Business Survival Plan Part 2: Contingency Planning

In part 1 of our series, Business Survival Plan: Guide to Finance, we focused on how to be financially secure during a crisis. Part 2 is about contingency planning to help you prepare for unexpected events and minimize their impact. In this article, we’ll explore how to create your own contingency plans, how to be proactive on decreasing the impact of risks, and why these are essential to the vacation rental industry.

There is always the chance of an unforeseen event happening that could disrupt your normal business operations – whether that is a natural disaster or COVID-19. While not all events will shut down your business like the pandemic, having a contingency plan for your vacation rental business is an absolute must in order to recover quickly from the disruption. How do you handle cancellations? What about a guest getting injured on the property? Each of these situations need resolutions with specific steps to get your business back on track. Having a contingency plan will help you react quickly and ensure you are focused on the right steps to get your business up and running as quickly as possible.

How to create a contingency plan:

1. Identify the Risks

To help you determine what should be in your plan, you first need to identify all potential risks that could negatively impact your short-term rental business. Natural disasters, a sudden influx of cancellations, guest injuries, decreased revenue, and data breaches are all risks that could have a negative effect on your business and your key resources. Prioritize and organize your information based on their impact to your business and probability of them occurring. Make sure you give higher priority and probability to events that have happened before, such as storm damage.

2. Determine the Essentials and Timelines

Once you know your risk, you need to identify ways to mitigate those risks. If an emergency should happen, what is necessary to keep your property open? This can include internet, telephones, cleaning services, and other services like electricity. Construct a backup plan for each of the risks you identified earlier to keep these vital resources available. Make sure you have a step-by-step plan that outlines what to do when an event happens and who to contact to help you keep your business running. Create and keep a list of people and companies that may need to be contacted, such as utilities, insurance agent, cleaning crew and others.

If you were unable to work, know who can step in for you and fill that position. Communicate who will be responsible for reporting an emergency and notifying the appropriate groups. Keep in mind what needs to be done in order to resume normal operations during the impact (if possible) and after the event of one. Clarify timelines for everything that should be completed after an event. 

3. Insure Your Business

Safeguard your short-term rental by mitigating risks through insurance. As a property owner, risks associated with property damage, liability, and even income protection in the event of a covered loss need to be addressed in your policy. CBIZ Vacation Rental Insurance offers comprehensive coverage designed for your short-term rental business. Because vacation rental is a business activity, most landlord and homeowners’ policies may not protect you from risks associated with your business. Having the right kind of insurance will help protect you against the specific risks your company faces. 

4. Keep Your Contact Information Up-to-Date

Although it may not be a huge part of your overarching contingency plan, periodically review contact information for your key resources. Take the time to write down in-case-of-emergency contact information, take a photo of it, and set it as your lock screen on your cell phone. Don’t forget to provide updated emergency contact information for guests at your property. You never know what could happen!

5. Revisit and Adapt

Once plans have been created, make sure that they are easily accessible and shared with everyone who would need to be aware of the plan. While there is no way to account for every possible scenario that could affect your rental business, you can at least identify the major events. Once your plan is in place, make sure you keep it up-to-date.  Periodically revisit your strategy and make updates to ensure it reflects any changes to your business or list of emergency contacts. 

Remember, owning a vacation rental property comes with risks, but you can help reduce those by creating a contingency plan and purchasing insurance coverage. Don’t carry the weight of the unknown, let us help you protect your business and mitigate potential risk. 

Find out more about how CBIZ Vacation Rental Insurance can protect you from the risks you face when renting your property. Request a free quote today!

This blog may contain scenarios that are provided as examples only. Coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.

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