Major disasters such as earthquakes, hurricanes, tornadoes, winter storms, and spring floods make headlines. Smaller disasters such as fires, burst pipes, power outages, Internet failure and hacker disruptions can destroy small businesses. That is, if there is no disaster recovery plan in place.
"Disaster planning and preparedness can be your lifeline to staying in business," says Bob Boyd, president and CEO of Agility Recovery, a Charlotte, North Carolina-based company that offers disaster recovery solutions and business continuity services for small and mid-size businesses.
Boyd said between 40 percent and 60 percent of small businesses without a disaster recovery plan never reopen their doors. And 25 percent of those without a plan eventually fail after reopening because of lost customers and a damaged reputation.
"Most disaster recovery strategies are easy and free," says Boyd. "You don't need to come out of the gates and have the Rolls Royce of recovery strategies.”
Among the top strategies Boyd suggests small businesses put in place are related to communication – who/how do employees make contact in case of emergency; backup plans – how to keep operations moving forward in case of emergency; and understanding how to handle a worst case scenario.
Says Boyd: “If you woke up and your employees couldn’t get to work, or weren’t able to do their job, what would you do? If you don’t know, you need a disaster plan.
Jeff Stoks is chief technology officer at Sexton Printing, a third-generation printing and marketing services company based in West Saint Paul, Minnesota that has been in business for 60 years and has 60 employees. While there haven't been many issues over the years, a leaky roof once forced the company to shut down a press, and a severed cable a few miles down the road in downtown St. Paul cut off Internet access.
"All our clients send files via email," says Stoks. "When the Internet is down, it can have a ripple effect."
As for that leaky roof, the company quickly hired a roofer, secured tarps to cover equipment, hired a cleanup crew and then made sure no other paper or machinery was damaged.
Reid Bradley, an Anytime Fitness franchisee owner in Moore, Oklahoma, went through the worst type of natural disaster in 2013 when an F-5 tornado rumbled through the town, damaging everything in its path, including his gym. No one was hurt and the club has recovered, but it was an experience he never wants to go through again.
"No one can plan for a disaster perfectly," says Bradley. "Communication is vital in making sure everyone is okay. We have group texts to make sure (employees) are safe during and after a disaster."
As the national media director for Anytime Fitness, Mark Daly oversees the company's Crisis Response team. The company has developed a crisis response guide, much of which has to do with helping franchise owners handle, deal with, and solve any crisis, no matter how small or large.
The team meets on a quarterly basis and in the monthly company newsletter Daly regularly includes safety tips and stories about infrequent crises or mini disasters at clubs throughout the franchise. The tips include best practices and information on how staff responded. "In the face of medical emergencies, we have staff that have responded in heroic fashion and lives have been saved because our staff is prepared," says Daly.
Defining a recovery plan
Any disaster plan should include key information such as bank account numbers, customer and employee lists, and an inventory of assets, to name a few, says Stoks.
At Sexton, if there is no access to the office, board members meet at the president's house to implement the disaster plan. They would also set up an impact analysis to assess the situation and determine who or what is needed to get back up and running. A workflow transition plan would also be implemented. That consists of ideas and strategies on how to work with industry peers, outsourced vendors, and client resources to keep work moving.
Once in place, experts recommend reviewing the disaster plan yearly to make sure it is accurate and still reflects the company’s needs. For instance, in the past few years Sexton has changed insurance companies, IT providers, and paper vendors and that new information is now part of the plan.
Disaster Planning: 5 tips for success
Boyd highlights cost-effective disaster plan steps any company can implement:
1. Power: Statistics show that if organizations had a power outage, 70 percent of companies wouldn't know their power requirements. Any electrician can look at a panel and tell you how much power you would need to get back up and running, says Boyd. Other questions to ask: Where do you get the power? Do you have your landlord’s permission to bring in a generator?
2. Communication: How will you communicate with all key stakeholders, such as employees, customers, and vendors? Phone, text, social media, 1-800 emergency number are some options. Develop a communication plan.
3. Educate employees: A disaster plan isn't beneficial unless employees are educated and aware of how the plan would be implemented, says Boyd. Inform and train on procedures and operations at least once per year. Practice and conduct drills on steps employees are responsible for in the event of an emergency.
4. Cross train staff: Prioritize which staff members are crucial to get back up and running. At Agility, they train accounts payable staff on all member service functions and on how to interact with customers in case they are needed to answer phones in the event of a mass disaster.
5. Understand your insurance: Boyd says in the wake of Hurricane Sandy in 2012, there are still small businesses wrangling with their insurance companies over payment for damages from the super storm. Simply put: Know and understand your insurance coverage and adjust as needed.
"I think the big message is that small businesses have to have some kind of plan in place," says Boyd. "Business owners shouldn't think it’s something that will take a lot of time and cost a lot of money, or require a lot of staff to do. Any small business that does not have a plan is not going to cut it."