One of the most important investments small business owners can make is preparing for an emergency or a disaster. Review this guide and begin building your own small business emergency preparedness plan.
The effects that both natural and human-made disasters have on small businesses are staggering. According to the Federal Emergency Management Agency (FEMA), almost 40 percent of small businesses never re-open following a disaster. Having a written plan in place, detailing how to respond to this kind of event is crucial, but small business emergency preparedness should also include educating yourself on available resources that will aid in your recovery. Take a closer look at how to prepare, plan, and recover from an emergency or disaster as a small business.
What is a Small Business Emergency Preparedness Plan and Why Do You Need One?
Both in life and in business, it’s impossible to predict a disaster. However, failing to plan for a disaster only increases the chance that you and your business are going to have a harder time recovering when the unthinkable happens. Creating a small business emergency plan requires an investment of time and resources, but the work is well worth the peace of gained and knowledge of a more likely recovery for your business if something does happen.
The best place to begin creating an emergency preparedness plan is writing it down. We’ll discuss which specific sections should be included, but you can start by forming a committee of knowledgeable employees from different areas of your business, if you have employees. This committee is crucial for getting company-wide buy in of your plan and a holistic view of operations. Depending on the kind of disaster that occurs, you’ll want to know the minimum staffing, operational, and technology requirements your business needs to stay functional – exactly why diverse opinions are so important to building your plan.
Once your plan is in place, it’s important to make sure the information stays relevant and up-to-date. Task your committee with reviewing the plan each year to make sure everything is accurate. Also, if you go through a major organizational shift or move locations, don’t wait to update the plan. As a busy organization, it’s easy to let non-emergency administrative tasks, such as keeping an up-to-date preparedness plan, fall on the backburner. But when there is an actual emergency or disaster, you need a high-functioning, easily accessible plan you can rely on.
Small Business Emergency Plan Template
What do we mean when we’re talking about natural and human-made disasters? Unfortunately, the list is long — earthquakes, fires, floods, terrorist attacks, tornados — and it’s impossible to prepare perfectly for each one. However, you know your geographical area and what’s most likely to occur, so those are the areas where you should put your most time and energy into. Some emergency planning includes preparing for less dramatic events, such as taking logical steps to prepare for more likely occurrences such as a break-room fire or burst pipe.
Use this checklist to begin building your small business emergency preparedness plan.
Your continuity planning section is your plan to stay in business. Take stock of how your business operates and what minimum resources need to be available to stay operational. For example, can most of your employees work from home during a snowstorm or is it essential for someone to be at your office or storefront? This part of your plan should also include your location and where you’ll plan to work from if that location is no longer available.
Create an easily accessible list of which agencies to contact in case of an emergency. Obviously for fires, medical emergencies, etc., the main contact will be 911, but you should include the number for your insurance company and depending on the nature of your business, possibly the gas company, water company, and so on.
It’s also wise to have the numbers of your suppliers and vendors handy in case you need to adjust an order or arrange and alternate delivery place. You should also have alternate supplier numbers available in case your main contacts have also been affected by a disaster.
Emergency Precaution Checklist
There are precautions you can take to lessen the burden of some emergencies, such as small in-office fires, or even larger ones such as earthquakes. As your team works to improve safety around the office for these types of events, keep track of what you’ve done so it’s readily available for anyone to review, and so you can audit for anything you might have missed. Examples include:
- Fire safety – Installing smoke detectors, fire extinguishers (with a map of where they are located), and automatic sprinklers.
- Utilities – Purchasing a generator, backup lights, flashlights, etc.
- Earthquake – Anchoring heavy furniture or equipment to a wall, installing latches to keep drawers from flying open, and securing your hot water heater.
Create and practice an evacuation plan from your building. Especially if you’re in a multi-office complex or share spaces with neighbors, coordinate with those nearby businesses to ensure everyone is on the same page. Your plan should include someone to guide others in case of confusion — usually a designated “safety officer” who is also a member of the emergency preparedness committee.
It’s a good idea to designate a secure gathering place in the event it’s not safe to leave your office during a disaster. This may or may not be the same location you designate in the case of a lock-down.
Prepare a disaster kit, keep an updated list of what you have on hand, and store your kit somewhere easily accessible from your shelter-in-place location. You can choose someone from your committee to make sure all supplies in the kit stay usable and up-to-date. You can also encourage employees to keep personal emergency kits at the office or in their cars — provided that nothing in their pack would cause any potential safety issues. It, of course, makes sense to include things like water, canned food, a tool kit, and batteries in your office emergency preparedness kit, but here are some additional items you may not have considered:
- Petty cash
- Dust masks
- Cleaning supplies
- Toilet paper
- Duct tape
- Work gloves
- Large garbage bags and twist ties
Every business should have a first aid kit and AED machine on site in case of medical emergencies. It’s also wise to offer first aid and CPR classes to your employees to be sure there’s always someone available who know how to perform these crucial, life-saving tasks. If you or someone in your office is interested in additional training in case of a disaster, there are also wilderness-style survival classes available across the country.
