Create a Small Business Disaster Recovery Plan

Create a Small Business Disaster Recovery Plan

Next Insurance Staff
By Next Insurance Staff
Aug 12, 2019
7 min read

Going into business for yourself is an exciting time. The world is your oyster. Anything is now possible, and you’re certainly hoping for the best. That being said, running a business – any business for that matter – has its risks. To combat them, it’s important to plan ahead. That means, as soon as you’re setting up your business you need to first run a risk assessment. After that, it's highly advised that you put together a risk management plan, as well as a business disaster recovery plan should the need arise.

Importance of Being Prepared for a Wide Range of Business Risks 

This may seem obvious, but the most essential part of a small business disaster recovery plan is to be prepared. That's because while you can’t prevent every accident or unfortunate event from happening, you can at least control your response. By knowing what you’ll do in advance, you can act calmly, wisely, and effectively to handle whatever’s thrown your way.

What Is a Small Business Disaster Recovery Plan?

A disaster recovery plan is basically your way to prepare in the event of extremely disruptive, unforeseen events. We’re not talking an employee missing a shift or payroll management here. This is more a matter of complete calamity or natural catastrophe. It can be something like an earthquake that shakes your business to its core, a cyber-attack that messes up your  whole computer system, or something less dramatic like a power outage that lasts for a few days.

A basic document, the written plan should cover each type of disaster that could affect your business. It then needs to detail what should be done in the event of such a disaster, to continue with business as usual as much as possible, and minimize damages. Whenever possible, it’s also a good idea to do a test run. Like we used to have fire drills at school, this is a good exercise in preparedness, that ensures all players know what to do in the event of any given disaster.

Why Is Disaster Recovery Important for Businesses?

A disaster, as the name implies, can put you out of business. Even if you have business insurance that includes some form of disaster insurance, that may not be enough to save you alone.

Disasters, after all, are costly. They cause physical damage that is expensive to fix. And they cause disruptive damages – like the loss of income during downtime as well as while you try to recover. Plus, there is the inconvenience caused to customers. Think about what would happen to a daycare center that flooded and couldn't take in kids for a week, and you know exactly what we mean. Or a spa facility with no water service, and how customers would feel about that. The examples are endless for any business you’re in from construction work through to carpet cleaners and consultants.

As such, you need a business disaster recovery plan to:

  • Minimize downtime as you return to normal operations
  • Create alternative ways of operating in the interim
  • Ensure smooth restoration of service
  • Reduce loss of income
  • Prevent customers from leaving/turning to competitors
  • Keep your employees prepared, so they know how to follow emergency procedures
  • Ensure overall damage control

Things to Keep in Mind When Creating Your Plan

There is no one template for creating a disaster recovery plan. You can do a little research online to see what others in your line of work have done, as guidance. Otherwise, you can work with common sense, with a couple of pointers in mind.

For starters, it may be a good idea to begin by reviewing your insurance coverage. Your business should definitely have general liability insurance to cover it in case of any number of mistakes or accidents. But keep in mind, not everything will be covered by such a policy. So for example you may likely need property insurance, commercial auto insurance, and professional liability insurance as well. However, even if you have the most amazing, comprehensive insurance coverage, you still need an emergency response plan.

Creating a Disaster Recovery Plan

As we hinted at above, your business disaster recovery plan should include the following elements.

  • List the types of disasters that could possibly affect your business – These can be things like severe weather, extreme heat, flooding, power outages, hurricanes, cyber-attacks, or even an active shooter. While not all of them would affect any given business, it’s important to identify the ones that relate to yours.
  • Identify the most vulnerable areas that can be affected – In the event of any type of disaster you need to know what may be affected. For example, what would a flood do to your equipment or tools? What parts of business would a cyber-attack hurt? What are the risks to personnel? These are the types of things you need to consider here.
  • Clarify logistics – In addition to running a practice run for dealing with each scenario, you need to clarify logistics. This means things like ensuring stocks of your most needed products and materials. Similarly, you might identify a backup location for running your business, should you need to evacuate the premises.
  • Determine work arounds – Certain disasters may put business on hold, and often, you can't just leave customers hanging. For example, if you’re a contractor, you need to be ready for what you’d do with the potential workload. Instead of cancelling on a client, you may want to work with a backup contractor who you trust to take your place in the meantime.

These are the basics any plan needs. The more detailed you are the better. Keep in mind, however, these are protocols that are meant to be followed. As such, keep the language clear and simple. That way they can be understood at a glance, by anyone, and implemented accordingly.

Bottom line

At the end of the day, we certainly hope disaster never strikes and your small business recovery plan gets to collect dust in a drawer. That is, in between readings to brush up on its contents, of course. However, in the unlikely event that you need it, a good disaster recovery plan can be your recipe for success – helping you overcome calamity and get back to business as soon as you can.

Create a Small Business Disaster Recovery Plan


Next Insurance Staff Bio
About the author

NEXT’s mission is to help entrepreneurs thrive.

We’re doing that by building the only technology-led, full-stack provider of small business insurance in the industry, taking on the entire value chain and transforming the customer experience.

We want to make sure you have all of the information you need to make an informed decisions about purchasing business insurance. We hope you’ll find this information helpful.

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