The Axcet Blog

When Disaster Strikes: 8 Steps to Prepare Your Business

Team of architects working on construction plans

In April 2017, Christopher Watkins and Tonya Gonzalez-Suarez were in their first morning on the job at a St. Louis company when a boiler exploded at a nearby business. The explosion launched the boiler through the roof and across the street, where a van-sized piece of it crashed into the office where Watkins and Gonzalez-Suarez were filling out new-hire paperwork. The freak event took their lives and the life of one other person and injured four. Besides the two companies directly affected, several other businesses were damaged in the blast.

No one, of course, expected this random and devastating catastrophe when the companies opened their doors that morning.

When the winds or the waters rise, flames ravage, cybercriminals steal proprietary data or the “freak accident” occurs, small business owners often are shocked and caught off guard. They may have believed the chances of a disaster were miniscule. Or, they may have recognized the possibility of a calamity, but prioritized other needs over getting prepared.

A disaster at your place of business may not be inevitable, but such situations are not uncommon. And the aftermath can be – well, disastrous – for smaller companies, as a late 2017 Federal Reserve study showed. The report, which focused on FEMA-designated disaster areas, found that:

  • 96 percent of the small businesses lost revenue as a result of the disaster.
  • 61 percent of the companies had revenue losses of up to $25,000, and 35 percent had revenue losses of more than $25,000.
  • 64 percent also had asset losses.
  • 45 percent had asset losses up to $25,000, and 19 percent had asset losses of more than $25,000.

Most small businesses would have a hard time recovering from losses of that magnitude. In fact, between 40 percent and 60 percent of them never do.

Plan for the What-If

Because unexpected emergencies do happen, every organization should carry out a “what-if” risk analysis to figure out what possible disasters could strike and where the business is most vulnerable if they do. Brainstorm both the most dramatic human-caused, natural and national crisis situations – such as a terrorist attack on the nation’s utilities, a workplace shooting, a flood or tornado destroying your workplace or a public health emergency – and the possible day-to-day disasters, like a computer system crash that causes significant data loss or a crisis at a key supplier that disrupts your own company’s ability to conduct business.

Create a comprehensive disaster preparedness plan that incorporates your company’s response to each potential scenario. The plan will help you minimize the business interruption, safeguard your assets and your employees and protect your customer base if a disaster occurs.

Here are eight areas it should cover:

  1. Employee Protection

Protecting and communicating with your employees is the most important facet of your disaster plan. Make sure your company’s personnel files include all current contact information for your workers and for their emergency contacts. Designate a meeting spot for employees if they have to evacuate your workplace. Consider steps you may need to take for any employees who have medical conditions or disabilities.

  1. Emergency Team

Establish an internal, cross-functional emergency response team that will take the lead in a crisis situation. Clearly define each member’s roles and responsibilities, including identifying critical business tasks and assigning these tasks to specific team members.

  1. Internal and External Communications

Create a structure the team will use for communicating with first responders, employees, employees’ families, clients and vendors during a crisis. Develop a list of others you will need to reach quickly – for example, your banker, your insurance company and your attorney – and keep their contact information updated. Determine how you will share information with and through the media, including deciding which leader or leaders will serve as designated company spokespeople. Securely store all plans in several locations, including offsite, so you can access them even if you can’t get into your own facility.

  1. File Protection

Regularly back up all files needed to run your business. Maintain copies both onsite and offsite. Determine which files you would need to access immediately to continue business operations. Store these documents in the cloud and perhaps in another secure offsite location, such as a bank’s safety deposit box. Ensure that login or security credentials are available to personnel who need them (and not to anyone else).

  1. Location

Determine where you will physically conduct business if your usual workplace is disabled. Consider what that facility might require – space to receive deliveries or to meet with clients, for instance. Make sure you can access critical business documents and disaster plans from that location.

  1. Dollars and Cents

Obtain adequate insurance to cover losses and business interruption. Keep a small amount of cash and your bank account numbers stored safely offsite.

  1. Practice and Training

Test your plan’s effectiveness by conducting and evaluating the outcomes of regular drills. Based on the possible scenarios you have identified, organize training that allows emergency team members to rehearse their responsibilities and other employees to practice evacuation and other relevant disaster responses. Make adjustments to your plan to address any hiccups demonstrated in the drills. 

  1. Updates

Over time, leadership and employees may change. Your business may move to a new location. Your client and vendor lists may grow. At least once each year, revisit your disaster preparedness plan to update it consistent with any changes that have occurred in your company.

Without a well-thought-out disaster preparedness plan, it may be impossible to safeguard your employees and your business assets. If a disaster strikes your business, a plan will help you mitigate the damage, reduce your recovery costs and get your company back up and running quickly. Considering how much more injury your business will sustain, on many fronts, without one, putting off disaster response planning is a risk that’s not worth taking.

An employee handbook is a business owner's best friend when it comes to employee relations. It sets standards and rules, makes clear what's acceptable behavior and the consequences of infractions, and is the fall back resource when there is a dispute that can save thousands in fines or lawsuits. It's also the perfect place for a disaster preparedness plan for your employees.

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Written by Steve Donovan