You have worked hard to build your company from the ground up, spending your savings and maxing out your resources, not to mention the time spent becoming a small business owner. While you may have focused much of that time and money on forming a successful business that is running smoothly, events can occur that are out of your control and can negatively affect your business. If you haven’t prepared for a potential disaster, now is the time to act. In fact, according to the American Red Cross, 40% of small businesses that are hit with a major disaster such as a flood, tornado, or earthquake, will not re-open their doors. Having a complete disaster plan is crucial for protecting your business assets and keeping your company afloat.
Here are five reasons a lack of small business disaster planning is risky:
1) Loss of critical data – One major concern associated with the lack of a business disaster plan is the potential loss of data. Events such as a natural disaster, fire, flood, theft, or even employee mistakes can lead to the loss of your company’s vital data. Backup your data off-site to secure it protected from the damage that might occur in your business dwelling. Choose a reputable backup service and trusted individual to maintain your backup data files and remember to continue backing up your data on a regular basis.
2) Loss of communication methods – In emergency disaster situations, communication methods are often one of the first things to go following power outages. This includes telephone and computer access which your employee most likely relies on constantly. Make arrangement for alternative communication, such as setting up a Skype account, or a VoIP system to be able to forward your business phone calls to other numbers, like a a mobile phone. Your company has other communication options thanks to modern technology. Have web-based email accounts and instant messaging features in place before a disaster occurs. Mobile devices enable you to maintain you contact lists and other important information if your servers go down during a disaster.
3) Downtime is lost money – One of the biggest risks to not having a complete disaster plan for your business is the potential loss of money, especially when you don’t have data backed up or communications alternatives in place. According to ECT News Network, the average business stands to loses $40,0000 for every hour of downtime.
4) Reputation damage – Aside from money being lost, your company may also discover a lack of reputation and credibility. Losing your servers and communications during a disaster means that your company website will go down — and your customers won’t be able to contact you, let alone make a purchase.
5) Required by law – Comprehensive disaster planning systems are required by law in some cases, depending on the type of business and data you have. As the business owner, you are responsible for understanding and following these laws and regulations. The following are the most common laws in place regarding disaster plans:
- Banking and financial institutions are required to have a disaster recovery plans due to the responsibility they hold for protecting funds of individuals and businesses.
- Stockbrokers are also required by law to have a disaster recovery plan, as stated by The National Association of Securities Dealers (NASD).
- Power utility companies are required by The Federal Energy Regulatory Commission (FERC) to have a disaster recovery plan in place. Telecommunications utility companies are advised to have a disaster plan but are not required by law.
- Health care providers, due to the sensitive nature of their work, are also required to have a disaster recovery plan.
Disaster planning is often looked over and passed by for other business details, but by planning for a potential disastrous event, you can protect your business and financial assets, and actually prevent your business from closing following one of these events.