Small Businesses and Disaster Preparedness

As the economy continues to struggle, many small businesses may not see it as a priority to maintain a functional and effective disaster preparedness plan; however, floods, fires …

As the economy continues to struggle, many small businesses may not see it as a priority to maintain a functional and effective disaster preparedness plan; however, floods, fires and earthquakes are real and unpredictable threats that could destroy a business. Experts advise considering four key areas: customers, staff, equipment and financial impact. Businesses must be prepared to be able to continue to provide their customers with their needed product or service by a staff that can work from an alternate location with backup equipment if necessary. For more on this continue reading the following article from The Street.

You have to be optimistic to start your own company. So perhaps it’s no surprise small-business owners prefer to focus on the day-to-day tasks of staying solvent rather than worrying about what-ifs.

At this time of year, when reports of tropical storms and looming hurricanes are a staple of the nightly news, it’s easy to tune out if you’re not in the affected areas. What’s important to remember is that fires, floods and other disasters can strike anywhere and any time. If you haven’t thought through some worst-case scenarios, that disaster might destroy not only your property, but your whole business.

Ideally, companies of every size should have a disaster preparedness plan in place, but the Society for Human Resource Management recently surveyed its members on the topic and found that there’s plenty of room for improvement. Overall, 76% of respondents said they had a disaster plan, but only 33% felt their organization was prepared to a "great or very great extent."

The numbers varied greatly by company size, with smaller organizations firmly in the "Needs Improvement" category. Almost every corporation with 2,500 employees or more had a plan in place, but only about half of companies with 99 employees or fewer did. Only 24% of small businesses said they were prepared "to a great extent."

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What constitutes a "disaster" in a business setting can vary widely. It could be a storm that knocks out power for a few days, a virus that takes down your computer network or a fire that levels your building. More important than what happens is how you recover: the measures you take to keep your workers and data safe and the procedures you have in place to ensure that your work can still get done.

When formulating a disaster plan, these are the four key elements to consider:

Customers
What are your company’s most important services and how are they delivered? Who are the key clients keeping your business afloat? Prioritize your company’s most critical tasks and decide how you’ll make them happen if your current office or factory becomes unusable. Could your products be made elsewhere temporarily? Work out the specifics of how you’ll keep your best customers happy and loyal.

Staff
Once you’ve highlighted your most important tasks, assign people to take charge of them and discuss how they can be accomplished at alternative locations. For instance, if most of your employees work via computer, could they do their jobs from home? While small-business owners are usually the decision-makers in an emergency situation, it’s important to designate a number two who can lead if necessary. If the boss is unable to reach the office because of flooding — and can’t call in because the phones are down — another trusted employee should be ready to step up and take charge. Be sure to tell all other employees who that second-in-command will be so there’s no confusion when he or she takes over.

Equipment
If everything in your office was destroyed, what are the absolute necessities you’d need to get up and running again? To replace what you’ve lost, you need to know what you had in the first place. It’s a given that all legal documents and computer data should be backed up regularly, with copies saved off-site. But you should also make a complete inventory of all hardware and software so you can rebuild your infrastructure quickly.

Financial impact
If disaster strikes, how long could your business survive without incoming revenue? That number will affect how you plan for recovery. If you need to get going immediately (for example, if you provide services to a hospital that’s running 24/7), you’ll have to spend money right away for temporary office space, rented computers and other necessities. If you have a financial cushion of a few weeks, you can take the time to comparison shop for replacement supplies. One crucial aspect of your financial planning is to consider employee salaries. If you business has to shut down temporarily, are you prepared to ask employees to go without a paycheck? Do you think they’ll agree?

For a basic disaster-plan template, you can follow the Business Continuity and Disaster Preparedness Plan produced by the Federal Emergency Management Agency. States with a higher-than-average risk of natural disasters have offices that can advise local businesses, such as the Florida Division of Emergency Management.

This article was republished with permission from The Street.

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