Any small business can get turned upside down by an unexpected disaster, but having a plan in place can help get you back in business.
A blizzard, hurricane, thunderstorm, tornado or wildfire could strike your business, shutting it down for hours, days, weeks—or even permanently.
Lack of planning contributes to a surprising statistic: as many as 25 percent of small businesses never reopen following a major disaster, according to the U.S. Small Business Administration. Getting up and running again quickly is crucial for business survival. Statistics show that 90 percent of businesses that don’t reopen after a disaster within five days ultimately fail.
In recent years, small businesses have been affected by Hurricane Sandy hitting the East Coast, a tornado in Joplin, Mo., and wildfires in California, as well as many smaller catastrophes. Even a small storm that causes a power outage can grind your business to a temporary halt.
However, proper business insurance coverage and disaster planning will help your business weather any storm.
The Small Business Administration and other organizations offer an array of resources that can help you create a small business disaster plan so your business can recover and if you’re forced to close temporarily, get back to serving clients or customers quickly.
11 Steps to Create a Disaster Action Plan for Your Business
It’s important to create a written plan and update it yearly. Here are 11 actions small business owners should take to plan for disaster:
- Start with a checklist. A business disaster checklist offers an overview of the components of a small business recovery plan. Keep it handy as you create your plan, and check off each completed action to make sure you don’t miss a crucial step. A checklist should include sections on communications, data, employees, operations and safety.
- Prepare for risks. Learn the specific types of hazards your business is likely to face and what to do during and immediately after these disasters. Review a checklist specific to disasters you may face in your area, such as an earthquake checklist, hurricane checklist, tornado checklist, wildfire checklist and winter weather checklist. Learn about the warning systems used in your community, and designate locations for you and your employees to seek shelter if necessary. To make sure you’re alerted promptly to any impending problem, buy an NOAA Weather Radio with a tone alert feature, the Red Cross recommends. This will warn you 24 hours a day about natural disasters, other hazards like chemical or oil spills, and temporary 911 outages in your area.
- Get help from disaster experts. Sign up for the Red Cross Ready Rating program, which can provide business preparedness training to help you ensure that you are ready to face a weather catastrophe or other disaster. Experts may have recommendations to make your business safer, such as installing shutters to protect windows and inexpensive emergency lights that turn on during power outages. Make sure your small business is properly protected by business insurance and check into business continuity insurance as well, the Red Cross recommends.
- Create an emergency kit. You, your employees and customers could get stuck in your business unexpectedly due to extreme weather or even a freak occurrence like a hazardous materials spill from a tipped truck. A small business should have an emergency kit containing enough non-perishable food, bottled water and other supplies to last multiple people for 72 hours. Your kit should include a can opener, flashlights and extra batteries, first-aid supplies and a first-aid reference book.
- Designate a recovery team. Choose a small group of employees who will take action in the immediate aftermath of an incident. Assign an employee to be crisis manager and choose a backup crisis manager. Assign other employees to work on the recovery team. Meet with these employees to clearly outline their roles and responsibilities.
- Consider communications. Develop an emergency communications plan for your business. Create an employee communication tree, provide copies to employees and store an extra copy outside your business. Offer multiple modes of communication, including email, phone calls and texting, and consider keeping battery operated walkie-talkies as backup. Gather emergency numbers, including your small business insurance company, electrician, plumber, customer list and media contacts, and store that information offsite. Also set up programmable call forwarding for your business phones in case a disaster prevents you from reaching the office. This way, you can remotely forward calls to another phone.
- ID critical business functions. Every business is different, so it’s important to identify the critical functions of your business. Assign each business function a priority: high, medium and low. Decide how much downtime is acceptable for each function. For example, a critical business function of a custom packaging company would be fulfilling orders for boxes. A critical business function for a small credit union would be opening new checking accounts for customers.
- Plan to protect your data. Your small business relies on data, so you need a data backup and disaster recovery system, also known as a BDR, in place. This will protect you not only in a natural disaster or fire but also if you fall victim to a cyber attack. A BDR ensures that a catastrophe doesn’t wipe out your data, and it helps to minimize downtime caused by data issues. Protecting your data is crucial because 90 percent of businesses that suffer a data center outage lasting more than a week never reopen. To set up a BDR, look for a service provider that has a solid reputation, 24-hour support and the ability to grow with your business, tech consultant Larry Alton recommends on Entrepreneur.com. Make sure your tax and financial records are stored safely.
- Document your equipment .Just like at home, it’s crucial to make a detailed list with photos or a video recording of the contents of your business, especially computers and other valuable equipment. This record will help facilitate the insurance claims process. Store this record safely so you can access it from outside your business.
- Get ready for recovery. What help will be available to your business in the wake of disaster?If you’re properly covered by business insurance, your insurer can play a huge part in helping you get your business back in gear. However, if you need a little extra help, you can apply for a business physical disaster loan from the federal government. These loans of up to $2 million, available to eligible businesses in a declared disaster area, may help you fix or replace items crucial to your small business, including equipment, machinery and inventory.
- Make sure all systems go. Regularly review your small business disaster plan, make sure all information is up to date and conduct testing to ensure all backup systems function as planned. Hold regular training sessions so all employees know exactly what to do if disaster strikes.
Taking the time to prepare, revise and update your emergency plan as necessary greatly increases the odds that your small business can face a catastrophe and stay open for business.