Prepare to be Interrupted

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What do the following have in common: 9/11; Aug. 14, 2003; Katrina; and BP?

You’ve probably figured out that these are all shorthand for national disasters. Not to minimize the human suffering these disasters caused, but they also created a lot of havoc for businesses.

The attacks of Sept. 11, 2001, devastated the national economy in general and millions of local businesses specifically. Aug. 14, 2003, was the date of the Northeast Blackout, when the electric grid in eight states went down. The power outage put approximately 55 million people in the dark and millions of companies temporarily out of business.

We had advance warning of Hurricane Katrina, but no one knew exactly how much it would devastate the business community. And just as the businesses in the Gulf region started to get back on their feet, the BP oil spill happened.

Today’s small-business owners have a very important task to perform continuously and consistently: Be prepared to recover from a disaster, whether of national or regional proportions. Let’s look at three ways to think about the word “recover.”

1.     Operational recovery: When interruption strikes, the ultimate survival of your business depends on your ability to pull through quickly. Have a planning session with your team around these thought-starters:

• If your building gets blown away, burned down, or otherwise becomes unavailable to you and your customers, what is your backup plan to return to operations as soon as possible?

• Consider purchasing laptop computers with docking stations instead of desktop units. This enables key employees to work and connect remotely, both internally and with customers.

• Find and incorporate alternate Web-based tools and processing power, aka cloud computing, to replicate what may be lost as a result of a disaster.

2.     Financial recovery: Every small business knows that a significant portion of their working capital comes from the revenue from customers. If that cash stream is interrupted, what are you going to do? Here are a few surefire strategies:

• Purchase a “business interruption” rider on your business property, as well as a casualty insurance policy that will pay you cash upon the acceptance of your claim. Be sure to read the fine print so you know what you can expect — all policies are not created equal.

• Maintain a close working relationship with a bank so that when you need a disaster loan, you won’t have to reintroduce yourself.

• Of course, there is no substitute for your own resources. Retained earnings, or profits you leave in the company, will enable you to withstand a disaster on your own. Moreover, if you show that kind of discipline, your banker may be more inclined to help you.

3.     Data recovery: Every year, entrepreneurs are using intellectual property more, and physical assets less, in the execution of their business model. Do you have the steps in place to make sure you don’t lose your IP? An internal disaster, such as a virus attack or mechanical meltdown, could happen to any business at any time. You should do all of the following, at a minimum:

• Assign one person to be in charge of getting all computers enabled with a reputable antivirus program — and keep them current.

• Identify the data that need to be backed up, what data should be archived and how often backups are required. Use a reliable backup program to save data to an external hard drive or to tape. Make sure copies of critical data are kept off-site. Cloud-based data backup systems are becoming more popular, but thoroughly investigate your options, as issues of security and privacy persist.

• Train and impress upon your team that your data — financial reports, customer lists, contracts and trade secrets included — are valuable assets that must be protected, just like the inventory in the warehouse.

Thankfully, most businesses don’t experience nightmare scenarios on the scale of 9/11 or the BP oil spill. But a recent survey showed that three out of four small-business professionals believe they will have a power outage in any given year, while only one in five consider themselves prepared for such an event. And the only people who don’t have a hard drive to crash are those who don’t have hard drives.

So the question is not whether you are one tornado, fire or flood away from being temporarily out of business. The question is whether you’re ready to bounce back.

Jim Blasingame is one of the world’s leading experts on small business and entrepreneurship. He is the creator and host of the weekday radio program “The Small Business Advocate^® Show.” Jim is also a speaker, a syndicated newspaper columnist, and the author of “Small Business Is Like a Bunch of Bananas” and “Three Minutes to Success.” 

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