How to … Prepare for a disaster

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As a business owner, you hope for a long and prosperous life for your company. But as you hope for the best, you must prepare for the worst to ensure your company’s survival in the event of total or partial disaster.
No one likes to think about the possibility of the company’s facilities being destroyed by a fire or the sudden death of a key employee. Every business can potentially be disrupted by a natural or man-made disaster, and while the thought is unpleasant, the scenarios must be considered.
First, create a comprehensive plan of what you will do in the event of a catastrophe. Share your plan with your employees. Their responses should be automatic in specific types of emergencies.
Make sure computer files are backed up on a regular basis. Once you figure out what information you need most, start a routine of backing up those files.
The backups should be stored at a remote location and should include copies of vital paper documents, such as signed contracts, financial documents and insurance policies. Because power outages and telephone problems can disrupt your business for an indeterminate amount of time, consider arranging for backup power and phone systems.
It’s also important to have a Plan B should an employee suddenly pass away, fall ill or hop a boat to Bora Bora with no notice.
A key component of your business should not be “all in someone’s head.” Create a system in which employees know what their colleagues do so they can cover for each other if necessary. Have department heads and their charges write detailed descriptions of their duties; make sure they note where important items, such as client contact lists, are kept.
Managers and owners should also prepare lists, and communicate to key employees exactly what they do. Update these profiles regularly and keep them in a safe place.
Catastrophes can befall other companies, too, so make sure you have a plan in place in case you’re suddenly without a key supplier or other business on which your company depends. Ask these companies about their disaster contingency plans and notify companies that rely on you of your plan to keep things going.
It pays to have a cash surplus to meet payroll and other vital obligations during a temporary crisis. Having an emergency line of credit in place can also help your business get back on its feet after a tough blow.
Check whether your insurance policy includes business interruption insurance, which provides money to pay fixed expenses and compensate you for lost income when you’re down because of property damage.
As your business grows, make sure your insurance coverage remains adequate; meet regularly with your insurance agent to review your coverage and determine whether an upgrade is in order.

The Checklist

Make sure important computer files are backed up on a regular basis. Store backup computer files and copies of vital paper documents off-site.
Create a system in which employees know what their colleagues do so they can cover for each other if necessary.
It pays to have a cash surplus so you can meet payroll and other vital obligations during a temporary crisis.
Check if your insurance policy includes business interruption insurance, which provides money to pay fixed expenses and compensate you for lost income when you’re down because of property damage.