Making a Disaster Recovery Plan: How to Prep Your Small Business for Relief and Recovery

When things are going well for your small business, it may be easy to put the thought of tough times off for another day. After all, there are myriad pressing demands on your resources and time. However, failing to prepare for unexpected economic, climate, and societal events is a recipe for disaster.

DID YOU KNOW?

According to FEMA, “25% of businesses do not reopen after disasters. Having an emergency disaster (recovery) plan and a continuity of operations plan in place can reduce that risk and help the business recover faster.”

Unexpected events have a way of popping up at just the wrong time. Whether it’s social turmoil, the next pandemic, or a natural disaster such as a flood, wildfire, hurricane, tornado, earthquake, or another large-scale emergency – you should be ready to seek disaster relief and define recovery objectives.

But don’t worry – small business disaster preparedness needn’t keep you up at night. One key step is to have a disaster recovery plan, as well as a business continuity plan. Keep reading to learn how good disaster recovery planning can help your small business weather the storm and help minimize disruptions to your customers and employees.

Think about risk and assess your environment

One of the most important steps to prepare for a disaster as a small business owner is to define your risk. Get into the habit of scanning your local and national environments for disasters and thinking about how you’d need to prepare your business in such a situation.

Consider as many facets as possible. What would the impact be on your working location? Would you need to move where you store your product or provide your service? What barriers could arise for your vendors, customers, or employees? Who might need keys, passwords, or important business documents during critical moments, and how would you access those materials? Could any opportunities to serve your community arise because of an unexpected event?

Details matter. A few more steps you could take include:

• Consider using the FEMA risk assessment table to help you outline everything to be aware of when you build your disaster recovery plan (up next!).
• If you have business property insurance, understand your coverage inside and out. Set up an appointment with your agent to make sure your current coverage is adequate.
• Talk with a Block Advisors tax pro or accounting expert to learn the best way to keep your small business bookkeeping, small business payroll, and small business tax documents in order and available if needed during recovery. A tax pro can also help you stay on top of shifting deadlines for disaster relief tax extensions.

Build a small business disaster recovery plan

After outlining how you, your employees, and your customers may be impacted by a disaster, it’s time to make a plan. As a small business owner, you know you are ultimately responsible for the success of your business, so it may be a good idea to construct the plan yourself. At the very least, ensure you have a good deal of oversight in the disaster recovery plan creation if you delegate it to an employee or other group. It’s also a good idea to consult OSHA guidelines to ensure your disaster recovery plan covers all the necessary bases. Local small business associations may also have additional guidelines to consider.

Your disaster recovery (DR) plan is part of your business continuity planning. A business continuity plan (BCP) is a broader plan for how your business will stay operational and outlines potential impacts if disaster strikes. Think of your DR plan as more reactive, focusing on the response and recovery stages. Three top priorities in your disaster recovery plan include:

#1 – Ensuring the safety of you, your employees, and your customers

Of course, preserving human life is the first and foremost concern during a disaster. A few things to consider in the disaster recovery process include:

• Workplace evacuation routes and designated meeting points
• Employee and customer emergency communication methods
• Safety and medical supply station locations
• Ways to contact emergency services

For an effective disaster recovery plan, you should ensure employees know the protocol for a potential disaster. It could be helpful to assign employees specific responsibilities to carry out once everyone’s safety has been assured. This group will be your go-to disaster recovery team. You can even consider running a “disaster scenario,” that is, a training session so you and your employees can test out your recovery procedure.

#2 – Ensuring the security and stability of your working location

Whether it is a home office, a brick-and-mortar shop, a fleet of vehicles, or something else, it’s important to maintain the integrity of the place where you conduct business.

You may want to think about:

• Technology redundancies for key systems or critical documentation
• Lockdown and containment processes
• Backup keys, passwords, and emergency business supplies
• Special actions to secure hazardous waste, dangerous equipment, and key systems
• Data backup and recovery for confidential documents or customer information
  • Note: Considering how to prevent data loss is an integral part of disaster recovery planning. Consider having backups of critical data like business licenses, contracts and legal documents, tax returns, and other financial documents.

#3 – Ensuring business continuity for your customers and employees.

Finally, after securing the safety of your people and your business assets, you may want to plan how to minimize the disruption of your business operations to your customers and employees, including having an emergency fund to bridge the gap before disaster relief may be deployed.

Doing so will help stabilize the cash flow for your books and also help provide stability to the community around you. The products and services you, as a small business owner, provide are the lifeblood of your community. Furthermore, if you have employees, they will be grateful to know they can still count on their paychecks arriving on time.

Ensuring your business continuity may also allow you to be a leader within your local small business community during your community disaster recovery effort.

Consider how you might need to:

• Address unique customer and community needs after a disaster by changing business hours, service locations, etc.
• Provide additional flexibility to your employees as they recover themselves.
• Outline recovery timelines and any service limitations (or expansions) during the coming days, weeks, and months.
• Communicate all the above via email, social media, signage, etc.
• Set aside an emergency fund to ensure your finances are covered while disaster relief is sorted out.

Keep the disaster recovery plan front of mind and up to date

After considering the risks you face as a small business owner during a disaster and building a plan to address those risks, all that is left to do is wait, right? Wrong. While it may be tempting to let your disaster recovery plan collect dust in a binder on a shelf until you need it, resist! Instead, set a routine cadence for revisiting your plan. Make sure it still fits your small business needs by creating automatic review touchpoints.

These could be calendar milestones such as the beginning of your fiscal year, quarterly to align with a staff meeting, or before a severe weather season, for example. Touchpoints could also occur at key small business growth milestones, such as when you hire a new employee, form a new vendor partnership, or expand your service area into a new location.

It is important to ensure you and any employees have the latest version readily available for review and are properly trained on the processes and contingencies. At the end of the day, when disaster strikes, your upfront planning allows you to be nimble in your response. Every moment matters. Navigating a crisis confidently could prove the difference between long-term business success and failure.

More tips for disaster recovery plans and disaster relief

Beyond the three top priorities discussed above, what else should your small business disaster recovery solution include? Here are a few extra tips to ensure you feel prepared to recover your business:

• Stockpile essential supplies and build emergency supply kits for employees
• Have a list of important phone numbers and addresses handy
  • NOTE: Include contacts for key contacts like major clients, contractors and vendors, your insurance agents, and financial institutions all in one place.
• Cross-check your vendor disaster recovery strategy
  • While your plan may be comprehensive and up-to-date, what about your business partners? Discuss recovery plans with suppliers and note any contractual obligations in the event of an emergency.
• Inquire about a tax extension
  • If you face a natural disaster, your tax deadline may change. The IRS frequently extends tax deadlines to provide relief to victims of federally declared disasters. Talk with a Block Advisors tax pro to see if the tax deadline has been extended due to a natural disaster in your area.
• Reach out to the Small Business Administration (SBA)
  • The SBA offers advice, provides access to resources, and even loans to help you respond to natural disasters and reduce your recovery time.

Additional small business disaster planning resources

The information above provides a good starting place when designing your small business disaster recovery plan. If you want to continue learning about disaster preparedness and how to make your small business more resilient during emergencies, check out the links below.

• US Chamber of Commerce >> Small Business Preparedness Page
• Ready.gov >> Ready Business Resources and Business Impact Analysis Guide
• IRS >> Preparing for a Disaster (Taxpayers and Businesses) and Tax Relief in Disaster Situations

If you have disaster recovery plan questions related to your small business taxes, payroll, or bookkeeping, contact a Block Advisors Certified Small Business expert today to start a conversation. Our professionals are available year-round to help you understand how your small business can prepare for or recover from a disaster.

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