You worked hard to get your business started, guided it through lean times and even dutifully paid your insurance premiums as a hedge against unforeseeable catastrophe. You rest assured in the knowledge that should a disaster put your business temporarily out of commission, a check will arrive shortly to ease you back into productivity. Don't count on it.
The odds say that money will arrive far too late to keep you from having to close your doors for good. If you have a disaster tomorrow, there is a nearly nine in 10 chance you'll be out of business within five years.
That's why it's imperative to complement insurance with a comprehensive business recovery plan that lays out what you need to do to survive a disaster and serve customers when normal operations are disabled.
"It's a form of insurance, but not the type that gives you money back," says Michael Higgins, business recovery coordinator at Roadway Express. "It's really an assurance that you keep your company alive."
And that's the goal-to create a blueprint that improves your company's chances of surviving a death knell when disaster strikes.
Decide what's crucial for survival
Highlight the critical functions that make your business work and organize them into a task-oriented list. Those details may differ for manufacturers and service providers, but every plan has the same essential ingredients.
That may sound simple, says Higgins, but if the roof were to cave in tomorrow, what would you need to continue operations? New computers? A sales force? Inventory? A base of operations?
That's the million dollar question, Higgins says, but one business owners often don't address until it's too late. "You have to create a business model of how everything is set up," he suggests.
It's also important to make the plan as simple as possible so that the people responsible for implementation can follow it without scratching their heads. "I start with determining what the department does on a normal day, then ask them what functions they couldn't do without to still operate," Higgins says "Those are what we do during a disaster-just the critical tasks."
Remember your customers
If your company suddenly finds itself unable to make the widgets your customers need, don't throw up your hands and wait until the insurance company comes through with a check. "You still have to serve your customers," warns Higgins. "Don't let the business lose them, or you'll have to start over."
That may include taking new orders from existing customers and farming out the work to another company until you're manufacturing widgets again. "It's important to find a way to keep turning the product around," Higgins says. "And, you better keep your customers informed about what's going on with the business."
Know where to replace the essentials
Say your building catches fire and fries the phone system and computers. Even if you've religiously backed up your crucial data, how are you going to access it? And what if the main piece of machinery in your manufacturing line explodes?
Try maintaining a list of what you'll need to replace to keep the base level of business operating. And just as important is knowing where to get it. "Either work with a recovery service vendor, or know which stores you can run to and buy the equipment you'll need," says Higgins.
He also suggests contacting an office space leasing company to send regular updates of vacant space. That way, if the office burns down, you already know what's available to rent.
Make your insurance company a partner
If you plan to make immediate replacements of essential hardware or machinery while you're waiting for the big insurance check to arrive, keep your insurance company informed. If they're in the loop, they can approve purchases-which makes reimbursement easier.
And, says Higgins, have all your equipment documented. That can be done in-house or through a loss prevention specialist who catalogues everything in the company.
"That way you're represented and have somebody working on your behalf while you stay focused on keeping the business alive," says Higgins. "Too many times you have to dig up documentation on what new equipment may or may not have been purchased recently. If you've got pictures and lists, it's easier to collect quickly."
Make your plan a living document
Companies change. Employees come and go. Information is updated daily. New equipment is purchased on regular basis. Your disaster recovery plan needs to reflect these constant changes as well. Says Higgins, "Your customer list isn't static. Update your plan at least on a quarterly basis, if not as soon as the changes occur."
Updating isn't as hard as it seems. The key, maintains Higgins, is to stay on top of changes within the company. "You have to have everybody in the company on board," he says.
Perform routine exercises
Practice. Practice. Practice.
Higgins says that can't be reinforced enough. At Roadway, he plans two exercises each year-mock disasters where the employees and management follow the business recovery plan from start to finish.
"We need to know what procedures need to be fixed," says Higgins. "I don't want to make the mistakes twice." And it's better to make the mistakes in a controlled, nonemergency environment than during the real thing.
Exercises are also the place where other issues that nobody had prepared for come to the surface. "Things happen all the time," Higgins says. "The entire thing hinges on sitting down and being prepared, making decisions before a state of disaster. Because when once disaster hits, chaos reigns."
The disaster experts
Michael Higgins, business recovery coordinator at Roadway Express, has been involved in business recovery for more than 10 years at three companies. To call him a major proponent of preparedness would be an understatement. In fact, his e-mail tagline reads "Be prepared."
Over the last five years, Higgins has also been an active member of BICEPP-the Business and Industry Council for Emergency Planning and Preparedness. "They're an excellent resource for helping business owners develop plans," he says. "They deal with every aspect of the process and help put you in touch with the people you'll need if there's a disaster."
BICEPP, a program of the American Red Cross, is focused on helping business owners stay in business after an emergency, says Kristin Warzocha, assistant director of public relations for the Red Cross' Greater Cleveland Chapter.
The organization puts on monthly seminars and workshops on topics such as restoration after smoke, fire and water damage; training disaster recovery teams; developing business recovery plans; and communications and data recovery. BICEPP also puts business owners in contact with the people who take charge during a disaster-fire and police departments, gas and electric companies and the phone company.