Is Your Firm Disaster-Proof?

A disaster—whether contained to your individual business, or the entire town or county—can affect your company for weeks and months. Following some simple suggestions by experts in the field may make the difference between your company going out of business, or surviving intact and actually thriving years later.

Disasters run the gamut from floods, local to your office building or the whole town; hurricanes; fires; terrorist attacks or anything else that stops your business in its tracks for days and weeks on end. How can you prepare for these unexpected and often unexplained incidents? Experts say a well-thought-out preparedness plan, backed up by a good insurance policy, can make the difference between bankruptcy and solvency when disaster strikes.

According to Carol Chastang, public affairs specialist, U.S. Small Business Administration (SBA), Office of Communications & Public Liaison, there are three components to remember when preparing your business for the possibility of a disaster: a financial plan, a good insurance plan, and a communications plan.

These components are important because they will help a business survive while you’re waiting for federal or state aid, she noted.

“Your financial plan concerns your business’ financial information and any warranties or proof of ownership for equipment in your business. This information should all be stored off-site in a fire proof area out of your county,” she noted. “The location should be less than a day away for your site but clearly out of the disaster area should there be a flood. Backup files of software programs should also be at this location.

“Your insurance plan should include business interruption insurance, which in most cases pays your operating expenses and rent while your business is down,” she explained, adding that sometimes a business is open, but customers can’t get into the town or county because of the disaster.

“Make sure you know what your insurance policy covers,” she said. “Not every policy includes flood insurance.”

This is important to note because in the case of federal aid through FEMA or the SBA, some disasters are not covered. “If your pipes burst in your shop, that is an isolated disaster to your business or building and would not be something covered by federal aid. So you’re on your own to recover losses,” Chastang explained.

A communications plan is also vital to the survival of the business. “Phone numbers of suppliers, manufacturers, utilities and customers should be handy for all upper management,” she noted. “You need to let your customers know that you’re not out of business, that you’re coming back to the area.”

She added that it is also important to let the local media know how your business is rebuilding so they can report it to their readers.

Jim Olson, vice president of inside sales and solutions engineering at SunGard Availability Services, said his company offers many tips to effective business continuity planning in the event of a disaster. “Companies need to plan for a wide range of scenarios, including fire, flood, hurricane, etc.; owners need to understand their data requirements; employees need to know where to go after the disaster; and you need to test your plan with a mock disaster.”

SunGard provides disaster recovery services, managed IT services, information availability consulting services, and business continuity management software. With four million square feet of data center and operations space, SunGard assists IT organizations across virtually all industry and government sectors prepare for and recover from emergencies by helping them minimize their computer downtime and optimize their uptime.

According to Olson, questions business owners need to answer before a disaster strikes are: How long can your business afford to be down; What is the impact of being down; And how much data can you afford to lose? “Knowing your recovery time objective, your hard dollar loss, the damage to your reputation, and your soft dollar loss are all vital to surviving the disaster,” he explained.