Most business owners have or understand the value in business insurance. It protects the business in case an insured event happens and rather than the business owner wasting time and losing business by addressing the problem, the insurance company takes care of things. Business insurance makes good business sense.
A good form of insurance but one only the business owner can handle is creating a opportunities Disaster Recovery Plan. It doesn’t sound very attractive and it doesn’t sound like a good use of time but let’s consider the following.
If your business was hit by a severe storm, hurricane, truck or car that was out of control, flood, tornado, lightning or hail, earthquake, disease or pests, unusually high temperatures that caused damage to the building your business is in or some other unpredictable occurrence, how would this affect your business? What about a building fire, hazardous materials incident, sabotage, a loss of key staff or power disruption? Perhaps ask the same question in a different way. If something occurred to damage the business and you were out of action for a week or so, could your business survive?
The point of all this is to put a Disaster Recovery Plan together.
With each disaster there are three phases; Response, Mitigation and Recovery. With a defined Disaster Recovery Plan, each of the three phases means there is less downtime in each phase and could mean the difference in saving or losing the business.
Here are some important ingredients to include in your Disaster Recovery Plan.
1. Make sure everyone is on board with the plan and understands their role.
2. Create and train a critical management team who can plan, check and execute.
3. Document any hazardous or business critical items so a mitigation strategy is developed and agreed upon so response time is kept to a minimum and its laser focused on the critical areas.
4. Create, document and test any mitigation strategies so the business can return to normal operation as soon as possible.
5. Test, evaluate and maintain; and do this every 3 months.
6. Make sure you don’t forget step five.
This article is not an advertisement for insurance but there are many insurance products available. These include Property insurance, Flood insurance, Business Liability insurance, Workers Compensation insurance, Business Interruption insurance, Umbrella insurance, Errors and Omissions insurance, Disability insurance and Employers Liability coverage.
All disasters, by definition, only allow a certain number of things to be done in a window of time. The first thing to therefore establish is priorities and these should be people first, business criticalities for the future of the business and then things. First and foremost, people include the owner’s immediate family, the employees and customers. If home or business neighbors need help then that too should be included. Help should include knowing where and when to send people out of the danger area (don’t send them to another danger area) including an agreed place and time to all meet, having a list of readily available contacts including an agreed means of communications and tools, having the appropriate medical equipment including medications if necessary and a list of contacts to emergency centers so they can be contacted for updates. It sounds basic, but the need to avert panic and poor decisions needs to be top of the mind.
Finally, copies of all critical records require a systemic and deliberate process. If paper records are copied and archived in a different location why not make an extra copy or two and archive them elsewhere. Computer data and a deliberate back up strategy should now be part and parcel of any small business that uses computers. Online back-up services are available for little to no cost and work very well.
Disasters cannot be avoided. History repeatedly shows us that we choose to ignore disasters at our own peril. Good management includes preparing for a disaster and strategies are readily and easily available. Include making a Disaster Recovery Plan as part of your business assets. If you have one in place; congratulations! If you don’t have one, create a deadline and make sure it gets done. Consider putting a team together and have them handle all the pieces and bring a final report back to you.
At some point, all business owners will exit their business. It’s just a question of whether it’s in a wooden box and is therefore an unplanned event or on a cruise ship as a planned event. Part 12 of this article series looks at the importance of an Exit Plan and how to put it together.
Andrew is a 5-time business owner that helps entrepreneurs exit or enter business ownership. His services include helping owners sell and/or buyers purchase an existing business or consult on purchasing a franchise. He also provides certified machinery and equipment appraisals and business valuations.