Crisis Communication Plan
During any kind of emergency, safety should be your number one concern. An essential building block of safety is communication. A good place to start when building your emergency preparedness communication plan is by listing the potential audiences you’ll need to communicate with. These audience personas might include: your employees and their families, customers, suppliers, vendors, local businesses, and more. Your communication plan should include who will reach out to each audience and by what means (phone, email, etc.).
Record who is in charge of backing up your mission-critical data and where it’s being stored. If your information is stored on a physical server, rather than in the cloud, it’s wise to consider storing a copy of your data in a secure off-site location. If your data doesn’t automatically back itself up, be sure to have a regular back-up schedule in place – ideally daily or at least weekly.
The best way to prepare and plan for a cyber attack disaster is prevention. There are a number of best practices included keeping software up-to-date, using multi-step logins, and requiring complex passwords. Include a record in your preparedness plan of the steps your business is taking to stay safe but also include the actions you’ll take if there is a security breach. You can limit the damage of a cyber security attack by keeping an eye out for suspicious activity, updating your passwords, and cleaning your devices. After an attack occurs, you should file a report with the Office of the Inspector General. And depending on what information was compromised, you may need to work with a third-party agency to help protect your, your client’s, or your employee’s personal data.
Small Business Emergency Loans
Your small business emergency preparedness plan is intended to keep you and your employees safe, as well as to mitigate risk to the business as much as possible in the event of a disaster or emergency. However, if a disaster does occur there are resources available to help you build your business back up. The first step is to reach out to FEMA, which can help provide funding for shelter, clothing, and basic necessities following a disaster.
If your business suffered damage or loss due to a declared disaster (such as a hurricane, tornado, earthquake, wildfire, etc.), you may also be able to get assistance funding through the Small Business Administration (SBA). The SBA offers low-interest loans to business owners to help cover the costs of repairing damages to real estate, personal property, inventory, machinery and equipment, and to help recoup economic injury.
Unlike most SBA loans, which are processed and funded through a third-party financial institution, you can apply directly for disaster assistance through the SBA website, here. However, before applying, it’s wise take a look at the different kind of disaster funding offered through the SBA, to see if you’re a potential fit.
SBA disaster assistance loans include:
- Home and Property Disaster Loans – Homeowners may apply for up to $200,000 to replace or repair their primary residence and renters may apply for up to $40,000 to cover damage to personal property. Applicants do not need to be business owners.
- Economic Injury Loans – Small business owners, small agricultural co-ops, and nonprofits can apply for up to $2 million to meet financial obligations and operating expenses that could have otherwise been met if the disaster had not occurred.
- Military Reservist Economic Injury Loan – This type of loan provides up to $2 million in funding to help small businesses meet necessary operating expenses they’re unable to cover due to an essential employee being called into duty as a military reservist.
- Farm Emergency Loans – In partnership with the SBA, the United States Department of Agriculture offers a number of programs to help farmers cover losses after a declared disaster.
Additional Steps for Small Business Emergency Preparedness
Beyond your standard business insurance, which can help cover some, but not all, of your losses in the case of a disaster or emergency, there are additional types of insurance you may want to consider based on your type of business.
Business Interruption Insurance
You might experience a local emergency such as a snowstorm that doesn’t qualify as a declared disaster. However, when weather is bad enough, it may be tough for employees to get to the office or clients to get to your business, making it near impossible to keep your doors open until the weather passes. Unexpected losses to operating revenue are not feasible for many small businesses. Business interruption insurance is designed to help businesses with lost revenue in the case of certain events, which typically aren’t covered in full by general liability policies.
Key Employee Insurance
Many small businesses are heavily dependent on a few key employees — such as the founder(s), CEO, or president. If something happened to that person or persons unexpectedly, the business would struggle to survive. Key employee insurance helps businesses prepare for this kind of emergency by making the business the beneficiary on a life insurance policy for the key employee. So that person passes away unexpectedly, the company has a financial buffer.
Hopefully your business will never experience the trauma of a natural or human-made disaster or even an in-office emergency. However, having a small business emergency preparedness plan in place is the best way to protect you, your business, and your employees if the worst does occur. Take the necessary steps to create a thoughtfully written plan, have the necessary supplies on hand, and consider purchasing additional insurance policies that can help keep your company afloat.