Imagine walking into your office, warehouse, or plant tomorrow morning and finding an empty space. Everything is gone. What would you do? How would you start rebuilding your business? What would you say to your employees? The scenario may seem far-fetched, considering that the U.S. Department of Commerce reports that 40% of small firms affected by a natural disaster never reopen — and that an additional 23% close their doors within 12 months — it’s a good exercise for any firm that lacks a disaster plan.
“Most small businesses have a lack of preparation and foresight when it comes to disaster planning,†says Erika Hayes James, Bank of America associate professor of business administration at the University of Virginia’s Darden School of Business. “They’re so focused on what needs to happen today to ensure survival tomorrow that they don’t consider random events, natural disasters, building fires and other perils.â€
The good news is that disaster planning doesn’t have to be complicated or expensive. James says company owners and managers can start by asking themselves, “What could go wrong here?†If the firm is located near railroad tracks that are used actively, for example, there is always the possibility of a train collision or the release of toxic chemicals. “Consider how these events would affect your business, then do a few test runs and practice how you would deal with them,†says James.
Geographic location also comes into play. Located in California? Then earthquakes are likely your biggest threat. On the Gulf Coast of the United States, it’s going to be hurricanes. Be sure that your insurance coverage includes not only property and casualty, but that it also
comprises other elements like business interruption (to cover wages and operational expenses when you can’t conduct business) and additional expense (which covers some key expenses should your firm be out of commission for a period of time).In this information age, companies also need to protect their data. Back up pertinent company records to an off-site location and/or an online backup service and on a regular basis. Be sure to test your backup system to make sure it works. That means not only uploading and/or delivering the information to the storage source on a regular basis, but also ensuring that the data arrives in good condition and that it will indeed be “retrievable†in the event of an emergency.
At D&C Charter Bus Co. in Chicago, vice president and CIO, Reginald Gardner, says his 10-employee luxury motor coach firm
uses a two-pronged approach to disaster planning. The first segment addresses the company’s administrative operations (archiving all files on a regular basis and maintaining them off site, for example), while the second covers the operation of its motor coaches (annual safety inspections and updated driver logs, for instance).Gardner, who during his 11 years in business hasn’t had to implement D&C’s disaster plan, is glad that he puts the time and effort into the exercise. “I spent 30 years in corporate America, where I learned firsthand just how expensive it can be to not have a plan in place,†says Gardner, who reviews, updates and tests the plan on a quarterly basis. “I’m confident that we’re prepared to keep the operations going in the event of an emergency.â€
James says getting key people involved in the planning process can go a long way in ensuring a successful effort. Assemble a team that will not only formulate and test the plan, but that will also inform the rest of the workforce of its importance. “If the last few years are any indication, crises are not always ‘rare’ events,†says James. “The firm that can devote even a minimum amount of attention to disaster planning — and to crafting a solid crisis plan — stands a much better chance of surviving.â€
Disaster Planning Tips
–Don’t wait until it’s too late — plan now.
–Don’t forget to back up your important data daily.
–Review your insurance coverage regularly.
–Consider business continuity insurance to cover your assets in case of a disaster.
Resources
SBA’s Disaster Planning Guide for Small Businesses
Further reading