Perhaps the last thing most small business owners think about is planning for a potential natural disaster. Who has the time to prepare for something that may never happen?
But that attitude can come back to haunt you. A flood, drought, hurricane, fire—one of those calamities can put you out of business for weeks—or forever. And this summer’s volatile weather only serves to underscore the urgency of the matter. “Of the small businesses that are forced to close due to a disaster, at least one in four never reopens,” says Diana McClure, business resiliency manager for the Institute for Business & Home Safety. The upshot: You need a plan for what to do if disaster strikes so you can get back to business as quickly as possible.
Where to start? Consider the following points when forming your plan:
Assess your vulnerable areas. Start by determining the most likely threats to your business. If, for example, you’re in a region prone to flooding or high winds, begin there. Then pinpoint the potential consequences. Would you have to shut down your manufacturing plant? Would you need to move your offices to another location? Would employees have trouble getting to work? Finally, prioritize the most critical business functions, those operations you’d need to get up and running as quickly as possible. Remember: Your assessment doesn’t have to be perfect. “You can always go back and take another look,” says McClure. The important part is to get started.
Think of ways to address those risks. Look at your list of priorities and start at the top. McClure points to an insurance agency based in an area of the Midwest that’s experienced heavy flooding recently. To address the number one risk—that the operation would have to shut down—the agency runs two locations in different cities. “The chances of both offices going down at the same time are slim,” says McClure. Employees can also work from home if necessary. Plus, there’s a partnership with a temporary employment service, in case employees can’t handle a surge in demand from policy holders affected by flooding.
Make sure your data is protected. While most companies back up data, they don’t always do it correctly. “People will tell me they back up their information on a PC on their desk,” says McClure. “But if your building burns down, what do you do then?” One solution is to use an Internet service for storing data online. Then, periodically test your backup system to make sure you can easily get access to critical information.
Think about how to communicate with employees, vendors and customers. First, make sure you have contact information for all employees, including cell phone numbers and email addresses. You might also plan to post information on your website in case of an emergency. But you need contact information for important suppliers, as well. If, say, you’re operating out of a temporary office, they’ll have to know where to make deliveries. Finally, don’t forget key customers. “You want them to get the news from you, not your local TV news program,” says McClure. Make sure you can also contact them with information about just how long you’ll be closed for or a temporary location you might have moved to.
Address potential problems if suppliers are affected. In a major disaster, your vendors might also feel the pain. For critical supplies, it’s best to identify alternative providers to make sure you’re covered. That’s especially important if you only have one supplier. When making your choice, look for a company located in a different area, so it’s less likely to be affected by the same problem. And don’t wait for a disaster to start using the supplier. Get your contract worked out so you won’t have to scramble should something happen.
Think about personnel policies. If you have to shut down temporarily, will you pay your employees for the whole time? For a week? Ask them to use vacation time? Whatever you decide, make sure you let employees know. On another note, also think about cross-training, so that more than one person can take over a critical function, if necessary. And have employees write down the procedures to follow, so there’s a written manual to follow. Says McClure, “It’s all about planning ahead.”