Disaster Readiness Part 1: Creating a Plan

Enough cannot be said of the importance of business continuity and disaster recovery (BCDR) planning. According to the Federal Emergency Management Agency (FEMA), more than 40% of businesses never reopen after a disaster. And only 29% are still operating after two years.

Don’t be lulled into a false sense of security that it won’t happen to you. Small businesses in the eye of Hurricane Katrina, Harvey and Maria, as well as numerous cyberattack victims, didn’t either.

Different Scales of Disaster

“Events” that can negatively affect your business come in different scales. Minor events, like a power outage or a limited virus infection, are typically easy to overcome. A flu outbreak that sickens half of your staff or a blizzard that shuts down traffic for two days are cause for more concern. But imagine the consequences to your business when a major event occurs – a hurricane or a wildfire.

How would you respond to these events? What would you do to prevent a major work disruption, the loss of data or a sharp decrease in sales? How can you build resiliency and reliability into your business?

Basic BCDR for Small Businesses

Small businesses have fewer resources than their larger counterparts and cannot afford to be closed down or offline for long without significantly impacting their financial outlook and ability to survive. Proper planning can mean the difference between success or failure after a major event. A simple BCDR plan addresses the following:

  • Roles and responsibilities: Create a list of who is responsible for what during and after a disaster. It’s also helpful to describe what employees are not supposed to do, such as trying to salvage work-related items instead of immediately leaving a burning or flooding building.
  • Critical business functions: This is a list of the activities and processes required that keep your business running, in priority order by how quickly they must be recovered if necessary. Along these lines, keep copies of critical information, including administrative and work product documents, in protected storage or relocate the originals.
  • A checklist of items to have on hand: This list should include items such as extra device batteries and chargers, one gallon of water per person per day, and a first-aid kit. You should also create a list of emergency contacts in print and save it to the cloud so you can access it if you can’t make it into your office.
  • How-tos: Essentially, you’ll have several paragraphs or sections in your plan that describe how to respond to a disaster as it occurs (turn off and secure all critical equipment, have a shelter in place, forward phone lines, etc.), how to keep the business operating, how to print/fax/copy/scan and perform similar tasks. You should also describe alternate work locations, such as allowing employees to work from home (if possible) or another physical location where you’ll temporarily run the business.

Include a Communication Plan

How will you contact staff if everyone must evacuate or work in various locations? Designate someone to be the point of contact for all staff members and the person responsible for staying in contact with them. Set up a plan for communicating by phone, email and/or social media. You’ll also need a plan for alerting customers and vendors that your company is experiencing a disaster and when you think you’ll be back up and running.

It’s a good idea to keep a weather alert radio (and fresh batteries) on hand in case phone lines and cellular communications go down. If you have cell service, the FEMA app includes weather alerts and helps you locate shelters in your area.

Review Insurance Coverage

Consider purchasing business interruption insurance, which provides cash flow in the event of a work stoppage. But you might need more than that. FEMA provides a Business Insurance Discussion Form on its website for businesses to use when talking to their agents about all kinds of insurance coverage.

To help ensure timely insurance claim processing after a disaster, create a detailed list of business equipment with photos or video clips. Store this information with your checklist and other important documents.

Create an Emergency Fund

Even if you’re well insured, you’ll need some working capital in the short term after a disaster. Prepare now by saving money for an emergency fund or prequalifying for a loan or line of credit. You might need to continue paying employees, and set up shop in a temporary location, all of which requires money. Insurance payouts can take weeks to arrive.

Moving On

Creating a plan – thinking it through and putting it in writing – greatly reduces stress during minor and major emergencies, and it could save your business. Make sure all staff members know where the plan is located (again, preferably in the cloud, where it can be accessed anytime from anywhere) and what it entails. Then review and update the plan at least annually.

One way to test your plan is to try it out. For example, if you run an office and your plan calls for employees to work from home during a disaster, have each of them do so for a day (staggering the days over a few weeks). You’ll know pretty quickly if someone doesn’t have adequate Internet bandwidth, phone service or computing and software tools.