Don't Allow a Disaster to Destroy Your Business

On Tuesday, January 12, a devastating earthquake hit the country of Haiti. Hundreds of thousands may be dead and much of the capital city of Port-au-Prince is in ruins. If you are wondering how to help, one good way to donate aid is through the American Red Cross.

Living in California, well known as earthquake country, I am aware that I constantly live a moment away from possible disaster. But the havoc caused by earthquakes can also come from other devastating events: floods, fires, terrorist attacks, even accidents. So I thought this would be an appropriate time to talk about disaster preparation. If a disaster were to strike your area tomorrow, would you be able to pick up the pieces of your business? Every business, no matter how large or small, needs a business continuity and recovery plan.

My guess is you don't have such a plan, since most entrepreneurs don't. The first thing to do is conduct a risk assessment. What types of natural disasters are most likely to strike your area? Don't assume you already know. Here in California we're prone to earthquakes and know we're not likely to get hit by a hurricane. However, there are many U.S. cities that sit on major earthquake fault lines but are not as well prepared as California and Alaska. From 1975 to 1995 there were only four U.S. states -- Florida, North Dakota, Wisconsin, and Iowa -- that did not record an earthquake.

Next, assess your internal functions (how your business actually works) and create a continuity plan. Identify the operations that are crucial to your business's survival and subsequent recovery. This could include things like payroll, accounting, and customer relation management (CRM) systems. As morbid as it might be to think about, you should appoint a temporary successor, someone who can take over in case you become incapacitated due to illness or injury. This works best if the person is not someone who works in your same location. You may wish to consider a member of your (informal or formal) board of directors and advisors.

Disaster planning is not just about your business. Who are you dependent upon? If any of your suppliers or vendors experienced a disaster, how would that affect your business? Don't keep all your eggs in one basket. If you are that dependent on another company, it is crucial you find others you can turn to in case of emergency.

What if you can't access your office or store? Can your business be run from another location? Decide now where that alternate location will be. Will it be your home? Or can you make arrangements with another company to "borrow" their location or facilities for a short time? You might also designate a phone number with a different area code for employees, vendors, or customers to leave messages.

Get input from everyone on your team. Then codify your plans and procedures, making sure all staff members and relevant outside people know exactly what's expected of them should disaster strike. Make sure your office is equipped with working fire extinguishers and other vital safety equipment. Appoint an in-house emergency coordinator whose job it is to check the equipment and plan an occasional drill.

What will you do if a disaster does occur? Will you and your employees need to evacuate your business location? Make sure to draw up an evacuation plan, which should be posted in office common areas. In fact, encourage your employees to draw up personal emergency plans for their homes as well.

As soon as you can, schedule an appointment with your insurance company to review your coverage and see if anything needs to be changed or supplemented. If you don't already have it, consider adding business-interruption insurance, which will replace any lost income should your company get hit by a covered incident. Depending on your area of the country, you might need extra flood or earthquake coverage as well.

Last but not least, what about your valuable data? Data loss is actually one of the most common problems businesses face after a disaster. It is crucial to back up your data in a safe and secure offsite location. There are several companies that provide online backup services, where your data is safely stored in the cloud. Designate someone who will be responsible for implementing your backup plan and test it to make sure you actually can recover your data.

Don't forget about the public relations component to disaster recovery. It's important to make sure customers, vendors, suppliers, your bank, utility companies, and even the local media know that your employees are OK and your business is still functioning.

Lastly, don't keep your plans to yourself. Share what you're doing with other business owners and encourage them to be prepared as well. Review your plan at least once a year. There's a lot of helpful information to be found at www.recovery.gov.

Disaster planning may be at the top of your mind right now in light of the situation in Haiti, but before too long you'll move on to something else and fail to make the necessary calls or carry out your well-intended plans. Don't let that happen. This is your business, and an ounce of prevention really is worth a pound of cure.

Follow Rieva on Twitter @Rieva and read more of her insights on SmallBizDaily.com.