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You never know when a disaster might strike your business, but this comprehensive disaster preparedness guide can help you successfully navigate one.
Running a small business is hard enough without having to rebuild after a natural disaster. Many businesses worldwide make the mistake of not preparing for disasters properly and are left to suffer the costly consequences. However, small business disaster preparedness planning is easier than you might think. We scoured the internet and interviewed risk management experts to bring you the best tips and resources so that you can finally check “disaster plan” off your to-do list.
What does good disaster preparedness mean? We asked Frank Russo, managing director of commercial risk advisory firm Imperium Consulting Group. He told us an impressive story.
A large consumer goods retailer calls a standing meeting after every major natural disaster — even ones with no effect on their business, Russo shared. They discuss what they would have done if the disaster had happened at one of their locations. Russo explained that the company builds these brainstorming sessions into a regular “catastrophe gaming process” where employees act out disaster situations. The real-life stress tests identify weak points — for example, a door that can’t be locked because the facilities person is on vacation.
In 2008, Hurricane Ike caused a significant loss for this company in Houston. Still, it recovered quickly thanks to all its preparation — so quickly that Russo says it saw higher-than-normal sales after the hurricane. Why? It was one of the only businesses open in the area.
Many businesses faced disaster-preparedness crises in 2020 when the World Health Organization recognized the spread of COVID-19 as a pandemic — beginning a year-long health and economic struggle. The pandemic impacted businesses all over the world. While many shuttered their doors for good, some managed to survive and others thrived. The companies that were prepared and able to pivot quickly were likelier to remain in business.
Studies show that more than 40 percent of small businesses close permanently after a disaster. Among the businesses that reopen, another 25 percent fail within a year.
A good disaster plan means fewer days out of business, better communication with customers and a better insurance company settlement. Add it all up and your plan could be the reason your small business beats the odds.
Look, we know you have a long to-do list. But trustworthy government resources developed over the past few years have made creating a disaster plan much easier than you’d think. As Russo says, “Even a basic plan is better than no plan.”
Here are four key steps involved in creating a disaster preparedness strategy.
Which of these large-scale disasters is a threat to your business?
If you have a single location, you already know the answer. But what about any additional areas that are critical to your business’s success? Consider additional business locations, where computer servers are located, where goods are stored and even areas where your employees commute from or work remotely. This risk assessment table from the Federal Emergency Management Agency (FEMA) will help.
If you have various business insurance types, ensure you’re covered for disasters that could hurt you. Your agent can tell you what coverage you need.
One thing you can do in the next 15 minutes to make your business more prepared is review one of the United States Small Business Administration (SBA) and Agility Recovery checklists below.
The key to developing any good plan is to put one person in charge. This is your disaster plan coordinator. They decide how to develop the plan but you, as the business owner or manager, should be clear about what they must include. Here are some questions to consider when you assign this critical task.
Does the plan coordinator need a supporting committee?
If your business is large enough to have separate departments, the answer is probably yes. Each internal department will have its own unique assets, systems and requirements and you don’t want an outsider guessing what those might be.
Next, consider the entire scope of your operations. Do you ship hundreds of packages daily? If so, add a shipping company staff member to the supporting committee. Any vendor, supplier or government agency you use daily should be represented on your committee. They can explain their own disaster preparedness planning and how that will affect your post-disaster operations.
What are the minimum elements your plan requires?
Disaster plans aim to ensure the well-being of your employees, the stability of your location and your ability to keep the business running. You may need a 100-page guide or a simple series of reference sheets. Either way, your planning coordinator must understand the scope of your plan before they can properly develop it.
Your plan must address the following three goals, at the very least:
These are the minimum viable elements of a disaster plan:
What special circumstances does your plan need to address?
Direct your plan coordinator to address any special circumstances related to your employees, your environment or your business operations. Here are some examples:
If you have business insurance, this is an excellent time to ask your insurance broker or agent any questions you have. Do you know the monthly premium you pay? Part of what you’re paying for is access to your insurer’s risk management experts. They have seen the aftermath of disasters from coast to coast and can help you decide what to prioritize in your disaster planning.
Here are some other resources to help you build out your plan requirements:
Your disaster plan coordinator, their supporting committee and you, as the business owner or manager, should approve the final plan — but your work doesn’t stop there.
