Disaster Planning and Recovery for Small Businesses
February 13, 2020
A fire in your warehouse. A hurricane demolishing your office. Business closure due to a bomb threat. A sustained telephone or power outage. A devastating cyber attack.
No matter how secure you feel in the current success of your small business, everything can come to a grinding halt if disaster strikes. Disruptions in business can damage your brand’s reputation, leading to revenue loss and reducing customer satisfaction.
The good news? You can create a strong safety net for your company that can help it to weather almost any emergency.
Small Businesses: Flattened by Disaster?
The statistics are shocking. According to FEMA, around half of all small businesses that are hit by these types of disasters are flattened, never to reopen again.
Shocking, but logical. After all, the downtime that a business would typically require to rebuild itself after a catastrophic event can cause its customers or clients to seek out help from its competition. It can also devastate the trust of the company’s employees and force them to look for employment elsewhere, while cutting off the company’s main income sources for an unknown amount of time.
There is, however, one way for a company to increase its chances of bouncing back. Interestingly, FEMA reports that 90% of small businesses that don’t reopen their doors within five days will go bankrupt within a year. In other words: businesses that get back on their feet quickly have a much better chance of weathering the storm.
That’s why planning ahead of time for a fast recovery can save your business from eventual destruction. Creating a disaster recovery plan and a business continuity plan can prepare your business for any eventuality, from natural disasters to any other disruptive event.
Emergency Preparedness: The First Step
The first step in emergency planning is ensuring that your employees are as safe as possible during any disaster.
What can you do to ensure this – ahead of time?
- Create emergency supply kits that include bottled water, first aid, device chargers, and other necessary items.
- Create an evacuation plan that lists the procedures that your employees should follow in case of an emergency. (You will need to specify details for each potential type of emergency.)
- Set up an emergency response plan so that employees know exactly what is expected of them during and immediately after the disaster. Most importantly, how can they ensure the safety of their fellow employees? And once their safety is secured, how can they limit the company’s property losses (e.g., raising equipment off the floor in case of flooding)? Whom are they responsible to contact in the wake of the disaster?
- Invest in backup systems that would be critical during an emergency situation. This might include a secondary power source (i.e., a generator) or communications system.
Plan for Communication
Rapid communication is another key aspect of recovering from a company-wide incident. Don’t wait until a crisis situation to figure out how to contact key people you will need to notify, as well as organizations that can help jump-start your company’s recovery.
Create a list of all of the people you will need to contact after a disaster, including…
- All of your employees (including those who may not be in the affected location)
- Major clients and customers
- Contractors and suppliers
- Investors and stakeholders
- Insurance agents and insurance company claim representatives
- Emergency management agencies (state and local)
One simple step is to provide your local fire station with a layout of your building. If your business handles any hazardous or flammable materials, indicate where these are stored, and provide the Safety Data Sheets (SDS).
When looking for strategies you can use to communicate with each of these categories of people, think both high-tech and low-tech. That means not only updating your social media channels, your website, and your e-newsletter, but also posting notices outside your business locations and in local newspapers, as well as contacting key players directly via phone or email.
Test and Evaluate Your Plan
A plan is worth as much as the people behind it. That means that educating your employees and ensuring that they can put your plan into action is essential in planning for a crisis.
Take these steps to ensure that your employees are up to the job, and that your plan will be a success when put into action.
- All employees – from upper management to maintenance workers – must be notified of and trained in your company’s recovery plan. Training sessions can be incorporated into typical company trainings, as necessary.
- Test your plan, using regularly scheduled drills, and evaluate the efficacy of your plans of actions and modify them accordingly. Incredibly, over 20% of small- to medium-sized businesses spend no time at all maintaining their disaster plans.
- Make it a priority to train all incoming employees as soon as they join the company, especially those who are part of your critical infrastructure.
- A local disaster that strikes your business may adversely impact your vendors, suppliers, or clients (specifically if you run a B2B business) as well. Contact both ends of your supply chain to ensure that they have disaster plans in place as well. Discuss any issues that may arise due to discrepancies between your plans.
Plan for a Move
If the disaster strikes your main location of business and renders it inhabitable, it is important to consider how you can keep your company afloat during the rebuilding process. Generally, this requires finding a new, temporary location where your business can continue to function.
- Research alternate locations. While you do not want to rent out an empty office “just in case,” you do want to complete all of the groundwork research so that you can easily take that step in case of a crisis.
- List the jobs that are critical to the functioning of your company, and that would therefore need to be relocated temporarily.
- List any absolutely necessary office equipment that would need to be moved, purchased, or leased in order to make the temporary location functional. Research where this equipment could be purchased or leased, if necessary.
- Locate qualified contractors that could help prepare your temporary location for your company’s arrival.
Duplicate and backup records and data
Data-related disaster planning used to be limited to hardcopy documents and inventory. For today’s small businesses, however, most data is saved in computer networks, rather than in file boxes. To protect this data in case of a disaster, take the following steps:
- Keep up-to-date duplicates of all important documents, including records and contracts. Hard copies of these can stay secure in a safe-deposit box, whereas computerized versions should be saved in the cloud.
- Consider investing in an offsite backup of your company’s computer data, usually provided by a data storage firm. This tool can secure any sensitive data from clients as well.
Insurance Plan Review
Often, business owners only look at their insurance plans after a crisis has already occurred. Prevent yourself from being blindsided by unexpected fees and uncovered costs by reviewing your insurance plan ahead of time.
- Make sure that your coverage is sufficient to not only cover the direct effects of the disaster, but also those that are more indirect – such as the cost of any disruption of your business or that of your suppliers.
- Consider taking out additional policies to cover flood or earthquake damage, if necessary, since most basic insurance policies do not cover these disasters.
- Update your insurance plan often, especially after any new addition or improvement to your business or its equipment. Ensure that there are no unexpected gaps in coverage.
- If you are going through disaster preparedness training, ask your agent if you qualify for any discounts on your policy or policies
- Prepare a detailed asset inventory, including photos and details concerning any tools or technology that your company uses on a regular basis. You can later reference this list and provide it to your adjuster, if necessary, in a timely fashion.
As a small business owner, every minute that you spend working on these plans can save you countless headaches after a disaster occurs. If you believe that your business is at particular risk for a given disaster, you may want to consider contacting a disaster recovery consultant. Creating a disaster recovery plan and ensuring the continuity of your business in the early aftermath of a crisis can mean the difference between insolvency and a successful recovery for your business.