What Every Small Business Needs to Know about Disaster Preparedness

Published by BradyRenner CPAs | October 30, 2018

Recent hurricanes in the Southeast, the fresh memory of recent past incidents throughout the country and forecasts of more violent storms and floods in the future, are all a reminder that every small business needs to be prepared for the unthinkable. No business today, large or small, can afford to find itself facing a major incident without preparation.

The question for small business owners, of course, is: How do you adequately prepare for fires, floods, storms, hurricanes, tornados, prolonged blackouts and other natural disasters that have the potential to obliterate your business? Here are some key steps you can take to position your business for survival and recovery in the event of a disaster in your area:

Step 1: Evaluate your risks.

Begin by evaluating your risks, with a particular focus on two questions. First, what kinds of risks are most likely to become realities for your business? If you’re located near major transportation routes, consider the risks of a hazardous materials spill. If your business is in low-lying areas or near water, consider floods. If you operate a retail store or other physical facilities, consider fire. And so forth. Evaluate these based upon your location, the core needs your business has in order to maintain continuity, and your ability to prevent, respond or recover from each.

Step 2: Determine how to reduce risks.

After evaluating and identifying risks, we need to reduce them. Take fire, as one example. Is the building your business is located in up to current fire codes, or grandfathered in based upon past standards? Does it have a fully automatic alarm system and sprinklers, or just manual pull-boxes only? Do you share a common wall, attic, cockloft or other space with other businesses? After reviewing these points, consider how you can reduce risks. For example, if your building is un-sprinklered, consider adding multiple fire extinguishers, mounted in key locations, and train employees in their use (especially since Class “A” fires involving wood and paper products need to be dealt with differently than Class “B” and “C” fires involving chemicals or grease). And if your business is in tornado country, check to see if your building has a tornado shelter — and if not, establish and mark where the safest place in the building is in the event of such an incident.

Step 3: Establish a disaster plan.

Now, it’ s time to establish your plan. The plan should address overall risks as well as specific kinds of incidents. Along with it, this is a good time to also ensure that you have a clear accident reporting process and procedure since our focus is on both property/assets and employees/customers. Make sure your plan specifically defines the priorities in an emergency, how to respond to each, and what personnel should do to protect themselves and the business. Also, note what staff positions are considered ‘mission-critical’ so that, for example, everyone knows who is responsible for boarding up windows if a hurricane is forecasted to make windfall.

Step 4: Replicate and protect assets.

Along with building your plan, it’s time to consider how best to replicate and protect your assets. If your company’s accounting and operations systems are maintained on in-house servers, consider backing them up online or migrating to the cloud so that location-specific disasters don’t bring your operations to a halt. If you have physical assets such as high-value inventory, consider maintaining a contract for off-site emergency storage space where you can quickly move your most valuable products in a different or more secure location.

Step 5: Review insurance and set up recovery services.

Preparing your disaster strategy is also an excellent time to bring in your business insurance carrier, who can give you tips and recommendations to reduce risk. In addition, take some time to review and update your insurance policies to ensure that the true value and various locations of your business assets are accurately reflected, and that you have business continuity coverage as well. Along with that, consider contracting proactively with a disaster recovery company for an emergency response agreement.

This will enable to you to skip to the ‘head of the line’ for flood mitigation, property restoration, emergency moving services and other support. Finally, make sure that you and your team understand exactly how, when and with what information to contact your insurance company in the event of a disaster, so that adjustment and recovery efforts can begin right away.

Step 6: Define clear lines of communication and leadership.

Pulling all of this together means establishing an effective communications and leadership plan. Who is in charge of what in an emergency, who is authorized to contact whom, and how can you ensure that all employees and customers are successfully reached in the event of a disaster? Can phone numbers be digitally switched over to new lines outside the region? Are backup generators available in multiple offsite locations to quickly bring to the business location and provide emergency power? How can the company restore ‘lifeline’ services to ensure continuity if local infrastructure is down? Now is the time to answer these questions, proactively and with clarity.

By taking these six steps, smart small businesses can successfully begin the journey toward more effective preparedness, response and recovery from whatever incidents and disasters (big or small) may come their way.

Image Credit: Jim Larrison (Flickr @ Creative Commons)