Is your small business ready to survive after a disaster?
This may seem like a well-covered topic, but honestly, no small business is ever fully prepared to face a disaster nevermind the long post-event road to recover. Another summer storm season is just around the corner. Most small business owners don’t realize that storms aren’t the only threat to their livelihood. The good news is that there are steps that every small business can take to reduce the impact of a catastrophe and decrease the restart time to being fully operational once more.
What can we learn from recent disasters?
Disasters don’t just include storms or fires. There are a multitude of unforeseen events that can impact and interrupt your business to the point of shut-down. Consider for a minute that your work force is lean, everyone is juggling multiple tasks, and each person is critical to your business’ success. Then consider that a pandemic virus, (think H1N1 virus) strikes your community taking out nearly two-thirds of your work force, several critically. Your business suffers because you cannot meet customer demands, provide adequate service, or maintain daily operations with so many key staffers out ill. What you do next, may mean the difference between keeping your customers or losing them forever. It may even mean the survival of your business.
If your next move is to reach for your updated crisis plan and implement the procedures your emergency team put together just last quarter, then your business may have hope for surviving the crisis. Alternately, if your next choice is to buy a box of surgical masks and put a quarantine sign on your door, you may want to start looking for another career choice.
To your amazement, not only did your emergency response team write the crisis plan, they even ran a few test scenarios to see how well it worked! Before you can believe your eyes, your emergency response team leader pulls out the binder and initiates the ‘Illness Crisis Protocol’ to start the process of auto orders with your vendors, back-up delivery schedules and a list of contingency duties for the remaining staff on hand. Each staffer gathers together a list of the top ten items in his or her department that need to be addressed in order to maintain operations for the next 24 to 36 hours. The team regroups in an hour and begins to sketch shor- term plans based on their needs lists. None of this would have been possible if your employees hadn’t taken the initiative and time to review these processes six months ago.
Threats to data bases aren’t just for corporate espionage novels any more. Posing even a greater risk to small businesses than their large corporate cousins, data theft or data interruption can cost thousands or even millions in lost revenue. According to a Trend Micro-sponsored Ponemon Institute study, “more than 78 percent of organizations have suffered from at least one data breach over the past two years.” Whether those breaches were from external malicious intent or as a result of employee error, the costs related to recovering and restoring your business’ data. Data recovery is severely hindered for small businesses because according to the Trend Micro report, “62 percent of small business enterprises do not routinely back up [their] data” making it even more difficult to recover lost information and restart the business. Of those businesses backing up their data, one in four of them are storing their back up at a remote location more than 50 miles away. Backing up your data to a removable hard drive and storing it in a desk drawer may be a nice first step, but consider what you would do if a rogue storm strikes and your business and all of its contents are flooded. Storing back up data in an off-site secure location will help to ensure greater business continuity. When creating a back-up, remember to also keep a duplicate copy of your business’ accounting and emergency contact information for every employee. These and other emergency measures will make a big difference in how quickly you can reopen your business.
Lastly, but certainly not least, protect your employees. For small businesses, employees hold not just the figurative keys to the business, but often the physical keys, too. “Employees, a small business’ most important asset, can often be overlooked in disaster planning,” says a representative from the Insurance Institute for Business & Home Safety (IBHS). Protecting your employees needs to happen both inside and outside your facility. Make sure that your emergency plan includes building evacuation, shelter in place, and lockdown activities. Also, consider how you can implement a work at home process until your business’ facilities are back online and fully operational.
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Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230.
Copyright Information 2013 Professional Association of Small Business Accountants