Business Resource Center

8 Steps to an Effective Small Business Disaster Recovery Plan

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According to the U.S. Chamber of Commerce Foundation, just 17% of small businesses have an effective disaster continuity plan.

1. Assess your risks

Start your planning by assessing what risks are most likely to impact your business. Every business is vulnerable to different risks. Understand how potential factors, such as weather events or risks unique to your industry or location, could impact your business. Also consider that the factors that might affect your customers or suppliers could also constitute an emergency for your business.

2. Explore insurance options

Get familiar with what types of insurance policies your business needs. Take time to understand what is and isn't covered. Policies that include flood insurance or cybersecurity coverage might be smart steps, depending on your industry and location. Evaluate whether business interruption insurance, which provides coverage if your business has to close down temporarily due to a disaster, could be a smart step to help your business weather a storm.

3. Develop a record-keeping plan

Make a list of key business documents, including business licenses, insurance policies, identification, customer data, and tax records. Ensure that you have copies stored in at least two physical locations —and ideally an additional copy in an off-site secure digital backup stored in the cloud. Physical copies should be stored in a fireproof safe or bank box. Evaluate your IT needs during a disaster and ensure that critical data is being backed up offsite, in case servers or computers are damaged.

4. Install and regularly test emergency systems

When you have a physical location, it's important that your emergency solutions are installed, functioning properly, and regularly tested. These include but aren't limited to smoke detectors, sprinklers, CO2 detectors, and failsafe protections such as generators.

5. Assemble on-site emergency kits

Do you have emergency supplies on hand in case employees or customers are stranded in your location during a disaster? Emergency kits should include first-aid kits and supplies, non-perishable food, bottled water, and equipment like flashlights and a radio.

6. Develop communications plans

Create a communications plan that details who should be notified in case of an emergency. Collect and centralize all key contact information, and verify the information at least quarterly to ensure that it's always current. Your contacts should include employees, emergency contacts, insurance brokers, legal counsel, key customers, lenders, and other resources. Don't forget to use accessible online channels (such as social media, websites, and blogs) to communicate opening and closure dates.

7. Create policies for closures and remote work

Determine policies for closures in advance. For example, if the school district where your office is located closes due to weather, that might be your standard guideline as well. Provide employees and customers with an easy-to-check option, such as a prerecorded line or a social media account, that will be updated with closure information.

8. Assess business continuity plans

If your key locations need to be closed due to a weather event or other disaster, what essential business processes or services must continue? For example, if you offer a software solution to customers, uninterrupted access for users is a top priority. By outlining these critical business functions, you can plan for the personnel, space, and other resources needed to keep these up and running in the event of a disaster.

Thinking ahead and developing a disaster preparedness plan can mean the difference between successfully making it through an emergency and missing critical steps that put your business at risk. A clear emergency management plan can help you weather any storm. Have you recently gone through a disaster? Learn more about getting back to business as quickly as possible.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Federal Emergency Management Agency, “Make Your Business Resilient," updated April 19, 2019, accessed February 15, 2020. Back
  2. U.S. Chamber of Commerce Foundation, “6 Starter Tips to Withstand Dangers to Small Businesses," published March 22, 2019, access February 16, 2020. Back