Disaster Recovery Plans for Small Businesses

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In this article:

• What is a disaster recovery plan (DRP)?
• Key elements of a disaster recovery plan for small businesses
• How to create a disaster recovery plan
• What to do if disaster strikes your small business

Whether you live in tornado alley, a hurricane-prone area of the coast, or a region prone to wildfires or floods, disasters can strike at any time and small businesses are particularly vulnerable. Having a well-thought-out disaster recovery plan on hand can make all the difference between experiencing a temporary disruption and a permanent shutdown. In this article, we’ll lay out everything you need to know to create a disaster recovery plan for small businesses.

What is a Disaster Recovery Plan?

A disaster recovery plan (DRP) is exactly what it sounds like—a set of strategies and procedures that you prepare in advance to be ready for anything emergency that occurs. DRPs are essential for small businesses, as they can help you minimize downtime, reduce financial losses, and keep customers and employees safe. It can be essential whether you experience a natural disaster, or something that is manmade, like a cyberattack or system wide services outage.

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Key Elements of a Disaster Recovery Plan for Small Businesses

• Risk Assessment: What are the areas of risk most likely to affect your business? Don’t hold back here, you should be both realistic and imaginative.
• Business Impact Analysis: Once you’ve outlined the various disasters that could occur, outline how they could impact your business.
• Recovery Strategies: The next step is to figure out how your business can recover should one of the disasters you outlined should occur. You’ll need the same high level strategic planning that you use to grow your business in the first place.
• Emergency Response Plan: This is where things get practical. What are the first steps your team should take in the immediate wake of a disaster? Write them down and make them practical.
• Communication Plan: It’s not enough to have a plan, you need to clearly communicate it to staff before disasters occur, and in the unfortunate case of a disaster, be able to communicate to staff and customers.
• Backup and Data Protection: Your DRP needs to address things like data backup and protection. Should you experience a service interruption, how will you continue operations? Do you have a backup? Is your data safe? Be proactive about this important step.
• Training and Testing: Once your plan is created, you need to rehearse it and test it with your employees. Think “fire drill” but for whatever emergencies you think could potentially affect your company.
• Review and Update: A DRP is not a “once and done” process. You should plan to review and update it annually to make sure it is relevant to your operations and policies.

How to Create a Recovery Plan for Your Business

Step 1 – Conduct a Risk Assessment

Start by identifying relevant disasters that could affect your business, including natural disasters like floods, pandemics, hurricanes, earthquakes, and tornados, as well as human-caused events like cyberattacks, mass shootings, and supply chain disruptions. Create a risk matrix that organizes these possibilities by their likelihood of occurring and by the impact that they would have on your company.

Cost and Time: This step typically involves minimal cost but can take several days to weeks depending on the complexity of your business. It’s a great opportunity to bring your team together to brainstorm and discuss.

Step 2 – Perform a Business Impact Analysis (BIA)

A BIA builds on your risk matrix by helping you understand the potential effects of the most concerning disasters you identified. Say for example that you’re hit by a cyberattack. What critical business functions would be affected? How long could your company survive without them? Decide on a maximum allowable downtime for each core business function and set it as your target for your action plan.

Cost and Time: Conducting a BIA might involve some consultancy fees if external experts are hired. It generally takes a few weeks and should be updated annually.

Step 3 – Develop Recovery Strategies

Now that you know your maximum allowable downtime, create recovery strategies to help your company get back on its feet before the deadline. This could include alternate work locations, innovative communication methods for engaging with employees, customers, and suppliers, and data plans.

Cost and Time: Depending on the type of business you have and the complexity of your strategies, this step can take several days to several weeks.

Step 4 – Establish an Emergency Response Plan

Your emergency response plan is the detailed map that shows everyone in your organization exactly what to do based on your recovery strategies. It includes things like evacuation procedures, emergency contacts, and roles and responsibilities should an emergency occur.

