Could Your Business Survive a Disaster?
As the occurrences of hurricanes, floods, and fires increase across the U.S., small business owners should be thinking about having plans in place to (1) recover and (2) continue operations in case of a major loss because of these natural disasters. Small business owners should also have a plan in place for other potential threats such as power/server outages, hackers, or other attacks.
According to a survey done by Nationwide Insurance, 75% of small businesses do not have a disaster plan in place and 52% of these businesses have said it would take them at least three months to recover from a disaster. Even more alarming, according to the Federal Emergency Management Agency (FEMA), up to 60% of small businesses never reopen their doors after a disaster.
This begs the question, could your small business ultimately survive a natural disaster?
Small businesses with plans in place to adapt to the change in environment after a disaster are more likely to recover, compared to businesses who do not. FEMA estimates that 90% of smaller businesses who don’t recover within the first five days after a disaster, fail within the first year of reopening their doors. To recover quickly, businesses should have at a minimum, the two plans discussed below in place in case of a disaster.
Disaster Recovery Plan
Your disaster recovery plan should detail the steps needed to recover after a loss. These steps should include those to ensure employee safety as well as how to prepare for continuing operations after the disaster has taken place. Some of these steps include:
Having and making sure employees are aware of the businesses evacuation plan
Knowing how you will contact all employees in case of an emergency
Making sure important records, such as insurance documents, contracts, and employee records, are properly backed up and stored
Having an IT redundancy plan in place, making sure that
Backup equipment is available if needed
Installation disks and software licensing keys are readily accessible
Important data is backed up and safeguarded
Developing a continuity plan
Business Continuity Plan
Your business continuity plan should detail the steps needed to keep your business running after the disaster. After recovery, this will ensure a smooth transition and allow the business to adapt to the change in environment. These steps include:
Making sure employees know what their roles are after a disaster
Having a contingent location, should your worksite be inoperable
Having access to a contingent power source should electricity not be available
Having an internet contingency plan if your business cannot survive without network for a long period of time
Prioritizing which systems are needed to be operational first and which clients should be aided first
In times of disaster, it is important for businesses to quickly regain operations, or else they may ultimately fail in recovery. With the increasing threat of natural disasters as well as other emergency situations, having these plans in place and educating employees about these plans not only helps to ensure employee safety, but also could also mean the difference between success and failure after a disaster.
About the Author - Grant Losper joined ECS as an accounting intern for the summer of 2018. He currently attends Bradley University in Peoria, Illinois and is working on his Master of Science Degree in Accounting this fall. Grant is working towards a double degree majoring in accounting and minoring in management information services, and has earned Dean’s List honors every semester in attendance. After earning his degree, Grant will look to pursue the Certified Public Accountant Designation.