Is Your Company Disaster-proof?
For business owners, the tragic events unfolding before us in Texas prove the critical importance of having a disaster recovery plan. Ask yourself, “How would my business survive such a catastrophe? How would we continue to operate?” According to the Federal Emergency Management Agency (FEMA), 40% of businesses do not reopen after a disaster, and another 25% fail within one year.
Keep in mind, disasters come in many shapes and sizes… Although you may be out of reach of a hurricane or natural disaster, there are other scenarios such as fire, theft, power outages and other unforeseen obstacles that can devastate your business.
While no plan is perfect or covers every situation, let’s look at 9 steps you can take to help your business survive:
Have a Business Continuity Plan
Remember that our goal is to not only survive the initial event, but to be able to operate our business and move forward as quickly as possible. The Insurance Institute for Business & Home Safety (IBHS) has great information for businesses that may not have the time or resources to create an extensive plan. Here is a PDF that will really help your business prepare and tailor a plan that works for your business.
Insurance Policy Review
Obviously having insurance is a “no-brainer” but what type of insurance do you have? Does it cover everything? In the wake of Hurricane Katrina insurance companies received 1.2 million personal property claims and more than 156,600 business claims. In total, only 167,900 policy owners received payment for losses caused by floods.
The time to review your insurance policy is before disaster strikes and more importantly, before you must file a claim. It is critically important that your business has the right amount and type of insurance. Meet with your agent as soon as possible to review your plan and coverage.
Back-up Data to Cloud and External Drive Off-site
Hopefully your business has already started to do this, as we face mini-disasters of hard drives crashing every day. Utilizing “the cloud” to either store or back-up our files has become a standard for most businesses. This can be a complex set-up with larger providers of data storage or in many cases one of these 22 providers would meet your off-site data storage needs.
Just as a precaution and in the event that your access to the internet may be compromised, back your REALLY important files up to a physical external storage device and store it off-site. Thumb drives and external hard drives, for example, have dropped in price and increased in capacity and can be a really easy way to provide this extra layer of protection.
Hard Copy Protection
So you have everything backed up in the cloud and offsite… What about your hard copy documents? You know, those records that came before you moved everything online? There can be some pretty important documents in your office that need to be stored and protected.
Our first step may be to scan and save these records. Desktop document scanners are very affordable and if you are faced with a mountain of paper, there are document scanning services in your local market that can handle this for you.
Our second step may also be to protect these documents in their original form. Invest in a file drawer system that can be locked, secured and is fire, water and crush-proof. They may be a little more expensive, but worth every penny if you ever face a disaster.
Power outages can be stand-alone events or a by-product of just about any natural disaster and they can last days, weeks and even months. Invest in a generator for your front office. Before you run out to Lowes or Home Depot or try to use one from a jobsite, have an electrician get an exact estimate of your required power output and outfit your business accordingly.
So we have power but in the event of most large natural events, the phones are likely going to be knocked out as well. Yes, we can fall back to our cell phones but in order to maintain business-as-usual while the phone companies try to get you back online, you may want to invest in a back-up service that automatically provides instant failover protection in the event of an emergency or other outage. I am sure there are others, but PBX Parachute offers this.
In your business continuity plan determine your course of action financially. Will you continue to pay your employees? Do you have enough to cover repairs and expenses before your insurance claim is processed and funds are received, which may take weeks or months?
Make sure your business insurance policy includes a business interruption policy which may cover unexpected expenses as you attempt to get your business back on track. Insurance experts seem to agree that setting aside 30 days of operational expenses is the standard, if available.
Where will you go if our office or location is unreachable or worse, destroyed. While many of your employees are used to working in the field, your front office staff will need a temporary facility while you work to get back online. This can be a prior office; perhaps you moved from your home office to your current location. You might have a vendor, partner or business associate that can sub-let or offer you a temporary place to do business. The key here is to have that in place now if something occurs in the future. Trying to find a solution later will be difficult and time consuming. Build it into your plan and be ready to hit the ground running should you have to set-up shop in a different location.
“This is only a test”
Hey, it worked in elementary school! You don’t have to line-up single file in the hallway but you should absolutely test your disaster plan internally. Pick a day during a slower time of the year and test your team with a scenario. Have a non-owner be the point person for your test so that the management team can be tested on how they handle this situation as well. The IBHS Document (PDF) has a great test template to use, complete with a scenario to start out with.
As a business owner, you have learned quickly that the adage “did you plan to fail or fail to plan” comes into play. That can apply to your overall business or financial plan or more critically when something goes terribly wrong in your community. Use these 9 steps to be prepared to not only survive, but get up and running so that you and your company can do business and more importantly, help those around you recover.
How Can You Help?
Our thoughts and Prayers go out to those affected by Hurricane Harvey. If you are looking for a way to help, here are two known resources that provide a tremendous help to those families and relief works that may need assistance.