A Disaster Can Kill a Small Business - Can You Recover?
Although a business owner can buy risk insurance to cover some cost of business disruption, unless the business is able to begin generating income quickly, the consequence can be far greater than the cost of property and equipment. Planning for the possibility of a disaster is considered essential to any larger business, but not always for smaller businesses, and hardly at all for a business of one person. Yet the effect on smaller businesses can be more dramatic than for larger ones.
A disaster could come in the form of a fire, flood, storm, a PC hard drive crash, or even an accident or health crisis to a key employee. It isn't the disaster, but the recovery that is important. Every business, even of one person, should have a Disaster Recovery Plan. Its objective should be to have the business operating again 100% in the shortest amount of time after the disaster occurs. To achieve that, the plan must be available and ready to execute immediately after the disaster begins.
So how does a small business go about developing a Disaster Recovery Plan? While one can find guidelines on the web, below is the approach I am familiar with.
Step 1: Since in almost any disaster, some company assets and information will be destroyed or lost, the first step is to identify equipment, documents (paper and electronic), databases, personal knowledge & experience, and services being used that would be necessary to resurrect the business at a different location.
Step 2: Beside each item, identify a way to copy, reconstruct, reconnect or replace it. This may take some effort, and could even involve needing to rework contract terms with suppliers and service providers.
Step 3: Take action to ensure that the resurrection of each item can occur in the shortest possible time. Examples could be an option to lease space at another facility, documents copied and stored off-site, database back-ups made frequently and stored off-site, knowledge documented, and the identification of sources for equipment or service replacement.
Step 4: The disaster. Different disasters will require different recovery responses. Think through and write down as many potential disasters as possible. Group disasters that would require exactly the same recovery. The number of different groups will tell you how many recovery variants you should include in your plan.
Step 5: Develop the plan(s) - one per variant. The best way to do this is to address one variant at a time, and simply list what needs to be done to fully recover - in any order - as they pop into your head. Next reorder your list as you consider...
- Dependencies - which action cannot be started until another action is begun or complete?
- Time sequence - what to do first, second, etc.
- Parallelism - time can be saved if some actions can be done in parallel.
Step 6: Now estimate how long each action will take, and then how long the total recovery will take. Use parallelism to find ways to shorten the total.
Step 7: Draw a diagram of each variant plan as a visual aid to show sequence, dependencies and parallelism. It becomes more realistic if length of the lines corresponds to time duration. The total length of the diagram will give you an idea of how long the full recovery of each variant will take. Include the diagram in the plan. For example:
Step 8: Detail the plan. Now go back and write out exactly what to do for each action in the plan. Include who is responsible for each action, who to contact, phone numbers, addresses, hours of operation, where to find copies, back-ups, keys, id's, passwords, etc. But most importantly in branch "a" - where copies of the plan are kept.
Step 9: Reviews - Many minds are better than one in this area. Task key members of the organization to critique and improve upon the plan. Ask them to look for missing pieces that would ensure complete business resumption. Then ask an outsider with some business knowledge to critique it. With all feedback in, finish writing the plan, keeping in mind that it will likely need tweaking after each of the following steps.
Step 10: Activate it - Go through each action with your team to ensure that everything is in place and working. Are back-ups being made? Taken off-site regularly? Alternate facility arranged for? Responsible people trained and aware of their duties as specified in the plan? Copies of the plan made and kept in secure places?
Step 11: Set up regular reviews, since business and relationships in business are always changing. At least each six months the plan(s) should be reviewed and made current.
Step 12: (Optional) Periodically simulate a disaster. Have someone audit how the plan is executed. The result will lead to an even better plan.
The above steps may sound like a lot of effort for a small business, but can spell the difference between surviving a disaster with minor business impact and going out of business altogether. The good news is that the biggest effort of creating the plan is only done once.
