Planning for disaster

It doesn’t matter how much planning you’ve done – for the time being you’re fucked.’ In that sharp slice of Anglo-Saxon, Nick Robertson finds the ideal sentiment to sum up the dry-mouthed, leaden-stomach moment when his business was dealt a calamitous blow.
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A co-founder of online fashion retailer ASOS, Robertson had been building up the business since 1999 and, having been hit by logistical tribulations around the crucial Christmas period in 2004, he was keen to show what it could do when all the cogs were fully greased. Robertson moved depots in autumn 2005 to a brand new warehouse in a Hemel Hempstead industrial park and the company began to move up the gears as the Yuletide orders flooded in.
Early on the morning of 11 December 2005, however, a series of huge explosions at the Buncefield oil storage terminal seriously damaged ASOS’ new warehouse nearby. Nobody was allowed on-site for five days. When finally they were, they found the blast had destroyed the office inside the warehouse and weeks of stock had been ruined by the sprinkler system.

‘In terms of disaster recovery we had no back-up,’ explains Robertson. ‘As a fast-growing company, the dynamics of the business meant that we had just one distribution centre.

‘Big companies have resources for this and small companies generally don’t. When you’re busy growing a business the last thing on your mind is making a robust recovery plan. Often, all you do is carry out a business health-check and then get necessary insurance cover – that will generally be your only concession to disaster recovery.’

The 300 ASOS workers who were due to arrive on Sunday morning had to be contacted and, thanks to an assurance from the insurers, would be paid. The ASOS.com website – the company’s only shop-front – was closed to transactions for five and a half weeks. ‘We shifted our staff from near Luton to the London office to complete the refunds of the 19,000 undeliverable orders,’ remembers Robertson. ‘The nature of this business is that we have a high turnover of stock and only carry about six or seven weeks’ worth. But all that just got put to one side and the big issue was how quickly we could get the warehouse back up and running.’

In a way, Robertson was lucky – lucky to have such a hugely popular service and to have an almost ‘virtual’ business with a fairly fast turnover of stock. How many other businesses could cope with not being able to do any business for a month and a half and then still make a profit, let alone survive? Not many.

Perception and reality
In fact, 70 per cent of businesses that suffer a ‘discontinuity’ in trading – not even necessarily five weeks of it – will be forced to cease trading, according to a recent survey by the DTI. And, while we’re running with the stats, a Chartered Management Institute survey this year found that only 46 per cent of SMEs have business continuity plans and that just 37 per cent of those with plans will rehearse or exercise them.
So, despite the possibility of going belly-up and losing everything, business owners’ perception of potential danger is fairly low. ‘SMEs don’t have the resources and management capability to make plans,’ asserts Dr Greg French, managing director of disaster recovery specialist Belfor. ‘They think that conducting contingency planning impacts their bottom line. Compiling a plan and testing it works is considered unnecessary because they don’t foresee anything bad happening to their business.’

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