A disaster plan isn’t something you dust off when the red warning stripe comes across your TV screen. You’ll have action items as soon as your plan is complete. The idea is to identify things you can do now so you won’t have to do them in the days or hours before a natural disaster.
Here are a few examples.
Evacuation routes and wardens
Employees need to know where to go in case of an evacuation. Supply evacuation maps and post them in visible areas. Designate one or more individuals to ensure everyone gets out of the building safely — these folks are called evacuation wardens. OSHA recommends you designate one warden for every 20 employees.
Disaster communications materials
Approve emergency communications for employees, customers, suppliers and other stakeholders. Write these now, with fill-in-the-blanks to cover disaster scenarios. Ensure people who need access have it both at work and home. Don’t be like the state governor who couldn’t tweet because he forgot his password.
Employee go bag
“In the event of a weather emergency, employee safety needs to be the No. 1 priority,” said Peter Duncanson, disaster preparedness and recovery expert at ServiceMaster Restore. “Having a preparedness kit on hand, stocked with nonperishable food, clean water, first-aid supplies and emergency tools like a hand-crank radio and backup batteries will all serve as valuable resources, especially if you have to wait out the storm for an extended period of time.”
When you plan the items to include in an employee go bag, consider how far employees travel to your work location and that roads may be rendered impassable. This Red Cross quiz can help you decide what to include.
Training
Every employee in your organization has a role during an emergency — even if it’s getting themselves out of the building safely. Your plan should identify which employees are responsible for which roles.
Businesses of all sizes should have a person or team responsible for business continuity and crisis communications. In a small company, this will be you, the owner:
Here’s a sample training scheme:
In a natural disaster, you may be at the mercy of your least-prepared neighbor. The unsecured restaurant patio umbrella that comes flying through your window or the hazardous materials that floodwaters carry into your parking lot might not be a threat if you were in charge of them, but you aren’t. And the longer your community takes to get back on its feet, the longer you’re likely to wait for business to ramp up again.
Communities often come together after a disaster, but it would be even better if they did so before the disaster happened.
Consider sharing your disaster preparedness plan to encourage other business owners and raise your profile in the community. Promoting your disaster preparedness efforts helps in these areas:
Ready’s Business Emergency Preparedness Social Media Toolkit has sample messaging and graphics to work from. They’re a little dry, so challenge your marketing team to do better. They should relish the opportunity to talk about something other than your products.
Bennett’s Market & Deli is a neighborhood grocery in Atlanta’s Grant Park. In September 2017, Victoria Bennett and Claire Pearson had owned the store for five years without experiencing a single power outage. But as Hurricane Irma approached, they put their disaster plan into action.
They bought a generator and massive amounts of ice and collected coolers from neighbors. They moved all their backroom stock off the floor to protect it from flooding. They sent staff home, deciding to run the store themselves rather than risk employees’ safety.
Then, the power went out and it was time to get creative. With no way to run their credit card processors and cash registers and no light in the store, Bennett and Pearson were still able to sell beer, wine, bread and snacks using a cash bag and manual receipts.
“I think the neighborhood really appreciated that we were open,” Pearson said.
You never know how bad a disaster is going to be and you can’t control it. Maybe flooding would have forced Pearson and Bennett to evacuate. Maybe the power would’ve stayed on. But they were prepared, which let them pivot as the situation required. In the end, they formed a stronger bond with their customers.
Russo advises Fortune 100 corporations about disaster planning. We asked him, “What do you tell friends who own small businesses when they ask what they should do?”
“At a minimum, have an inventory of what your assets are and make sure it’s up to date,” Russo advised. That’s something you could knock off in less than an hour.
Once you’ve done that, consider following the steps above to create an actionable plan for your business.
“Have an updated planning review session once per year,” Russo recommended. “Ideally, every quarter.”
The best action you can take, says Russo, is to weave disaster preparedness into the fabric of your business like the company in Houston did.
The true indicator of your disaster plan’s strength will be your business not only surviving the disaster but thriving during the recovery.
The SBA and Agility Recovery provide comprehensive checklists of things you should do in the days before a disaster is likely to strike. Review the ones applicable to your business — you want to ensure you can do as much as possible. All checklists are printable PDFs, although some may need to be downloaded with a business email:
These 40- to 65-page documents are a good place to start. They are generic and broad because they are meant to work for many different types of businesses. However, they provide a solid framework focused on six factors: staff, surroundings, space, systems, structure and service: