hope that lower confidence levels among decision-makers without a plan would stimulate an increase in planning. (Certainly, there was no hope for such change among this population as long as they retained a “false confidence” in their organization’s ability to survive an event.) However, although confidence levels are lower, there remains no detectible motivation to actively plan among this group of decision-makers.

It is notable that confidence levels among those with a plan have increased. It could be that confidence levels have been influenced by the recent media coverage of various “high profile” disastrous events. It is possible that recent events motivated respondents with a plan to become even more proactive. It is also possible that at the time of the previous study participants had not reviewed or updated their plans. Current events could have motivated them to update and maintain their plans thereby increasing their confidence levels over previously reported levels.

Conversely, those without a plan have become more aware of the potential risks involved in operating their businesses. Although they may not be motivated to plan because of the perception of minimal risk, they are still aware of the potential for an event, which decreases confidence levels.

The final analysis finds there has not been a significant increase in the percentage of businesses reporting they have a business continuity plan in place. It is disappointing that recent media coverage and the abundance of information available has not effectively increased the incidence of planning among this population.

Overall, 34 percent of respondents reported that they do have a plan. However, of those respondents reporting the existence of a plan, only 17 percent indicate their plan is in writing. The good news is that the percentage of written plans is significantly higher than the previous study (up from 11 percent). The fact that a larger proportion of respondents report they have written plans is encouraging. However, these gains are minimal, at best.

In general, small business managers in Central California indicate they do not need to worry about or plan for disastrous events. After all, there are no tornadoes, hurricanes, or blizzards in California. When the next disastrous event occurs it will hit next door, around the corner, or across town.

Most acknowledge they have already experienced equipment failures, computer viruses, employee sabotage, data storage room floods, or other similar disastrous events. Many managers have experienced one of these “events” but fail to recognize it as such. Most even agree that recovery would have been smoother if they had had a business continuity plan at the time. Yet, even when armed with this knowledge, most indicate they do not intend to allocate time or resources to business continuity planning.

Overall, my findings should be considered positive signs indicating the potential for change. Clearly, we need to convert more “Sluggers” and help them understand the benefits of planning. We must somehow publicize that planning is not just for “big business.” The unresolved mystery is how to motivate these decision-makers to access the available information and use it to generate planning activity.

I still believe the key is providing information regarding disastrous occurrences and the improved incidence of recovery when a comprehensive plan is in place. Then, once armed with this information, maybe more “Sluggers” will make business continuity planning a priority.

 



Laurie Taylor-Hamm is an adjunct professor at the Craig School of Business, California State University-Fresno, and a business consultant. This article is based on her master’s thesis.

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