Create a Disaster Plan in 10 Steps

Article Written by Eric Bank

 

Natural disasters can destroy your business. Earthquakes, hurricanes, terrorist attacks, viral contagions and other calamities can knock out power or disrupt key vendors, events that can damage your small business. Research indicates that one in four businesses that undergo a significant disaster close for good. That ratio increases to between 40 and 60 percent for small businesses. Moreover, 90 percent of businesses close within a year if they don't resume operations within a week. The best defense against financial ruin is a carefully drawn disaster plan that you update regularly. The plan should facilitate resumption of operation rapidly so that you can once again provide your offerings to your customers.

The Big Picture

Your disaster plan must cover a range of contingencies stemming from man-made or natural disaster. The basic steps should include:

1.      Identify who will be on your recovery team: Specify who will take charge of managing the crisis and how you will maintain communications with your employees and other parties.

2.      List the disasters that are the most likely: Figure the likelihood of each disaster's occurrence so that you can prepare for the most probable.

3.      Identify alternate operating locations: Identify and make contingent arrangements for backup and recovery sites, and become familiar with your local disaster recovery assistance providers. Also, assign space to an emergency command location.

4.      Create communications plans: Create internal and external communication plans, including emergency phone numbers and non-phone methods such as email.

5.      Create technology recovery plan: Take inventory of all your technology and data backup facilities, and don't forget cloud-based files. Create procedures to recover your technology after disruptions, and specify the employees or vendors who are charged with restoring critical technology. Make sure that you have suitable off-site backup and access to alternate computer facilities.

6.      Develop plan to restore operations: Employee responsibilities should be specified. Create a plan to resume important operations first and to delegate emergency tasks to the appropriate employees. You need a method to track disaster costs and a person or vendor who is in charge of this tracking. Look over your business insurance to verify it will assist you in getting back into operation.

7.      Work out contingency financing: You should set up commercial loan facilities to help pay the bills stemming from disasters. Rapid access to money can improve your business' chances of survival.

8.      Make plans for your supply chain: You must be able to communicate with vendors and suppliers, both local and remote, so that you can continue to obtain important services and materials. List all supply-chain members and secure the list in a safe place. Discus your plans with vendors and form secondary arrangement with alternate suppliers.

9.      Ensure safety: Assemble disaster recovery kits that include survival gear, flashlights, medical supplies, battery-powered radios and other emergency items. Ensure you create an evacuation plan, practice drills and emergency shelter arrangements.

10.   Test: Run a simulation recovery annually. Record the results of drills and assess the results in order to improve the plan. Ensure that you discuss any changes to the plan with employees.