Who Needs a Disaster Recovery Plan? You Do!

Last Updated Jul 9, 2010 7:02 PM EDT

Big, disruptive events like the BP oil spill, Hurricane Katrina and the California wildfires make the news, but it's more often the smaller, unexpected disasters that wreck havoc on your company's ability to function. The Small Business Administration and Agility Recovery Solutions, a Charlotte NC disaster recover company, recently launched an educational website called Prepare My Business, which offers resources to help small business owners recover from disasters. With a nasty hurricane season in the forecast, I was eager to speak with Agility's CEO Bob Boyd for some tips on disaster preparedness for small companies. Here's his advice:
Assess your risk. "There's nothing you can do if your building is on an earthquake fault line," notes Boyd, "but you can develop a plan for what you'd do if there's an earthquake." Ditto for floods, hurricanes, fires, and tornadoes. But it's not all about geography and natural disasters. If you're situated near a building that may be a high-risk terrorist target, you should also take that into account when assessing your risk.

Review your insurance coverage. Boyd suggests that you sit down with your insurance agent to review your coverage. "Get business interruption insurance, which often isn't expensive," he says. That will cover any revenue losses you might experience if your company is forced to cease operations. You should also consider extra expense insurance, which covers any additional costs you may incur as a result of disaster, such as moving to a temporary office. Both will be separate parts of your existing policy.

Determine your critical business functions. "Look at your business and figure out what functions would need to be restored first in the event of a disaster," suggests Boyd. Say, for example, you absolutely need accounts receivable to be up and running immediately. If there's just one person in your company who handles AR, then you had better cross-train another staff member to do the job in the event of an emergency. Take an inventory of your staff's skills and determine whose expertise you'll need most in a disaster; make sure that none of your critical business functions are in the hands of a single individual. Also, think ahead of time about your human resources policies. "Last year, people were worried about H1N1, and losing 40% of their workforce," says Boyd. "If you send a sick person home, is that sick leave, paid leave, or a vacation day? You don't want to make decisions like that in the heat of a disaster."

Develop a communications strategy. "Communication is vital in a disaster," says Boyd. "When you see a crisis developing, who is going to communicate with who and how will they communicate?" asks Boyd. You might use a phone tree, an alert notification system, an 800 number, or even social networking sites. Make sure you know who will be assigned to communicate with employees, customers, and the media, if necessary. "If you don't communicate right away, human nature dictates that people will jump to the worst conclusions," says Boyd.

Back up your data. "Having access to your data after an interruption is critical," says Body. Sure, most small businesses have a process to back up data but the problem is that they don't test it. "They're backing up to tape, but hard drives can fail, and tape drives can fail," he says. So test your system frequently. Also consider that if you're backing up your data remotely at a third party site that's situated in the same city as your company, your data still may at risk in the event of a disaster. Consider an electronic backup service that stores the contents of your hard drive on line.

Test Your Plan. "Testing a plan is really important," says Boyd. "When you answer all the questions to set up the plan, you make a lot of assumptions." It's only when the plan is executed that you might find out, for example, that your IT person can rebuild an Intel server but is befuddled by a Hewlett Packard or Dell system. "Finding that out on a test is really valuable," says Boyd. So do a run through of your disaster recovery plan, note what works and what needs to be tweaked, and adjust the plan accordingly with input from your staff.

Does your company have a disaster recovery plan? Share your best advice with your fellow entrepreneurs.

Natural disaster image courtesy of Flickr user Verymuchalive, CC 2.0