Emergency Planning for Small and Home Businesses

Last Updated: Jun 18, 2018
What would you do if a disaster struck your business? Most disasters aren’t preventable, and many aren’t even predictable. But you can take steps in advance to minimize your potential for loss from catastrophic events. Here are some guidelines.

What would you do if a catastrophe struck your business? While most business owners don’t expect much (or than a lack of business) could do m harm, as we’ve seen in recent years, re are any number of relately “common” disasters such as hurricanes, tornadoes, flooding rers, fires and even earthquakes that can potentially disrupt your small business.

Although most disasters aren’t preventable, and many aren’t even predictable, you can take steps in advance to minimize your potential for loss from catastrophic events. Here are some guidelines.

specifics of a disaster recovery plan will depend to some extent on nature of your business, but here are some areas you’ll want to address.

Actually you will have several of m. Determine what types of losses would be most damaging overall to your operation. Would your business go down tubes if your accounts receables files were destroyed? What about your customer list, contact list, or all procedures you’ve developed for your independent testing laboratory? How long would it take you to get back in business if y were destroyed? Once you identify se critical operations, write an emergency recovery plan that details priority order in which your operations should be restored and where resources to restore each business function can be found.

Related: 3 Ways to Keep Disasters from Ruining Your Business

Most businesses never stop to realize how much ir ongoing business depends on documents, forms, programs, employee records, customer correspondence, contact lists, and accounting information that has been developed or collected over years y have been in business.

To minimize losses, make duplicates of all of your company’s vital records, computer data, videos, customer lists, accounting data or documents or media that are essential to your business operations.

Related: Preparing for Disaster

For any data that requires a computer program to , be sure you have a copy of software as well as a copy of data file that contains your records. (For custom software and enterprise level applications, ult your vendor to determine how to best protect your records.) Store se duplicates off-site in warehouses, in cloud-based back up resources, or or facilities specially tructed for data and record storage. Look for a facility that is located in a different town from yours, or if you are in an area prone to hurricanes, flooding, ider using storage facilities in a different geographic region. 

If you just have a small amount of records or data to store, put m in a bank safe deposit box, or if re are no or options available to you, store m at a relate or associate’s office in a distant location. Be sure to update backups regularly, too. All backups in world won’t do you any good if y are a year old, or if y are stored in your office and your office building burns down.

Be sure you have current backups of that even if your host site claims to make daily backups. One large hosting company in NY recently had a hard disk crash, and despite claims of daily backups, were unable to restore data from mailing lists y operated for ir . reason: ir backups were too old. Any of ir who had not captured names from mailing list program and stored m on ir own computer systems were out of luck. names were gone. An easy way to keep your site backed up (and a good fall-back if your hosting company’s backups aren’t current or get destroyed) is to use a cloud-based backup service such as Carbonite to backup your website. y also have a version for backing up home computers and small business computers.  

It can takes weeks or months to restore a facility after a disaster. While your may be sympatic to your situation, if you can’t handle ir needs, y will have to look elsewhere to for someone to serve m. To avoid losing market share to your competitors, ider what alternate facilities you might use to operate if a disaster should hit your business. Among se alternate facilities that will rent office or warehouse space for short terms, friend or neighbors with a spare room or spare office, or even your employees’ homes if your business is one that would lend itself to telecommuting.

Your contact list should include state, local and federal emergency phone numbers; phone numbers, addresses and email addresses if available for major clients, suppliers, contractors, financial institutions, insurance agents, radio and newspapers, and any or indiduals or businesses you might need to notify if re was a disaster. You should also have complete contact information for your employees and corporate officers. Keep contact list stored offsite so it is available in case of disaster. Keep a printed copy of your contact list as well as any electronic copies in case you can’t your computers.

This should be some offsite location y can call to get information in event of a disaster and to notify company, family and friends that y are OK.

Keep make, model number, serial number and purchase price. You’ll need information for insurance company and for IRS. Photos of your equipment in use in your office can also help document claims. Be sure a copy of your inventory list and images are stored in a safe deposit box or or safe place off site.

