Many practice owners do not even consider a contingency plan or realize the option exists and is a sound business practice. Creating a plan is most often overlooked or forgotten when times are good and business is booming.
Unfortunately, it does not take much to turn things around. As we can observe during this global pandemic, one crisis can turn your business upside down in a very short time.
What is Contingency Planning?
Contingency planning is the process of building a procedure to prepare for the absolute worst. When things go wrong, the plan is there to salvage your practice and provide an opportunity to get things back on track again.
Contingency plans are essentially based on “What if…?” scenarios. What if the market crashes? What if there is a labor shortage? What if the insurance company does not pay? What if our system goes down unexpectedly? What if we get hacked with a Ransomware? Ask yourself every possible “What if…?” that could apply to your practice in your area, and then start building a plan to answer those questions.
Types of Contingency Planning
The exact type of contingency plan you create should depend on your practice type and its location. For example, a practice located in a hurricane zone should add flood insurance and hurricane damage recovery to its plan. The plan itself is essentially a detailed sequence of steps and processes that will be used in worst-case scenarios.
The most basic plan should cover the financial aspects of the practice. An in-depth plan pinpoints areas of the practice that are first in line for cuts, where employees can be eliminated and where costs can be drastically reduced to save expenses immediately while entering a rebuilding phase.
For more on the types of threats facing your private practice, check out this article I wrote a few months ago: Five Major Threats to The CEO Optometrist and How to Protect Against Them.
How to Write a Contingency Plan
The contingency plan works as a sequence of events based on priority.
First, make a list of the most likely major events that could change the course of your practice for the worse. Build out an individual response for each of these events. How will you prepare, and what actionable steps will you execute following the events?
After you have each scenario and response on paper, it’s time to prioritize. In the case of a financial crisis, what contingency steps are the most important? Where can you cut some fat immediately without losing ground on processes?
Lay these things out in order of importance so you can have an action plan ready to use immediately after taking a big hit. You won’t be able to implement everything in the plan all at once, so really take the time to prioritize your cuts and actions.
Most contingency situations are out of your control, and in many cases cannot be seen coming in advance. However, you can create contingency plans for elements that are within your immediate control. The key is to create it before the crisis hits.
Do you have a contingency plan for your practice? What resources helped you put it together? Please share in the comment section below.