Your business is your baby. When you start and build a small business you put everything into its success -- your time, talent and financial resources. With that in mind, I’m surprised more entrepreneurs don’t take important steps to protect their businesses in the event of a disaster.
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Maybe it’s because no one ever wants to think it’s really going to happen to them. According to an NFIB National Small Business Poll, man-made disasters affect 10% of small businesses, whereas natural disasters have impacted more than 30% of all small businesses in the USA. Despite those statistics, only 38% of small businesses have an emergency/disaster preparedness plan, according to a new study released from Sage.
The primary reasons business owners gave for failing to have a plan in place:
*I’ve never had an issue before/disaster are rare in my area -- 33% *I haven’t really thought about it -- 30% *I don’t think it’s important for my business -- 27% *I’ve thought about it, but don’t have time to come up with anything -- 20%
The bottom line is you never know when a disaster may strike your small business and once it does, it’s too late. How quickly you get back on your feet after a disaster strikes depends significantly on the amount of advanced planning you do for your business.
September marks the 10th anniversary of National Preparedness Month sponsored by the Federal Emergency Management Agency. If you haven’t already put a disaster plan in place for your small business, now is the perfect time to start. Here are seven simple steps to consider.
1. Risk Assessment: Identify what kinds of emergencies are most likely to affect your company then evaluate your preparedness level. To determine your level of preparedness, there are free online resources such as the American Red Cross’s Ready Rating website. Business owners can complete a 123-point self assessment of their level of preparedness and have access to tools, tips and best practices to help improve their level of preparedness.
In addition to assessment tools, every business owner should consider such questions as: do you regularly check-in with your insurance agent?; do you have emergency equipment on site?; do you have employees trained to help in a medical emergency?; and do you have your data backed up and stored someplace safe?
2. Review Your Insurance Coverage: Based on your risk assessment, talk with your insurance agent to make sure your business is covered should a disaster strike. Many business owners think they have plenty of coverage, only later to learn that their policy didn’t cover a particular disaster situation. Additionally, inquire about business interruption insurance. This coverage helps a business owner continue to pay on-going bills while his operations are shut down.
3. Create a Contingency Plan: Once you’ve evaluated your current level of preparedness, create an operations contingency plan. Review all your business operations and identify those areas most critical for your business survival. Establish a procedure for managing those functions in the event of a disaster. For example, make a list of all your suppliers and their contact information. If they’re located in the same area as your business, consider establishing secondary relationships with providers in other locations.
Additionally, determine an alternate business location -- someplace you and your employees can continue to run the business. You may be able to work virtually or you may want to choose a location in a nearby community. In Joplin, Missouri two hair salon owners located in different parts of the city agreed to allow each other to share facilities in the event of a disaster. When the tornado devastated that city, one of the owners relocated to her competitor’s salon and was able to continue servicing her clients.
4. Create a Communications Plan: When a disaster strikes things become chaotic. Deciding how communications will be managed in advance will minimize panic and misinformation being disseminated. You may want to establish a calling tree or create a password protected website area where employees can report in. Some companies have an out-of-area phone contact who everyone is expected to call in the event of a disaster situation. Don’t forget the power of social media. In the aftermath of the Oklahoma tornado, social media became an important communication tool. Whatever you choose, make sure it is communicated clearly to all your team members in advance.
5. Back Up Your Data!: Probably the most critical issue for small businesses is to make sure all your data is backed up and stored securely. If your business is using cloud-based solutions, you’re one step ahead of the game. Your data should be safe and can be accessed from any location.
However, if you aren’t storing data in the cloud, then make sure you backup information and keep it stored in a safe location off-site. Important documents such as contracts, business licenses, corporate records, etc. should be kept in a fireproof box or a bank lock-box. The impact of Super Storm Sandy on small businesses could have been minimized with proper planning. The Hartford Small Business Pulse: Storm Sandy research report (“The Hartford Small Business Pulse: Storm Sandy” ) found only 25% of small businesses had backups of critical programs and data.
6. Build An Emergency Kit: Keep an emergency kit on site at all times. It should include water, batteries, flashlights, a fire extinguisher, non-perishable food, water, a whistle, and first-aid items. You can find a complete check-list for your emergency kit on the Red Cross website
7. Review and Rehearse Your Plan: When you have your disaster plan in place, make sure you review and rehearse it with your team. Make a habit of doing this at least twice a year so employees won’t forget. It’s a good idea to provide a copy of your plan to each staff member too.
For more information, visit FEMA’s Ready website or the American Red Cross’s Ready Rating site. Remember, an ounce of prevention is worth a pound of cure. Don’t wait until it’s too late. Take action now to protect your business in the event of a disaster.