Notebook computers and cell phone connections can help you stay in touch with associates during some disasters.  During , cell phone service may be restored before electricity. Keep one copy of your contact list on your notebook computer so that you can pick it up and carry it out of building if you are onsite when an emergency occurs. If you don’t already have one, invest in a mobile charging device that lets you charge phones, lap and tablets from your automobile. Portable power supplies can come in handy to recharge small electronic devices as well.

As recent hurricanes have demonstrated, storm surges can wreak havoc on cars, vans, and even trucks. So can downed trees and blowing debris. Repo indicated more than 200,000 automobiles were damaged from storm surge that accompanies Hurricane Sandy when it New York/Metropolitan area.  Storm surges can send water much furr in-land at much greater depths than most people would ever imagine. If a hurricane threatens, heed all forecaster warnings get your vehicles to much higher ground far away from storm surge area as soon as you can. Waiting until last minute isn’t an option when a hurricane approaches.

Even if you are on high ground and re is no danger of flooding from a hurricane, if hurricane does severe damage to your area, electricity could be out for a week or two or even longer. Gas stations may close, or not be able to get gas from ir suppliers. Multi-week gas shortages resulting from Hurricane Sandy caused many states on East coast to implement gas rationing. 

Be sure each of your employees know what steps y should take if a disaster occurs. ider things such as crucial valves that need to be turned off to prevent explosion, backup power supplies, location of first-aid supplies, and methods for communicating instructions to employees and/or while an emergency is in progress.

Keep emergency plan simple, but be sure it lists critical steps that need to be taken and by whom. Identify escape routes and make sure everyone knows where y are. Denate a check-in point or meeting place that all employees should go to if re is an emergency such as a roof cave-in that only effects your facility. Having such a check-in point makes it easier to determine if anyone is unaccounted for.

obvious losses you might suffer in a disaster (damage to buildings, equipment, etc.) aren’t only possible risks you face. Rent, loans, equipment leases and or expenses will have to be paid wher your business is operating or not. Furrmore, you could be held responsible for damage to any property held on your site for ors (for instance, clothing if you are a dry cleaner; computers if you repair computers.)

RELATED: What Types of Insurance Does Your Business Need?

Business equipment in you home may not be covered at all, or if it is covered, losses may be limited to under $2,500. If you don’t already have it, ask your insurance broker about an endorsement to your homeowners’ policy to cover an office in home, or get a separate business owners’ policy.

Check, too, to see if amount of coverage on homes or buildings you own  is sufficient to replace home and contents at today’s prices. Policies just a few years old may leave your building  and property drastically underinsured even if your policy adjusts yearly for inflation. 

It’s unlikely that a quick glance at front page of your policy will tell you exactly what losses are covered, so read entire policy. Pay particular attention to what risks are excluded. Even if you have a business owners’ policy, you may find that employee ft, machinery downs or or perils are not covered. If you are located in a flood area, you will probably need to get a separate flood insurance policy, too. Information about flood insurance is available from Federal Emergency Management Agency (http://www.fema.gov/nfip/). Pay careful attention to wher or not your computer equipment, software and computer data are covered, too. Those may need to be covered under a separate policy. If re is anything that isn’t clear, ask your agent or broker to get you a clear explanation.

In some pa of country, insurers have been increasing deductibles for damages due to hurricanes or or major catastrophes.  If you are in one of those areas, and  roof blew off your business, or a tree fell through your house during certain types of storms, you would not be reimbursed for total value of needed repairs. In fact you might have to pay as much as 5% of total policy value out of your own pocket  before insurance moneys kicked in. Thus, if your home is insured for $500,000 and a tree crashed into it during a Category 1 hurricane, you’d be on hook for first  $25,000 worth of repairs.

Be sure your business owner policy includes business interruption insurance and insurance for extra expenses. (Extra expenses would be costs over and above your normal operating costs that you need to spend to keep business going during restoration.)

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About author:
Janet Attard is founder of award-winning  Business Know-How small business web site and information resource. Janet is also author of Home Office And Small Business Answer Book and of Business Know-How: An Operational Guide For Home-Based and Micro-Sized Businesses with Limited Budgets.  Follow Janet on Twitter and on LinkedIn