Forty percent of small businesses never re-open after a major disaster and another 25% close within a year of the event*. Will your business be one of them?
Weather events, fire, and adequate insurance coverage frequently come to mind when we think of disaster. But disaster-related business disruption takes many forms. It may present as technology or equipment failure, cyber-attack, sabotage, criminal activity, or key staff loss. A pandemic, economic or environmental event, accident, public relations debacle, and human-initiated incidents can also spell disaster for a business.
Maintaining or returning to operations quickly amid a disaster is essential to your company’s survival. The speed and level you can recover are determined by how well you have prepared for the unexpected.
Small businesses and those with limited financial resources are at the highest risk of failure, but none are immune. It is not a matter of if but when your business will be disrupted by disaster. Planning your response and establishing protections in advance can help your business avoid or mitigate the negative impacts before the worst happens.
A carefully prepared Business Continuity Plan (BCP) will guide the organization during periods of operational strain created by significant disruptions. It assures that decisions are made and implemented sooner, saves money, and gets you back to business as usual sooner.
Creating the plan can seem daunting at first. We can’t control the weather or predict every possible scenario. But applying a proven formula makes it a more straightforward process.
The best plans begin with a team. Someone must own and guide the planning process. But it is not a solo endeavor. Bring together a group of your key staff – finance, HR, technology, production, supply chain, administration, and facilities. Consider including partners, stakeholders, and industry experts, too. Doing so ensures that all requisites vital to recovery are considered. Decide who will be responsible for the final plan creation, distribution, monitoring, and personnel training.
Identify your role in a community disaster. Will you focus solely on your operations? Do you provide essential products or services in high demand during this time? Will you help employees, customers, clients, or the general public? It is critical to prioritize your people, property, and operations first. You will also want to choose the type and limit of your assistance to others and include it in the plan.
Identify and assess the most likely types of disruption to the operations. Discuss the events that threaten your company, and list them all. Assess each by weighing the severity of its impact and the probability of occurrence. Rank these from most to least severe. A standardized one to five scale keeps it simple and consistent across the various types of disruption. Events with the highest risk of negative impact and likelihood of occurrence take planning precedence.
Schedule a meeting with your insurance agent. Once you have identified the events that place the business at the highest risk, have a detailed review of your coverages. The time to find out you are underinsured is now, not when you have to make a claim.
Identify your priority business activities. The team should discuss the business activities that must continue or the order by which activities be brought back online in the wake of disaster. It is tempting to flag it all as critical, but if everything is a priority, then nothing becomes a priority. Assigning a timeline for return to operations allows the team to plan effectively for the resources and support necessary to get back to work and reduces downtime.
Create the plan. Write an action document for each event included in the plan. Describe the event, the scale of impact, the desired outcome (avoidance, mitigation, or tolerance), the steps to continue or resume operations, and a timeline for achievement.
Each step should outline the actions required and resources necessary to achieve it – human, financial, technological, equipment, vendor, etcetera, and the parties responsible for its achievement. Remember to include monitoring and reporting requirements as well. Speaking of vendors and suppliers, consider backup agreements with regional suppliers if a locally sourced item is critical to your operation.
Other inclusions to the document Disaster doesn’t punch a clock. So, it is essential to include emergency action and evacuation plans in the document to protect staff and customers.
Also include a section for your company’s communication process, an authority matrix or diagram, and essential contact information for staff, insurers, customers, suppliers, partners, etc.
Train, test, and review the plan regularly. Review and train on the plan at least annually. Refine it as necessary, but always when significant changes occur in industry standards, facilities, location, or operational processes.
Finally, copies of the plan should be readily accessible electronically and off-site. A plan you cannot access due to a facility or technology disaster is useless. I recommend a cloud-based alternative as well as physical storage off-site. Some companies have their plan privately accessible on their company website, too.
Whether you are a start-up business or have operated for decades, you’ve worked long hours and sacrificed to reach this level. Don’t leave your business’s future to chance. Pull that team together and craft a plan that assures a successful recovery before a disaster strikes. For more business planning resources, visit https://www.ready.gov/business
*Federal Emergency Management Agency (FEMA) *Small Business Association
About the Author
LaJuan Gordon is the Chief Executive Officer of Northeast Texas Habitat for Humanity and has served in the nonprofit industry for twenty-five years. NE Texas Habitat is dedicated to creating safe and affordable places for people to live and thrive in Gregg, Harrison, and Upshur counties. During her tenure, more than seven hundred households have achieved safer, healthier, and more affordable living conditions through a NE Texas Habitat program. Gordon attended New York State University for business studies, holds a Certificate in Emergency Management, and worked for six years in nonprofit disaster preparedness and response. With twenty-five years’ experience in the nonprofit industry, she writes on the topics of disaster preparedness, housing as a human right, and nonprofit leadership. In addition, she consults with nonprofits in strategy, resource development, disaster preparedness, and business continuity planning.