Cost and Time: Typically involves minimal costs but requires regular training sessions. Develop this plan over a few weeks and review it annually.

Step 5 – Implement a Communication Plan

Too many businesses have disaster response plans, but they are on a dusty shelf or hidden in an old file cabinet and no one knows where to find them or what to do with them. You need a clear communication plan to inform people about your DRP, and you need communication plans within your DRP to map out how it is communicated to stakeholders.

Cost and Time: Minimal costs if using existing communication tools. This step can be completed in a few weeks and should be tested regularly.

Step 6 – Secure Backup and Data Protection

All of your essential business data needs to be regularly backed up in the cloud or in off-site storage. This should be part of your normal business operations even when disasters are not on your horizon.

Cost and Time: Costs will depend on the backup solutions you use and your data storage needs, but if you’re a small business, it shouldn’t take long or cost very much to accomplish this.

Step 7 – Train and Test

You should conduct annual trainings to ensure that all of your new and old staff understand your disaster recovery plan and know how to implement it.

Cost and Time: Training and drills can incur minimal costs but are ongoing efforts that should be part of your regular business operations.

Step 8 – Review and Update

Disaster recovery plans should be living documents. Regularly review and update your plan to incorporate new risks, changes in business operations, and feedback from training and testing exercises.

Cost and Time: Ongoing updates are essential and should be incorporated into your annual business review processes.

If you don’t want to start from scratch, you can find a free template for disaster recovery plans here.

What to Do if Disaster Strikes

1. Activate Your Emergency Response Plan: This is what you’ve been preparing for! Now is the time to activate your plan, working first to ensure the safety of staff and customers. As rapidly as you can, roll out the necessary procedures, communicating clearly and calmly with everyone. Again, what you do and how you do it will depend on the emergency—you’ll respond differently to a building fire than you would to a hacker stealing your customer data, but either way, it should trigger a response that is included in your DRP. The primary goal here is to protect lives and minimize harm, which sets the stage for an organized and efficient recovery process once the immediate danger has passed.

2. Communicate: Use your established communication plan to inform everyone affected about the situation and next steps. Start by contacting people on site and any emergency responders that need to be involved. Make sure you maintain regular updates so that people know what is happening and how they can expect the company to respond. If there will be disruptions, tell your customers and suppliers about it, and in all things, use multiple communication channels to ensure that the message goes out.

3. Assess the Damage: How bad is it? Is everyone OK? Was anything destroyed or stolen? Check your employee list, check in with customers, and review inventory, data, and IT systems. Thoroughly assessing every aspect of your business will help you grasp the impact of the disaster and document all damage, which will be helpful if insurance claims are necessary.

   Recovery efforts may require financing, either through low interest SBA disaster loans, emergency lines of credit, or other products. Biz2Credit offers various financing solutions tailored to small businesses facing unexpected disruptions, providing the necessary capital to repair damages, replace inventory, and restore operations swiftly. You can also check FEMA’s website for resources.

4. Initiate Recovery Strategies: Don’t wait to initiate recovery strategies. Your employees, customers, and suppliers will be rooting for you to get back on your feet. Start by prioritizing the most important functions that need your immediate attention. This could be restoring IT systems from backups, repairing your buildings, or purchasing more inventory. And remember, this isn’t something you should be doing on your own. Hopefully, your DRP includes roles and responsibilities for each team member that makes them feel valuable even if their normal job functions aren’t possible. By making it a team effort, you’ll boost morale while getting your company back on its feet faster.

Conclusion

Nobody likes to think about the possibility of disasters happening—they’re always supposed to happen to “someone else.” Unfortunately, it’s impossible to predict what the future holds, so the best that anyone can do is to plan for the worst and hope for the best. A disaster recovery plan can help you prepare for whatever comes your way, mitigating the impact of the disaster and ensuring a swift recovery. For additional financial support and resources, consider partnering with Biz2Credit to help secure the funding needed to protect and grow your business.

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