Disasters can and do strike unexpectedly. When they do, the unprepared small business can be significantly impacted. In fact, businesses of all sizes need to engage in strategic and smart planning to ensure they are as agile and robust as possible to survive.
Whether it’s on resources, financial or otherwise, or operational flexibility, fallouts from disaster can range in impact and severity, which is why ensuring that you are in as strong a position as possible is critical.
Why Disaster Planning is Crucial
Disaster planning for a business is about preparing for worst-case scenarios. It’s not a foolproof way of ensuring ongoing business viability but it is about protecting your business as much as you can and increasing resilience in the face of adversity.
Disasters range in type and scope, but the better your planning is the better you’ll be able to weather the storm.
Examples of Market and Economic Disasters
Natural Disasters
Natural disasters are the least predictable and controllable. Hurricanes, earthquakes, floods and wildfires are not just devastating in the loss of life and infrastructure damage–they can severely disrupt businesses too.
You don’t have to be directly affected either: Supply chains and levels of demand can fluctuate wildly during and in the aftermath of a disaster.
Economic Crises
Market turmoil, economic recessions and financial crises are all stark reminders of economic volatility and uncertainty inherent in business.
Market downturns can cause changes in supply chains, customer spending, employee availability and retention, investor confidence and even business operations.
Geopolitical Risk
Geopolitics around the world has a rippling effect on society, culture and business. Changes in trade agreements or regulations can directly impact your business depending on the industry.
Even second and third order effects from geopolitical instability can be felt by businesses of all sizes.
Industry/Business-specific Risk
Disasters can also come in the form of industry or business specific risk. A recall of a product can be highly disruptive operationally, financially and reputationally for a company. Disasters of this kind may not even be your fault, for example a cybersecurity threat.
Industry revelations which may not have anything directly to do with your business can cause customer sentiment to shift and thus spending to change. Weathering these disasters is not just about investing in public relations, but about ensuring an internal flexibility and resilience that’s up to scratch.
10 Disaster Planning Tips for Small Businesses:
1. Conduct risk assessments
It is impossible to adequately plan for a disaster without understanding the risks and the potential implications for your business.
Conducting a risk assessment may require time and financial investment but you will be identifying potential hazards in the market, vulnerabilities in your company and gaps in your business’s resilience.
From here you will have the data and insight to progress to the next stage of planning of disasters of the natural, cyber or economic variety.
2. Develop a business continuity plan
Armed with your risk assessments, you can develop a plan for ensuring the ongoing continuity of your business in the face of disaster.
The plan should be as comprehensive as possible and outline procedures and plans of action to ensure ongoing essential functions are maintained, communications distributed and operations considered during and after the disaster.
3. Back up data, documentation and storage
Once upon a time the greatest risk to your business’s data was a warehouse fire. But nowadays, the world is increasingly digital.
Investing in sufficient backup data and digital documentation storage will keep your critical information safe and accessible in the case of both physical damage as well as digital system failure.
4. Review your insurance coverage
Insurance is not the most enjoyable thing in the world, but having secure and adequate coverage can be the difference between life and death for a business in the face of a disaster.
Insurance can be complicated and different covers may include any combination of things such as property damage, business interruption, liability or cyber threats. Take the time to ensure you have the right cover for you.
5. Establish emergency communication protocols
Communication is key in the face of a disaster. Make sure you have developed communication protocols and contact lists for employees, customers, suppliers and stakeholders.
With the systems and channels in place from the outset, you can ensure timely updates and quick responses during emergencies.
6. Physical evacuation plans
This disaster planning is not business-specific but it is important. Establishing evacuation routes and assembly points should be widely communicated and made known.
Safety protocols, equipment checks and ongoing training can help avoid human tragedy in the event of a natural disaster or physical emergency.
7. Train your employees
Training employees is critical for disaster preparedness beyond just physical response procedures.
With a workforce that understands roles and responsibilities during times of either business disruption or sustained disasters, such as economic downturns, it can be easier and more efficient to ensure ongoing business operations thanks to the reduced levels of chaos.
8. Diversify and build resilience
Diversification in your business offerings and capabilities will allow your business to pivot when supply or demand significantly changes as a result of a disaster.
Building resilience ensures that you have established alternative sources of funding for working capital and alternative supply chain options to minimise the likelihood and scope of any business interruption.
9. Invest in cybersecurity
Cybersecurity is such a prevalent and growing risk in the modern world it merits its own tip. Robust cybersecurity measures by a reputable security team will protect your digital assets, systems, confidential information, customer data and finances from attacks.
While many of the tips on this list can be implemented in some way by you and your team, when it comes to cybersecurity, it’s critical you rely on the experts in the field.
10. Review and update regularly
Businesses are dynamic and disasters are unpredictable. So continuously evaluate your plans and review your procedures to ensure they are still fit-for-purpose and relevant.
Update your disaster preparedness and response plans whenever there are perceived changes in risks, identified changes in regulations, new technologies, or modified business operational needs.
Improve your business’s financial resilience with ScotPac
It’s hard to imagine a disaster befalling us before it happens but it’s always better to be safe than sorry.
Disaster planning is critical in helping small businesses survive and even thrive in an unpredictable world.
Here at ScotPac, we specialise in helping small and medium sized businesses access the financial solutions they need to build in adaptability and flexibility in their operations.
