9 Steps to Set Up a Small Business Disaster Plan

What keeps a small business owner up at night? Well, before the recent spate of hurricanes, disaster preparedness was not top of the list. But introduce a wicked hurricane or two and suddenly frantic calls to confirm insurance coverages are the latest craze. When did everyone become flood zone experts?

Where small businesses are concerned, it’s an uphill battle to survive. Small businesses operate lean and don’t have a lot of redundancy. Unlike larger companies, small businesses don’t have the capital to replace property and equipment. A shutdown of just a couple of weeks could doom the business permanently. Refer to my article, Lessons for Small Businesses from a Texas Sized Flood, for startling survival statistics.

What can a small business owner do? Answer: Give yourself and your business a fighting chance by putting together a disaster recovery plan.

Okay, hold on - don’t cue the moaning just yet. Realize that a disaster recovery plan for a small business does not have to be a huge exercise producing an unwieldy document. It also doesn’t take long to develop. It takes just a little time, thoughtfulness and the involvement of other people in your small business.

Step 1: Run a Sprint, Don’t Develop Plan in One Sitting

A best practice I have observed is to declare a disaster recovery planning week and set aside one hour each day for one week to develop a plan. It can be challenging to brainstorm over a multi-hour meeting, so a daily sprint can keep momentum and not have to shut down the business.

Step 2: Safety First for Yourself and Your People

If you are required to evacuate, everyone should be familiar with the evacuation procedures. If evacuation is not possible, where are the secure areas on the business premises? Talk this through and make sure everyone gets it.

Step 3: Conduct a Business Impact Analysis

This is where most small businesses make mistakes and get overwhelmed. Keep it simple. You don’t need a fancy risk assessment, play out detailed scenarios or measure the financial impact in dollars. You just need to understand what actions to take if the business is unable to:

  • Use the business property.
  • Run the equipment.
  • Perform internal and external services/activities.

Because any shut down would make it difficult for a small business to survive, avoiding it is a critical goal. Therefore, the key outcome of this step is to answer the following questions:

  • What is the minimal needed to keep business operations running?
  • Can the business operate from another location?

Step 4: Leverage the Cloud

We live in a highly automated world with more and more applications moving online. Use this advantage to keep mission critical information and applications in the cloud. Back up data files regularly and keep important records and documents in a safe deposit box, preferably not on the business premises. (For more, see: How to Reduce Risks in Small Business.)

Step 5: Compile a Call List of Important Phone Numbers and Addresses

Make sure you can contact key people after a disaster. The list should include emergency management agencies, major clients, contractors, suppliers, financial institutions, insurance company representatives and financial advisors.

Step 6: Involve Business Partners and Suppliers

Share your disaster preparedness and recovery plans with your business partners and suppliers and understand their plans. Consider a reciprocity agreement with these groups or even with competitors that would allow the needs of your customers to be met.

Step 7: Write the Plan Down in Clear and Simple Language

Write out each step of the plan and assign responsibilities.

Step 8: Practice the Plan

The plan should not sit untouched in a file cabinet. Practice every year and refresh the plan accordingly.

Step 9: Review Your Business Insurance

Leverage the expertise of your insurance agent or certified financial planner professional to ensure there are no gaps in insurance coverage.

The harsh reality is that there is no way to prevent a disaster, whether natural or man made. You can only minimize the impact. While a small business is likely to face some sort of disaster at some point, a recovery plan can save lives and provide the owner with a little piece of mind. It’s always good to know what to do when a crisis strikes. (For related reading, see: The 4 Most Common Reasons a Small Business Fails.)