Are You Ready to Help Yourself?
Disaster Preparedness for Small Businesses
By Eric Giltner
Today’s headlines inform us of disasters of many types and sizes. The United States, Mexico, and its Caribbean neighbors have been struck with multiple hurricanes in recent months, causing immeasurable harm to people, property, and local economies. Wildfires and earthquakes all over the world are disrupting entire communities, and for many, months will pass before some semblance of normalcy returns.
These events affect large areas, but localized disasters can be just as devastating. Fires, cybersecurity attacks, electrical storms, blizzards, flash floods, malicious acts, and vehicle accidents can impact the bottom line of businesses in a variety of ways.
Helicopter operators are often the people who put out the fires and respond to disasters. But what are you doing to protect your own business from even a minor disaster?
An estimated 25 percent of businesses that close because of a disaster never reopen, according to the Institute for Business and Home Safety. Small businesses are especially at risk because few have the resources to assess their risks and develop recovery plans for the future.
As part of its mission to help small businesses to start, grow, and succeed, the U.S. Small Business Administration can help when it comes to disaster preparedness and recovery. Start with these seven simple tips:
Evaluate Your Exposure
Know your region and the types of disasters most likely to impact your business. Consider your facility’s proximity to floodplains, wildfire areas, rivers and streams, dams, nuclear power plants, and other hazards.
Review Your Insurance Coverage
Now is the time to consult your insurance agent to determine whether your coverage is sufficient. Make sure you understand what’s covered by your policy, and determine if you need flood insurance. Remember, many general policies do not cover flood damage.
Check into business interruption insurance, which helps you cover operating expenses if you’re forced to temporarily close. Calculate the cost of business interruptions for a day, week, month, or more. To the extent possible, set aside a cash reserve that will allow your company to function during the recovery phase.
Review and Prepare Your Supply Chain
Develop professional relationships with alternate vendors, in case your primary supplier isn’t available. Place occasional orders with them so they’ll regard you as an active customer.
Create a contact list for important business contractors and vendors you plan to use in an emergency. Keep this list with other documents in an easily accessible place, as well as at a protected off-site location.
Create a Crisis Communications Plan
Try to make sure your staff, customers, vendors, contractors — everyone you do business with — know what’s going on in the aftermath of a disaster. Establish email and cell phone alert systems, and maintain an up-to-date list of the phone numbers and primary and secondary email addresses for your employees, vendors, and customers.
Provide real-time updates to your customers and clients and the community so they know you’re still in business and in the process of rebuilding after the disaster. Don’t forget to test your plan beforehand.
Establish Business Procedures
Let your employees know the emergency chain of command. Maintain a clear leave and sick-day policy during disasters. Have a backup payroll service, should your office be destroyed.
Safeguard Important Information
If your main business location is destroyed, having key information stored off-site in another physical location or the cloud will allow for a faster continuation of business activities. Information on customers, employees, vendors, and financial and logistics systems are needed to resume operations in a timely fashion.
Create and Implement a Business Continuity Plan
This plan will help keep your business operating as it responds and recovers from a disaster or emergency situation. This plan should do the following:
- Indicate when it will be activated
- Identify essential business functions and staff to carry out these functions
- Determine which employees will be considered nonessential vs. essential
- Identify records and documents that must be safe and readily accessible to perform key functions.
Developing an effective and workable disaster preparedness plan is critical for all small business owners. For helpful checklists and more information on disaster recovery planning, visit http://bit.ly/sba-recover.
Eric Giltner has been a business development specialist and the Grand Forks area manager for the U.S. Small Business Administration since 1998, having formerly been assistant to the dean of the University of North Dakota College of Business and Public Administration. He received his B.S. degree in geological engineering and his master’s degree in business administration from the University of North Dakota. Eric can be reached at firstname.lastname@example.org.