What if ...
What if hackers break into your computer system and delete vital customer and employee data?
What if an unexpected ice storm knocks out power to your office for a week?
What if, late at night, an electrical fire destroys the contents of your office?
What if an F5 tornado, with winds blowing more than 300 mph, tears across your state, leaving your employees homeless?
What if the last two active hurricane seasons weren't anomalies, but the pattern for years to come? Could your business survive being hit by a wall of water and wind?
If your answer to these questions is, “I don't know,” you're not alone. Many small businesses lack plans to weather—and recover from—a disaster, whether it's natural or man-made, unique to their business or affecting an entire region.
The consequences of being unprepared can be dire. As many as 40 percent of small businesses never recover from a disaster, and many more spend months clawing their way back to profitability. Similar to the emotions many people experience while writing a will, planning for a disaster that could cripple your business can seem daunting—even a bit morbid. But the process doesn't have to be as difficult as some may think, and experts say strong disaster preparedness can even improve small businesses' day-to-day operations.
Before the Storm Researchers at the National Federation of Independent Business (NFIB) discovered in the summer of 2004 that many small businesses were unprepared for the spate of hurricanes that hit Florida. That prompted the organization to create a survey specific to the issue of disaster preparedness. The results showed that small businesses anywhere in the country were vulnerable to disasters, and that those events—both natural and man-made, such as computer viruses—“are a lot more common than we thought,” says William Dennis, senior research fellow at the NFIB Research Foundation. In fact, 30 percent of respondents said they'd been closed for 24 hours or more within the previous three years due to a natural disaster.
Often, it's tough to see the need for a disaster plan, particularly if a business owner is already stretched thin with daily operations and hasn't been negatively affected by a disaster in the past. Charlie Sidoti, vice president of risk control services for OneBeacon Insurance, says that many business owners' estimates for the time and effort it takes to recover from a disaster are “wildly optimistic.”
Many companies are stymied in the disaster preparedness process because they don't know where to begin or whom to ask for help. But since Sept. 11—which affected nearly every business nationwide in one way or another—those questions have been easier to answer. “A whole industry has grown and expanded,” says Carol Chastang, a spokeswoman for the federal Small Business Administration (SBA). “[Disaster planning] is not as daunting, and not as expensive, as one would think. The real expense will occur if you don't do anything and you lose your business.”