Premier Online Banking

Access ID:

Preparing Your Small Business For a Disaster

As we have all seen, both natural and man-made disasters, can wreak havoc on businesses and their owners. Preparing for a disaster is a good investment in both time and resources, and may make the difference between your company surviving or failing, which in turn will impact your personal life. As a small business owner, it is important to plan for disasters that come in many forms - each of these can cause your business to cease operating:

  • Fire
  • Hazardous materials incident - tanker, rail spills, leaks from chemical plants
  • Flood or flash flood
  • Hurricane or tornado
  • Winter storm - snow and ice etc.
  • Earthquake
  • Communications failure
  • Civil disturbance

There are other "disasters" that befall small businesses, such as the loss of a major client or supplier, family emergencies, strikes etc. but this article will focus on those elements that impact the business physically.

Identify the hazards you face - i.e. are you likely to experience an earthquake? Ask yourself the following questions:

What would you do if your facility/offices were closed for several days, damaged or even totally destroyed?

  • Develop contingency plans to remain in operation if your office, factory, or store is unusable or has no power.
  • Purchase a backup generator to maintain full operations or critical functions such as refrigeration, lighting, security systems, and computer control in the event of a power failure.
  • Upgrade exterior walls, shore up creeks, and strengthen retaining walls if you own property, or discuss with your landlord if you are leasing. Have supplies on hand for boarding up windows and doors.
  • Could you operate out of your home/garage or a nearby storefront?
  • Could you quickly relocate (transport and store) critical items such as computers, inventory, and equipment?
  • Could your employees telecommute, do they have equipment - computers, phones, printers etc.?
  • Examine the possibilities, make a plan, and assure that you and all your employees know what to do.
  • Test your plan on a regular basis by conducting tabletop walk thoughts and/or simulation exercises.

What if your payroll, tax, accounting, or operating records were destroyed?

  • Create regular backup copies of all essential records including accounting, employee data, customer lists, inventory and key contact information and passwords. Keep a backup copy of your computer's basic operating system, boot files, and critical software. Store a copy of all vital information on-site and a second in a safe off-site location - preferably some distance from your location.
  • Use surge-protectors to protect your computers.
  • Utilize online banking so that your accounts and records are available to you anytime, anywhere; you can move money, manage and monitor your accounts, pay bills and even receive money. You'll have complete access without needing paper checks or statements.

Is your insurance adequate to get you back in operation? Do you understand what is covered and what is not?

  • Review your insurance plan to determine if it covers replacement of vital facilities and critical equipment.
  • Consider the cost/benefit of flood insurance, windstorm, sewer back up, difference in conditions (earth movement).
  • Can you pay creditors, employees, and your own needs during a prolonged shutdown?
  • How long can you survive if your business is shut down?
  • Consider business interruption insurance that assists you with operating needs during a period of shutdown. It may help you meet payroll, pay vendors, and purchase inventory until you are in full operation again. Also be prepared for the costs of a disaster such as leasing temporary equipment, restoring lost data, and hiring temporary workers.

If you run/own a larger business with many employees review all your internal plans and policies and make sure they include disaster preparedness. Some documents to update and keep current include but not limited to:

  • Employee manuals
  • Evacuation plan
  • Fire protection plan
  • Safety and health program
  • Environmental policies
  • Security procedures
  • Insurance programs
  • Finance and purchasing procedures
  • Plant closing policy
  • Hazardous materials plan
  • Process safety assessment

Your plans may include some or all of the following applicable federal, state and local regulations such as:

  • Occupational safety and health regulations
  • Environmental regulations
  • Fire codes
  • Seismic safety codes
  • Transportation regulations
  • Zoning regulations
  • Corporate policies

It is important to create emergency call lists - lists (wallet size if possible) of all persons on and off site who would be involved in responding to an emergency (full-time, part-time and contractors should all be included), their responsibilities and their 24-hour telephone numbers. On a regular basis conduct a call list exercise to ensure information for all persons are current. You should also create a building and/or site map that indicates:

  • Utility shutoffs
  • Water hydrants
  • Water main valves and lines
  • Gas main valves and lines
  • Electrical cutoffs and substations
  • Storm drains and sewer lines
  • Floor plans with fire extinguisher placements noted
  • Alarm and enunciators
  • Fire suppression systems
  • Exits and stairways
  • Designated escape routes
  • Restricted areas
  • Hazardous materials (including cleaning supplies and chemicals)
  • High-value items

This is not a complete listing, FEMA, OSHA and other government organizations can also be a great resource for learning more about disaster preparedness.