Articles
The Best Time for a Business Disaster Plan? Before the Disaster
Happens
Before 9/11 and Hurricane Katrina, the concept of a business
“disaster plan” was envisioned mainly in terms of weather- or
fire-related disasters and heavy on the notion of evacuation.
The concept of business risk today is so much wider - legal threats
from inside and outside the company, computer-related losses,
regulatory threats, and of course, the potential of human and
facility losses due to natural disasters or the possibility of
terrorism. There really is no one-size-fits-all approach to dealing
with business risk - variables like your business size and structure
and personal issues like your age, health and your time to retirement
also factor into what should be a very customized risk management
plan.
If you are starting a business or already own or co-own a company,
the first steps in creating a disaster plan should involve separate
visits to tax, insurance and qualified financial advisers. A CERTIFIED
FINANCIAL PLANNER™ professional with specific expertise in helping
business owners plan their finances is a good place to start.
Here are some general issues you should consider in developing
an overall business disaster plan:
Your plan depends in large part on your industry and business
structure. A three-person law partnership may have a completely
different risk profile than a sole proprietor working out of his
attic or the owner of a body shop. Whether you use expensive equipment
in your business or if all you produce is valuable ideas on paper,
you need to take specific steps to protect the value of your business
assets in tandem with your personal finances. This process should
start with a financial review to review how to protect your home,
your income stream and your retirement savings if particular scenarios
happen.
Develop a “what if” list. Be as imaginative and as negative
as possible about this. Consider every possible event that could
hurt you or your business - what hurts one automatically hurts
the other. The first question - what if you died or became disabled
tomorrow? Others might refer to some specific physical plant or
computer risks as well as employee or customer risks that could
affect your future operations. A good way to make the list is
to draw a line down the middle. On the left side, list every possible
risk, while writing every possible remedy for those risks on the
right side. Prepare this list before you meet with experts.
Protect yourself first. If you’re a good boss, you care
about your employees and your customers, and we’ll get to them
in a moment. But the first step in a business disaster plan is
to review your list of worst-case scenarios and review how you
would protect your home, your health, your retirement, your kids’
education and your estate priorities first. If your business fails
for any reason, all of those critical necessities could be jeopardized.
Make sure you have appropriate life and disability insurance coverage
in addition to a current estate plan.
Protect your employees second. In a natural or man-made
disaster, lives can be lost. But if you’re closed for weeks and
months, key employees may leave and that might be a greater long-term
danger to your company. Talk to your insurance company about every
physical and employment risk your staff could face in a disaster
and see what safety nets are available.
Protect your customers third. If you faced a lengthy business
interruption, how would you serve the customers who are depending
on you? Are there specific customer service and inventory procedures
in place to keep them informed, supplied and most important, loyal
once you’re up and running again? Do you have options for alternate
office and production space as well as resources for temporary
workers?
Protect your information. You don’t have to be some high-tech
firm to understand the value of proprietary information that keeps
your company running. From proprietary databases and research
to customer credit information, this data is critical fuel for
your business. What’s to keep a burglar from stealing your computers
and taking all your valuable financial, inventory and customer
data with them? Better yet, what’s to keep a computer hacker from
stealing the information and leaving the machines behind? Data
security and backup procedures are increasingly important as disaster-planning
priorities. Get help finding the protective measures that fit
your industry.
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