Why do I need a Contingency Plan?

 

In Big Business… or at least the kind who have their heads screwed on right… there is a phrase… “Plan for Success… plan for Failure“.

Now… this post will focus in on the Failure part… the need to be prepared… but it is also important to realize that even Success can lead to a kind of failure… especially when there is far too much success for you to “humanly” handle, or even your servers to “serverly” handle.

For example… a couple of weeks ago… someone put out a new software app for the online business community.. and through all the instant sales traffic being generated through the affiliates, there was far to much traffic for the servers to handle, and the offer went offline for about 1 hour.

When it came back online, the vendors were fortunately able to turn things around from a minus to a plus – i.e. “Look how many people crazy want our product… it literally blew up our servers… !

But they were lucky, and able to get away with it… but more often too much success can undermine a business, because it is too much to handle, orders don’t get processed in time, and Customers start to complain… and then start asking for refunds etc.

You see, the wrong kind of success can be just as bad for business as outright failure… that is why a far-sighted business will also ask the question “What will we do if we are too successful?

But in the rest of this post we are going to be looking at failure… potential future failure.

OK, you can’t predict what will happen in life… but you can try and predict what might happen… and what you could do if it does indeed occur… and that activity is known as contingency planning… and it always good to have a contingency plan or two up your sleeve when engaging in the world of internet marketing.

Basically it’s a case of forewarned is forearmed.

And in the heat of the panic, having some idea about what to do is a great help… especially when panic and anxiety kicks in and you can’t think straight (… which is something you hear the emergency services say all the time… planning, planning, planning… is what makes the difference).

For example, you do all your business via Amazon… and then suddenly Amazon closes down your account overnight, instantly cutting off your revenue stream… and yes, that has happened to several internal entrepreneurs over the years.

Now, if you have no contingency plan, all you can do is appeal to Amazon… and we all know how long an Amazon appeal process takes, and there is no guarantee that you will be successful at the end of it… and the whole while you are not making money, and the anxiety is driving you crazy.

However, if part of your contingency plan you have also developed a Shopify store, or your own selling website, then you are not totally in the cold, you have other revenue streams coming in… and so you can survive while appealing to Amazon to be re-instated.

And with the above example, we could change Amazon for Facebook / Shopify… In a similar way, Facebook rent you space on their platform, called a Shopify store, and they can evict you just as easily if you transcend their rules.

What if… Facebook closes down your Ad account because of some reason which they may not even initially tell you… and you need to appeal. But while appealing, if you have a second account you can access, in your wife’s name, or with your business partner, using a 2nd credit card, this gives you a way of continuing while going through the Facebook appeal process (which can also be long and tiresome).

And what if Paypal closes down your account… while appealing their decision… you can always transfer to your Stripe account… or to one of the other payment platforms which are out there.

In each of the above scenarios… what could have initially looked like a disaster, turns out to be workable if inconvenient when you realize that you have options.

Now, when you are doing contingency planning there is:

  • Risk
  • Acceptable Risk
  • Unacceptable Risk
  • BIG SCARY risk…

When you are starting out, then much will be probably defined as an acceptable risk… but when you are on $10 mill a year take home, then things may move to the BIG SCARY bucket… and not to have a back-up plan or two might be a mistake (especially when your money dies up just after you have put down a first payment on that mansion in Beverly Hills).

One of the things which I have learnt from years working in different areas of I.T…. and different kinds of business… have a contingency plan… think of what might go wrong, and try to have a back-up plan if possible.

For example, my biz partner is in Australia, while I am in U.K., and this has some disadvantages, but other advantages… and one of the things we are doing, I have a Facebook account… and he has a Facebook account, although we tend to use his for a couple of reasons (i.e. E.U. charging different VAT rates depending on country of origin… although whether this continue after Brexit, who knows.)

But if he ever gets closed down by Facebook then hopefully we can continue with mine while he is negotiating with Facebook.

Anyway, that’s one of our contingency plans… hopefully it will work… although don’t want to have to see.

When I was playing at being a Service Delivery Manager, I once spent the morning with my I.T. Support team watching the Cloud on the U.S. East Coast go down and stay down for about 5 hours… something which was meant to be impossible, but saw it with my own eyes… most people think that I.T. is this “solid” thing, but in some ways it can be as impermanent as anything else… and so you need a back-up plan in case.

OK, for many people who are developing their business, these are things you don’t need worry about at the moment…

However, once you have built a solid business, cruising at $100k per year plus say, then perhaps… from the point of view of contingency planning … you might want to consider having a back-up option or two…

AND AT THE VERY LEAST MAKE SURE YOU BACK-UP YOUR SITE REGULARLY… just reminding you.

I have a friend who put all his faith in Amazon, built a business, and then Amazon pulled the plug on that niche (basically setting up an Amazon competition business), and he lost all his revenue overnight because he couldn’t compete with their prices…

If Paypal pulled the plug on your business, all your revenue could literally stop overnight, and so at very least thinking about what you might do IF the big corporations changed their policy is I believe a good thing…

Like I said at the start, as businesses mature, they start to ask themselves… “Plan for Success… plan for Failure?

(c) Brian Parsons, July 2016

 

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