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Seven Steps to Prepare for the Worst

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Twenty-five percent of businesses that close following a disaster never get back up and running, according to the Institute for Business & Home Safety, a non-profit insurance industry group. Keeping your business running after a major flood, earthquake, fire, terrorist attack or other unexpected and unwelcome event is critical. Help from normal insurance policies and government agencies may be too little, too late in today’s competitive and unforgiving economy.

Here are seven steps to develop a business continuity plan in the case of a disaster or other unplanned event:

Do a business impact analysis.
Begin with a thorough assessment of your business risks, including the most likely scenarios for a disaster and the impact that extended downtime could have on your business. Estimate the potential revenue loss per day that your company, and then weigh that cost against the job of creating continuity plans. A business impact analysis can help you determine which parts of the business should be restored first. Consider how your business will continue to service customers, how you will restore IT services, and where people will work until your primary location is safe. For instance, a healthcare provider may need completely redundant systems so there is no interruption in patient care, but a manufacturer may be able to wait 24 hours until it can resume shipping.

Review insurance policies.
Business owners should have property insurance policies that cover the cost of replacing damaged or destroyed equipment and buildings. Business interruption insurance covers lost income if your business has to shut down temporarily.

Develop an employee contingency plan.
Your plan should cover how employees will communicate, if they should go to alternate locations, and how they will keep doing their jobs. The plan should also establish a process for locating and communicating with employees after an event. Keep a list of emergency numbers for all your employees and make sure you have a quick and efficient way of keeping workers informed of changing conditions. In some disasters, workers may have more pressing concerns than getting back to work. Identifying alternative work sites can allow your business to keep operating through the disruption. With today’s social networks and mobile lifestyle, locating employees and working anywhere is much easier than ever.

Develop a supplier contingency plan.
Create a list of backup suppliers in case your primary ones are shut down. Make sure you have an established business relationship with these companies.

Develop a systems recovery plan for IT.
Consider the survivability of key IT systems, such as phones, and establish a recovery strategy that includes clear documentation on how to restore each application and service. System recovery plans vary by business. For instance, a retailer might need to restore point-of-sale systems, customer service and employee communications within one business day. Knowing what IT systems you need to restore in priority order—and having those systems and data available at a backup site in advance—is critical for a speedy recovery. The industry move to virtualization and cloud computing simplifies business continuity planning. With virtualization, there are fewer devices to track and failover is easier. Cloud computing shifts the business continuity responsibility to your provider, but be sure that your contract outlines your requirements. Consider other ways to communicate if the phones aren’t working, such as two-way radios, e-mail, posting on your website, or an emergency notification. Also consider your communication needs at your recovery location, such as phones, voicemail, audio and web conferencing, and call recording.

Backup, backup, backup.
Make regular backup copies of all critical business records, such as finance, tax and employee data, customer information, production formulas and inventory. Keep that information in a separate location at least 50 miles away, or subscribe to an online data backup service.

Practice your contingency plan.
Put your contingency plan into practice at least once a year so that all employees, including executives, are familiar with the processes. Train both primary and backup employees to perform emergency tasks, in case the team leaders you count on during an emergency are not available. Designate specific employees to contact employees, customers, suppliers, creditors, utilities and other companies to get the word out about the business. Practice your crisis communications with employees, customers and the outside world. Use your business continuity exercises to tap into employees’ emotions so you can see how they’ll react under the stress of the situation. Evaluate your company’s performance during these drills and work toward identifying weaknesses and making improvements.

The Small Business Association is a good resource for disaster recovery information, including the Open for Business guide.