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A case for a business plan - September, 11’s lesson for small and medium business owners

Guest post by: Michiel Jonker

Article Overview: Many of us know the story of Morgan Stanley, the global financial services firm and largest tenant in the World Trade Center, who lost ONLY 6 out of its 2,700 employees on September, 11. But did you ever wonder why? Why only 6 employees (including Morgan Stanley’s head of security)? And what on earth can this story tell us about business plans?

A case for a business plan - September, 11’s lesson for small and medium business owners

There is a REASON why only 6 people didn't survive... Today Rick Rescorla, the security chief of Morgan Stanley at that time, is known as the person who had predicted September, 11. Rick's story also confirmed my opinion that a business plan needs to include a reference to a company's business risks and "set the tone" (company culture) for reducing business risks. It was Rick's job to secure the working environment of Morgan Stanley employees. Part of his job was to identify security risks, to make decisions whether or not to manage and control it, how to implement security controls and how to maintain the security controls.

Since he was certain that an attack from the air was most likely, he insisted on regular fire drills (every three months) - even executives had to participate - safe lights, smoke extractors and evacuation plans. Morgan Stanley employees, including the bosses, knew in detail what to do in a case of emergency. Due to advance risk planning (risk management concerning the security of personnel) almost all of Morgan Stanley's personnel escaped the horror of September, 11.

Further, due to advance risk planning (risk management regarding business continuity planning) Morgan Stanley personnel knew what to do - they immediately reported to Morgan Stanley's offsite (disaster recovery) facility. As a result, Morgan Stanley was able to continue with its global operations the same day.

It is clear that Morgan Stanley PLANNED for possible risks/threats/pitfalls in the future. It is therefore extremely important that our business plans also acknowledge the fact that we face risks, now as well as in the future, and that we need to counteract negative events in the future - as far as we can and our resources allow us... cost effectively of course.

The story of Morgan Stanley is an excellent example of a business and individuals who have performed excellent risk management ahead of time. Did the attack have a negative financial impact on Morgan Stanley? Absolutely. However, imagine what the profit loss would have been without their advance planning. A loss of a great number of employees, loss of systems, data, information, communication mediums etc. etc. The end result would have been a close down of business activities... Fortunately, almost every one survived because of advanced emergency planning and the company also survived because of its advanced business continuity planning.

This is only one example of a business that has controlled its risks (of physical attacks and a possible disruption in business activities), threatening to close their doors for ever. The story of Rick Rescorla and Morgan Stanley is one excellent argument for a business plan.

Small and medium business owners can and should do the same. Do we have the resources of big business? Certainly not. But it doesn't excuse us from performing advance profit protection planning (risks management). By knowing how to identify your business risks, calculate the negative financial impact of it (i.e. the profit erosion it causes or might cause) and to calculate the cost of possible countermeasures you would not only be able to protect and rescue your profits, but you would also be able to motivate on a sound economical basis why you have decided to counteract or not to counteract certain business threats.

However, I can also draw another story from the September 11's horror that can be used to make a case for a not too tight business plan. I will write more about this aspect in a next article.

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Article Tags: business plan, financial services firm, medium business owners, morgan stanley, september 11, small and medium business, world trade center



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