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Why you need a good disaster-preparedness plan, and how to put one in place.
By William J. Lynott
Many of the thousands of small businesses destroyed by the catastrophic effects of Hurricanes Katrina and Rita will never reopen their doors. Many others are already back in operation and on their way to a healthy recovery.
The difference? In most cases, say the experts, the fortunate ones are those who had a disaster preparation and recovery plan to guide them through that traumatic time.
Depending upon your location and other factors, the odds of being the victim of a catastrophic loss from wind, water or fire may be greater or lesser than average. But every manufacturer faces some degree of risk of a crippling disaster, natural or manmade.
The key to minimizing that risk is a well-thought-out plan of action in the event that disaster strikes. There are well-defined steps you can take to help your business avoid—or recover from—a catastrophic loss.
Disaster preparation and recovery plan
“Every business needs to have a disaster preparation and recovery plan, even if it’s located in a relatively low risk area for natural disasters,” says Gene Fairbrother, consultant to the National Association for the Self-Employed and an expert in disaster planning.
Your plan need not and should not be a cumbersome project, according to Fairbrother. “To be effective,” he says, “it should be a model of clarity, fully understood by every employee.”
Whether it’s in writing or not—and you should put it in writing—it’s important to refresh your plan periodically. “Some basics of a disaster plan seldom change,” he says. “For example, your evacuation destination, or the first things you’d grab on your way out if you had to evacuate in a hurry. However, other things do change, like contact information on customers and vendors, and places to find replacement equipment. Review your disaster plan at least once a year to make sure it still works for your business.”
Make it company policy
“It’s important to make your disaster plan a permanent part of your business philosophy,” says Fairbrother. “However, it often takes another set of eyes and ears to point out the cracks in a plan, or to spot missing components. That’s why you should share it with someone else, especially your employees. They may find a flaw or an important step that you missed.
“Beyond the possibility that you might owe some employees a paycheck, a business owner has little or no legal obligation to employees if the company closes due to a disaster,” he says. “Still, you need to make your employees part of your disaster plan. Failing to do so will hinder your ability to get the business back up and running if the need arises.”
Follow these steps to prepare for a natural disaster:
Maintain an off-site backup of all computer records. According to one estimate, 90 percent of all business records are now electronic. That makes protection and recovery of vital business information easier—provided a careful system of backing up data is in place. Most manufacturers have learned the importance of backing up the information on their computers, but not everyone does a complete job.
Stefan Dietrich, co-author of the book “Contingency Planning and Disaster Recovery: A Small Business Guide,” stresses the importance of maintaining an up-to-date backup copy of critical data at an offsite location. “Unattended automated backups are better then using CDs,” he says. “Typically, most people don’t follow through with creating CD backups. For that reason, automated online backups to a remote location via the Internet are much better.”
Safeguard your most important asset. Your list of satisfied customers is the foundation for the continued health of your business. Of all your business assets, your customer list is among the most valuable and irreplaceable. Do everything possible to ensure that you have access to it in the event of a natural disaster.
“If you are out of business for a few days—or longer—you need to let your customers know what is happening,” says Fairbrother.Ê“This means having an easily accessible list of customers and their contact information.ÊAs with other business records, it’s best if copies of this are stored offsite.”
Review your insurance coverage. “Carefully review your insurance policy to make certain it is appropriate for your needs,” says Donna Childs, CEO of Childs Capital LLC and co-author of “Contingency Planning and Disaster Recovery: A Small Business Guide.” “You should have business interruption insurance to replace lost revenues if your operations are disrupted due to a disaster.” According to Childs, the failure to include business interruption insurance is the most common error in disaster planning for small businesses.
Childs suggests that you take digital photographs of your difficult-to-value assets and preserve them online where you can access them remotely. “Scan critical documents, such as your insurance policies and lease, and have digitized copies available online for the same reason.”
Provide for backup power. “Consider the use of a backup power generator,” says management consultant Isidore Kharasch, “so that if a disaster strikes it is not made worse by not having lights and power to at least get people out to safety. Also, having a backup battery for your computer should be part of your plan. Even if it lasts for only two or three hours, it will give you time to close out servers and shut down the system with your critical records intact.”
In the unfortunate event that your business is fully or partially wiped out by a natural disaster, your plan should include guidance on how to get it up and running again as quickly as possible. These basic suggestions should be part of your plan.
Ensure physical security. In the aftermath of any natural disaster, security of business assets is almost certain to have been compromised. As soon as possible, put any parts of your plan dealing with the physical security of business assets into effect.
Where to get help
“If you are involved in a major natural disaster, you should be prepared to make early contact with any organization that may be able to offer assistance,” says Ernest G. Vendrell, Ph.D., assistant professor of emergency planning programs, Lynn University, Boca Raton, Fla. Some of these agencies include:
- Local offices of emergency management
- Small Business Administration (SBA)
- Local police and fire services
- Federal Emergency Management Administration (FEMA)
- Your insurance carriers
“In addition to a variety of educational and training guides,” says Vendrell, “FEMA also offers a number of disaster planning courses that are typically offered free-of-charge.”
“It’s important, too, to maintain ongoing contact,” says Fairbrother. “During a major disaster there is always much confusion, and you don’t want your business to be the one that falls between the cracks.”
Keep your customers updated
“Remember that your business clients may have businesses of their own to run, so they will appreciate knowing how and when you expect to be back in business,” says Fairbrother. “In most cases they will work with you in your time of need. However, don’t lose sight of the fact that they have needs of their own and must continue to take care of those needs. Maintaining contact with them will increase the likelihood that they will stick with you instead of straying off to a competitor.”
Unless you’re located in one of the hurricane-prone areas, preparation for a natural disaster may seem like an unnecessary demand on your time; but every year, thousands of unsuspecting business owners around the country find themselves victimized by a natural disaster of one form or another. That’s why investing time in preparing a disaster preparation plan now will be a wise business investment.
Experts agree that it’s absolutely critical to have a disaster recovery plan, regardless of the nature of the business or its size. Disasters come in all sizes and shapes. Fires, flood, ice storms, earthquakes and tornadoes—even attacks from hackers—can all take their toll. Should a disaster strike, the last thing you need is a panicky scramble for information or assistance. Having a current plan in place is the first important step to recovery.