Do you know how your company would respond to widespread flooding? What about an extended power outage? If you cannot answer these questions, you are not alone. Business owners invest hard work, time and money to grow their enterprises, but far too many are unprepared to respond to an emergency or disaster. In fact, 40 percent of businesses do not reopen after a disaster and 25 percent fail within one year, according to the Federal Emergency Management Agency. Whether it is a large scale disaster, like a damaging storm, or a more centralized incident, like a website crash, having a response plan in place helps make small businesses more successful and resilient.
The time and expense required to develop a disaster response plan pales in comparison to the cost of being caught unprepared. Think your business is immune? Think again: The Small Business Administration reports that almost 70 percent of all companies will lose power at some point over the next year. Companies with a plan in place to respond to disruptive incidents large or small can return to business as usual much quicker than those that do not, which can have a lasting impact on sales, perception, customer loyalty and more.
Make the time to evaluate preparedness
With September recognized as National Preparedness Month, businesses should take the opportunity to create a crisis response plan or review and test existing plans. The Small Business Administration has partnered with private sector companies and disaster relief organizations to create PrepareMyBusiness.org, where small businesses can access continuity strategies and disaster preparedness tools and resources. Below we highlight a few high-level concepts to keep in mind as your business considers how it would respond to a disaster.
Identify key business functions
When developing your disaster response plan, consider the aspects of your business that are critical to daily operations and what would need to happen to restore them during or after an interruption or incident. Examples of key business include order fulfillment, billing or payroll. Depending on the nature and scope of the emergency, you will need to identify processes for getting these functions back online (alternate worksites, backup servers, alternate communications, etc.).
Crisis communication is key
In times of a crisis, your business has several audiences to which it must convey important information, such as employees, customers, vendors and emergency responders. Having a well-rounded communications strategy in place helps to keep your team on the same page in terms of chain of command, messaging, contact information and media interaction, and lessens the risk of incorrect information causing even more confusion at a hectic and stressful time.
Test and review regularly
Business continuity and disaster recovery planning is not a once and done exercise. These plans are constantly evolving, living documents that must be tested and reviewed regularly to ensure accuracy and effectiveness. Keep everyone in the loop as well, with plan updates and by providing test results and changes in the plan with all employees.
Business continuity and disaster planning is certainly not a cheerful project, but your business is too valuable and important to leave unprotected. After all, you can’t stop every bad thing from happening, but you can control how your business responds to it. A business advisor like RKL can be an asset to companies developing or testing business continuity plans. Contact one of our local offices today for more information.
Contributed by Michelle S. Gibbons, CPA, Principal in RKL’s Small Business Services Group. Michelle is responsible for compilation, review and tax services for small businesses, as well as coordinating all additional services for her clients. She has experience serving various industries, including real estate service, manufacturing and retail.