How to Build a Disaster Recovery Plan for Your Small Business

It’s not always possible to avoid the business fallout of a disaster like a pandemic, earthquake, or cybersecurity breach. But with a clear plan in place, you can minimize the downtime and get back to serving your customers faster.

Review your insurance coverage

Having the right insurance coverage is one of the most fundamental steps in preparing for a disaster. Review your policies at least once a year to ensure they cover the risks your business faces, from property damage and business interruption to cyber incidents.

For example, if you’re in a region prone to floods or earthquakes, verify that your policy includes these perils. These policies are often excluded from standard coverage but are available as endorsements.

Have digital and printed copies of your policies available, and make sure your leadership team knows how to access them. Maintaining an updated list of insurance contacts will help you file claims quickly if a disaster occurs.

Audit your business resources

Before you can plan your recovery, you need to know what’s at stake. Conduct an audit of any business resources, including equipment, data systems, and property. From there, identify which resources are essential to your company’s daily operations.

For example, if you run a restaurant, you probably need a payment processor to complete customer transactions and manage inventory. Knowing which resources are crucial to your daily business operations helps you know what to prioritize after a disruption.

Set recovery objectives and prioritize systems

Every business should establish clear recovery objectives, which typically include a recovery time objective (RTO) and a recovery point objective (RPO). The RTO is the maximum amount of time a system can be down following a failure, while the RPO is the maximum amount of data a company can afford to lose after a system failure.

For instance, an e-commerce store might decide that its website needs to be back online within four hours (RTO) and that it can’t lose more than 30 minutes of sales data (RPO). Establishing these priorities in advance helps your team act quickly and focus on what matters most.

Create a step-by-step recovery playbook

Once you know your priorities, document them in a disaster recovery playbook. This playbook should include step-by-step instructions for restoring systems, contacting your team, and coordinating with vendors.

Next, define what each person is responsible for once a disaster hits — who leads the recovery efforts, who manages communications, and who handles technical fixes or insurance claims. Run practice drills at least once a year to test your plan and make sure everyone knows what to do.

Coordinate with vendors

Many businesses work with third-party vendors for software, logistics, or supply chain operations. Identify a primary point of contact at each company to whom you can reach if your operations are disrupted. This is often an account manager or customer representative who can explain what contingency support is available.

Communicate with customers

After any kind of disaster, it’s crucial to reach out to your customers as quickly as possible. Clear communication helps prevent misinformation and shows that your business is taking proactive steps to resolve the issue. In comparison, radio silence can cause your customers to distrust your company.

Have a plan for how you’ll communicate with your customers following a disaster. Plan to use a variety of platforms, like email, social media, and your website so you aren’t reliant on a single communication channel.

​​Back up and secure your data

Data loss is one of the most common and costly consequences of a disaster. Over 50% of businesses aren’t prepared for significant data loss, and 60% of those companies end up going out of business within six months.

It’s best to have multiple data backup plans in place. For instance, you could buy and use an external hard drive to back up your company’s data. And you should also back up your data in the cloud so that you can access it from anywhere.

Apply for the Small Business Readiness for Resiliency Program

The U.S. Chamber of Commerce Foundation and FedEx created the Small Business Readiness for Resiliency (R4R) Program. The R4R Program encourages businesses to prepare for natural disasters before they occur and awards grants to businesses in qualifying areas.

You’ll start by downloading FedEx’s “Emergency Preparedness Checklist for Small Businesses.” This checklist helps you create an emergency action plan for your business. From there, you’ll apply online and provide more details about your business. If you apply before a disaster strikes in your area, you may be selected to receive a grant to help your business recover.

 

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

 

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.

 

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