Five tips for small businesses to create a disaster-preparedness plan

As the anniversary of Hurricane Sandy approaches on Oct. 29, the Insurance Institute for Business & Home Safety is urging small business owners nationwide to learn from the lessons of Hurricane Sandy and prepare for disasters by creating a preparedness and recovery plan. Hurricane Sandy had devastating effects on anywhere from 60,000 to 100,000 small businesses impacted by the storm, according to the U.S. Chamber Foundation’s Business Civic Leadership Center. It was the third most-devastating hurricane in U.S. history based on estimated insured property losses, and nearly half of the privately insured losses from Businesses, the Insurance Information Institute estimates.

“Continuity planning can make all the difference in a crisis, especially considering that one in four businesses forced to close because of a disaster never re-open,” said Gail Moraton, business resiliency manager, IBHS. “Having a plan in place will enable business owners to act quickly so they can recover as soon as possible.”

Business owners can prepare for a disaster using OFB-EZ (Open For Business-EZ), IBHS’ free, online continuity planning toolkit that provides an easy process for users to create a recovery plan that will help small businesses recover and re-open quickly after a disaster.

“As a web-based program, OFB-EZ offers business owners the convenience and confidence of developing and storing their business plan in a secure, third-party location on IBHS’ Disaster Safety website,” Moraton explained. “OFB-EZ Online uses non-technical language to help business owners create an effective business continuity plan so they are able to keep their doors open and return to normal operations as quickly as possible.”

When creating a continuity plan, IBHS recommends that businesses consider the following five questions, based on IBHS’ OFB-EZ business continuity toolkit:

1. Do you have contact information for employees, suppliers, and vendors in a protected place?

Ask your employees to provide their personal contact information annually. After a disaster, this will enable you to check on their well-being and share next steps for resuming normal business operations.

Also update your supplier and vendor contact information, as well as other important contacts such as your bank or insurance carriers, and keep this information in a safe location on the premises and an easily accessible off-site location.

2. Do you have plans for maintaining or resuming critical business functions?

Consider which functions are necessary to keeping your business viable and in the black, such as ones that fulfill legal or regulatory obligations, or are essential for maintaining market share or reputation. Critical business functions can change from year to year, so be sure to account for any changes such as the addition of new business systems, products or employees.

Work with your employees so that they fully understand the procedures for recovering the critical business functions. Name an alternate employee to take charge should the primary employee be unavailable to perform the function.

3. How is your data protected in a disaster?

Determine which data and records are vital to perform the critical functions, and be sure they are backed up on one or more types of media. Store a backup copy onsite for use after small disasters, such as a failed hard drive, and store a second copy in a safe offsite location that can be easily accessed after large disasters.

4. How will you fulfill your financial obligations?

Identify financial obligations and expenses that must be paid. You should not assume that because your area got hit by a disaster, your suppliers, vendors and creditors are aware of the situation and are granting extensions automatically. Items such as mortgage, lease or rental payments may still need to be made even after a disaster strikes your business.

Also, have an emergency cash reserve fund or credit available. You may need cash to purchase supplies or equipment, or relocate your business temporarily.

5. Do you have sufficient insurance coverage?

Evaluate your insurance policies and meet regularly with your insurance agent/broker to be sure you understand your coverage, deductibles and limits, and how to file a claim. Most policies do not cover flood or earthquake damage, and you may need to buy separate insurance for those events. You also may need to consider a policy that will reimburse you for business disruptions, in addition to physical losses or extra expenses.

Additional Hurricane Sandy recovery resources, as well as more business and disaster preparedness information is available at www.DisasterSafety.org.