No event may have a bigger impact on your business than a natural disaster. Recent hurricane damage reminds us that a disaster can severely damage your company, or even force you to close your doors permanently. An emergency preparation checklist can help you minimize the financial impact and help you restart business operations quickly. Use these tips to write and implement an emergency checklist.
Protect Your Business and Its Assets with a Disaster Recovery Plan
Recent studies indicate that one in four small and medium-size businesses do not reopen after a major storm, and that the average small business loses $3,000 per day after closing. In spite of these risks, 57% of small businesses do not have a disaster recovery plan.
Risks for Business Owners After an Emergency
Small businesses face a variety of risks, some of which can impact a company’s financial performance for years into the future:
- Physical assets: A disaster can damage or destroy buildings, warehouses, and inventory.
- Relationships: Customers may start buying products and services from your competitors, and some of those clients may not return, once your company is up and running again. Businesses may also lose relationships with suppliers and other vendors while the company is recovering from a disaster.
- Income stream: Most importantly, an interruption in your business may prevent you from paying your staff and yourself. If you can’t restart your operations quickly, you may lose members of your staff to other companies.
You have a great deal at stake when a disaster strikes, so it’s critical for every business owner to implement an emergency preparation checklist.
What You Need for Your Emergency Checklist
For starters, your emergency checklist should be outlined in your procedures manual, which documents every routine task your company performs. When a disaster happens, your staff can refer to the checklist and start to respond.
Here are some key elements for your checklist:
- User IDs and passwords: It may sound simple, but everyone in your organization needs access to a single location for all user IDs and passwords. Your business may use dozens of systems that require this information, so your staff needs quick access in an emergency.
- Cloud backup: Your entire operation should be backed up on offsite servers using the cloud. Cloud computing allows your staff to work more productively, but using the cloud also helps you recover quickly after a disaster.
- Working remotely: Many businesses have employees who work remotely, either full-time or part-time. If these workers aren’t directly impacted by a disaster, they can continue to work remotely, using the company information on the cloud. Think through your operation to determine which tasks can be performed remotely, and other work that must be performed onsite.
- Access to capital: Get access to a line of credit for your business, even if you only borrow a small amount to operate each month. In an emergency, you’ll need access to capital to reopen your doors. Don’t wait until you’re in a crisis to get access to cash.
- Flood insurance and other coverage: Have a conversation with your insurance agent to determine the coverage your business needs. Floods, for example, are the most common natural disaster in the U.S., but flood insurance is not included in the typical homeowners or renters insurance policy. Make sure that your physical assets are protected by insurance. Even if you have coverage, however, you may incur costs to restart your business before your claim is paid.
- Train your staff: All of these issues need to be addressed with your staff, and you should walk through your disaster recovery process once a quarter. Training your staff will help everyone take action if a disaster occurs.
When you prepare your annual budget for the next fiscal year, review your emergency checklist and make any necessary changes. Reviewing the checklist should be on your calendar each year.
How the Emergency Checklist Would Work in Action
Assume that Julie owns Marshall Sporting Goods, a business that sells sporting goods equipment through three retail locations and online. Half of Marshall’s staff works online, and half operate the retail locations. Julie and three other executives manage the business in an office attached to one of the retail shops.
The Marshall employees have access to a document with all of their needed user IDs and passwords, and the business operates on the cloud. Julie meets with her insurance agent each quarter to review her firm’s insurance coverage.
If a disaster impacts a retail location, the operations manager refers to the emergency checklist that instructs him to notify every worker by text and email. Each store location has an agreement with a nearby retailer where the staff can seek shelter in the event of a store fire. In the event of a tornado, the staff at each store location follow a procedure to move to a basement area with emergency suppliers. The supplies, including weather radios, batteries, and fresh water, are checked each month.
Julie’s staff works with the store manager to secure the building and assess any damage. Marshall notifies customers about the store closing by email, social media, and through a message on the company’s website.
Once Julie and her managers determine how long a store location will be closed, Marshall attempts to staff store workers at other retail locations. The marketing team reaches out to existing retail customers by email and offers to fill orders online. Julie also contacts her insurance agent to file any needed claims.
Prepare Your Business to Recover Quickly
Managing a business is challenging, and dealing with a disaster is stressful for everyone involved. If you invest the time to write and implement an emergency preparation checklist, you can start to recover after a disaster and prevent large company losses.