A growing management firm that specializes in government contracts needed to be better prepared for possible business interruptions and ready to implement a business continuity plan in the event the owner should suddenly be absent. In the tough world of business startups, a company that withstands the trials and challenges of its early years may seem to have it made. But as businessman Alex Hernandez can attest, even the owner of a thriving company can occasionally overlook key needs. For Hernandez, the owner of project management firm Hernandez Consulting LLC, the wakeup call came courtesy of his bonding company. As the entity that provides performance guarantees for work that Hernandez Consulting does on large government contracts, the bonding firm a few years ago became worried about what would happen if Hernandez suddenly weren't around.
"I own the vast majority of my business and I'm intimately involved in its daily operations," he says. "My bonding company was concerned about what would happen to my company if something happened to me." Hernandez says his bankers voiced similar concerns. His firm had grown quickly, thanks in part to a range of federal benefits accorded to veterans and owners of companies that operate in "historically underutilized" business zones. (Hernandez is a former U.S. Marine who qualifies as a "service-disabled veteran.") The firm also qualified to receive training, business counseling and other support under Section 8 (a) of the Small Business Act. Armed with that support, Hernandez launched his firm soon after Hurricane Katrina struck New Orleans in 2005. His company's first experiences with big storms came later, via hurricanes Gustav and Ike. While those storms did not damage his company – in fact, they generated new project management work for it – they also raised questions about whether his business was equipped to withstand a potential interruption. "I really didn't have any concrete plan in place for what would happen if a hurricane put my business out of operation, or if I was overseas and couldn't return, or if I died," he says. Hernandez sought help from the Louisiana Small Business Development Center Greater New Orleans Region, where he met counselor Jerre Madere. "He was referred to us by the SBA to see about getting a continuity plan and a succession plan," Madere says. "They wanted to see something in writing." Madere guided Hernandez on how to approach emergency preparedness and business continuity planning, providing him with resources, plan templates and advice on how he could integrate other aspects of his personal and business planning into the new continuity and succession documents. "He did exactly what we asked him to do," Madere says. Hernandez developed the new plans with SBDC assistance, using templates federally approved for such purposes.
"He also addressed things like the order of succession and transfer of responsibilities so that people in the company are trained and ready to do what they need to do if something happens," Madere says. In addition, LSBDC GNOR referred Hernandez to a program offered through Louisiana Economic Development. Known as the Economic Gardening Program, the initiative offers small businesses access to intense, customized research from the Edward Lowe Foundation. "They came in and over a three-month period showed me where we might be able to grow our business and maybe diversify into the commercial sector and different sectors within the construction industry," Hernandez says. That diversification could become more important as his business nears the point where it will no longer qualify for some of the federal designations that helped it grow through the early years. "When that happens to some companies, they go bankrupt," Hernandez says. "I don't want that to happen to us." Madere says that like many LSBDC clients, Hernandez was pleased that the center's assistance is available free of charge. "The SBDC will work with anyone, from entrepreneurs and startups to existing businesses," she says, noting that persons who qualify under such programs as the SBA's Section 8 (a) can receive even more intensive hands-on assistance. Hernandez says the help he has received has been invaluable.
"Without a succession plan and a business continuity plan, our bonding company at some point probably would have said, 'We're not going to give you any more bonding,' " he says. "Instead, they now can pull our plans out of their filing cabinet and know exactly what to expect" if something should interrupt the company's operation. His bankers feel more secure as well, and have extended the company a line of credit that Hernandez could not get before the plans were in place. All of that has enabled him to look deeper into his company's strategies for future growth. "Now we're doing some long-term business planning," he says. "We had our first official strategic planning session this year." For more information on emergency preparedness, visit www.lsbdc.org or contact LSBDC GNOR at (504) 831-3730 or firstname.lastname@example.org. The LSBDC is funded in part through a cooperative agreement with the U.S. Small Business Administration, Louisiana Department of Economic Development, and participating universities. All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the SBA.