Twenty five percent of the businesses forced to close due to a disaster or emergency never reopen. Smaller businesses are especially vulnerable because they do not typically have the resources to cover continuing expenses if income is interrupted. A business can greatly reduce the chances of a disaster becoming a death sentence for you business by planning ahead. Here’s what you need to have in place.

Step 1:

Identify natural disasters most likely to occur in your area. Recognize that some disasters can be very localized, like a tornado or brush fire and others can affect a wide area like hurricanes or flood. You will need a plan that is flexible enough to deal with both situations.

Step 2:

Review your insurance protection. First, you need to understand what is covered and what is not covered. For instance, while many business insurance policies cover loss of income that only applies to causes of loss specified in business insurance policies. Flood, earthquake and acts of terrorism are often excluded as covered causes of loss. Moreover, when a disaster does not affect you directly, even if the cause of loss is covered, you would not be compensated for lost business income. Scenarios like this include a major supplier suspending operations or a significant part of your customer base being forced to evacuate due to flood or fire.

Once you understand what is covered you need to review the amounts of insurance you need. Will your insurance protection be enough to see you through a transition period and get your business up and running again?

Step 3:

Assign key responsibilities to employees and make sure everyone knows who is responsible for what in the event of a disaster. Typical responsibilities include deciding whether to implement the emergency plan, contacting employees, setting up temporary operations, etc.

Step 4:

Make an emergency contact list that includes names, addresses, phone numbers and email and make sure all employees have a copy. Contacts should include local fire, police and federal authorities like FEMA and the SBA. You should also compile a list of your largest and most important suppliers and customers.

Step 5:

Make sure you have an up to date and accessible copy of important records and data. Few businesses can run for very long or recover very easily without the information that is the life blood of commerce.

Step 6:

Identify alternative business locations for the short and long term. Many employees may be able to work from their homes if your business location becomes inaccessible. But you may need to make provisions for temporary office space in the event that is not possible. Likewise, you may want to identify a facility where you could set up operations or outsource work during a recovery period.

Step 7:

Take an inventory of business property and equipment including serial numbers. Include the price, when bought and vendor or retailer. You will need this information for insurance reimbursement and tax purposes should business property become damaged or destroyed.

Step 8:

Walk through plans. What looks good on paper often breaks down in practice. Consider different scenarios. For instance, if you will rely on cell phones for short term communication what happens if the cellular network is down or overloaded? How will you let employees know what to do?

Step 9:

Put regular reviews and updates for you plan on your planning calendar.