No one likes to think about things going wrong, but when you run your own business, it's something you have to consider. How can your business prepare for an unforeseen challenge? Here are 11 steps you can take today to prepare.
No one likes to think about things going wrong, but when you run your own business, you just can't ignore the risk. Chances are, every business, at one point or another, will have to deal with unexpected challenges, difficulties or even disasters. What matters is that you're ready to deal with them.
How can businesses prepare for unforeseen challenges? It's impossible to think of and deal with every potential business threat, but there are steps you can take to protect yourself and your business from the financial, natural or human difficulties that could arise.
What could happen to my business?
Unforeseen disasters are, by definition, unexpected, but the more you consider every possibility in advance, the less likely you are to be taken by surprise. Take the time to think about what could go wrong and prepare a risk management plan that outlines how you’ll deal with each possibility. The more prepared you are, the better you'll be able to respond.
Here are some of the scenarios you should think about:
- A natural disaster, such as a hurricane, tornado, earthquake, wildfire, floods, etc.
- A man-made crisis, such as a terrorism attack, mass shooting or lockdown in your area
- The sudden death or loss of a key senior executive, either yourself or someone else
- Theft of your vital business data
- A scandal or social media crisis that ruins your business’ reputation
- Equipment failure, a plumbing failure, power outage or some other event that leaves you unable to use your business equipment or premises
- An expensive lawsuit
- A financial disaster elsewhere in your business chain which leaves you waiting indefinitely for payment from your clients
- A strike or natural disaster in the region that produces your goods, leaving you stranded without your product
11 steps to help you prepare for an unforeseen disaster
It’s impossible to prepare for everything, but here are 11 steps to take to proactively protect your business against the most likely scenarios.
1. Assess risk. The very first step is to think about everything that could possibly go wrong in your business. That includes the risk of natural disaster: Is your business located in an earthquake or hurricane zone? Are you close to an area susceptible to wildfires or floods? Do you deal in goods which are highly perishable? Is your equipment well maintained? Does your business use confidential data which could cause a lot of damage if it were leaked or compromised in any way?
2. Analyze key business functions. Although all the areas of your business are important, some are truly non-negotiable. Establish which are the key roles or tasks that must continue in order to keep your business on its feet and which can be allowed to fall by the wayside for a short period of time.
3. Prepare your emergency response. Running a safe work environment means buying and maintaining safety equipment, marking emergency escape routes and planning your immediate response in the case of fire, flood, lockdown, power failure or other potential disaster. Rehearse your emergency response plan once or twice a year with your entire staff.
4. Back up everything. Since it's likely that all your business data and business processes are digitized, you should never rely on just one server or just one copy of your most important business documents and information. Back up vital data to cloud storage and diversify the location of your servers (if relevant) so that your entire business information isn't lost if there's a regional power outage or a flood wipes out the local servers.
5. Don't rely on just one individual. If only one person knows all the passwords or how to access the emergency internet server, then if that person isn't present, the whole business will fall apart. Make sure that at least two people know every password. In the same vein, try to have at least one other trusted person who knows how to do the key elements of someone else's role. If that's impossible, at least ensure that your most important business processes are fully documented so that someone else can take over in a pinch.
6. Get the right insurance. Having good business insurance coverage isn't just about buying enough insurance but about choosing the right policies for your business needs. Make sure that your general liability insurance policy is robust, and consider other policies like specific disaster coverage, cyber liability insurance or equipment insurance. Consult an insurance provider that’s experienced in providing policies for small businesses.
7. Create an emergency fund. Your emergency fund should add up to enough to cover your core business expenses for six months so you have a safety net whether your cash flow hits a snag or a hurricane hits your office.
8. Maintain up to date contact information. Whether you need to get in touch at midnight to tell everyone not to come to work the next day, or make sure that everybody got home safely after a huge storm, you must be able to contact all your employees at any time. Keep your records up to date and somewhere accessible, even if the internet is down, you’re stuck on a train or you have to evacuate the building.
9. Plan for remote communication. Set up remote working capabilities and establish secure and reliable ways to communicate with all your employees long in advance so you can keep the business running even if all your employees are geographically scattered or can't come into the office.
10. Set up a disaster chain of command. Nothing makes a difficult situation worse than having no one to turn to. Everyone should know who to contact if something goes wrong and who makes decisions in an emergency. Having a clear chain of command saves a crisis turning into a catastrophe.
11. Know what resources you can draw on. Investigate the municipal, state or federal resources that are available for businesses after a natural or financial disaster, such as state-wide disaster recovery funds, state benefits such as unemployment benefits for your workers while your business is closed, and low-interest loans from the SBA for property damage after a natural disaster.