Business Disaster Planning 101

By Generational Equity


Disaster planning includes much more than the purchase of business interruption insurance. Your organization needs to identify and plan around your core dependencies and processes, vital records, equipment requirements, essential personnel and key contact information.

But, to make your company truly resilient in the face of misfortune, you need a multi-staged business disaster plan that’s tested and updated regularly to ensure relevance. Not only does this protect your company should disaster occur, but reassures potential buyers when you decide to exit, increasing your sale-ability.

Disaster planning varies by industry and physical location, but every plan should incorporate a few basic elements. These include an IT resilience strategy, a recovery plan, a crisis management plan and regular tests that reveal any needed updates to the plan.

Rather than think about disaster planning as one more chore on your to-do list, consider this an exercise in protecting your company from known unknowns.

Steps to Building a Business Disaster Plan on a Budget

Michael C. Redmond of Ijona Skills recommends an eight-step strategy to building a disaster plan for your business. These steps include:

  1. Analyze potential risks and recommend ways to reduce that risk.
  2. Analyze any potential impact of various disasters.
  3. Make recommendations for business continuity and disaster recovery.
  4. Outline business continuity and recovery objectives and then produce contingency plans, recovery plans and communications plans.
  5. Audit and review all plans.
  6. Review plans with senior management and obtain buy-in.
  7. Test all elements of the plans.
  8. Update the plans annually (at least).

“The fortunes of businesses today are inevitably linked to IT infrastructure, critical data, sustainable workforce, supply chain logistics and integral systems,” says Redmond. “Due to the constant risk of adverse events such as internal and external security threats, natural disasters, sophisticated hacking and the like, organizations need to increasingly focus on developing a resilient disaster recovery plan.”

Businesses tend to focus on past events when developing a disaster plan. But it’s vital to consider new trends too, such as cyberhacking, social media blow-ups and weather events related to climate change.

It’s also important to avoid thinking of IT infrastructure, the physical workspace and human resources issues in isolation, recommends Redmond.

Building an Emergency Communication Plan

When a disaster strikes, you don’t want to waste valuable time figuring out how to get in touch with your employees. Gather contact information for all staff and have a plan for contacting everyone, whether that’s through WhatsApp or an old-fashioned telephone tree.

Next, consider which customers, vendors and suppliers will need to be notified that you need extra help or need to cancel an order.

Store this information in the cloud and not just on a spreadsheet, so that you have copies in multiple locations.

Don’t forget to update your clients, vendors and employees about your company’s status on social media sites to ensure accurate information is out there rather than rumor. Speaking of social media accounts, a key part of disaster planning means that more than one person has access to passwords and knowledge of how to use each social media platform.

Review Insurance Policies

As part of disaster planning, review your business insurance package annually. Particularly if your organization is growing rapidly, the limits you set a year ago for property and equipment may prove inadequate should a fire or tornado rip through your building.

You’ll also need to keep business interruption insurance limits properly aligned with current revenue to protect your company should a total shutdown of all, or a portion, of the business be required.

In the end, your disaster recovery plan should minimize the impact of disaster in all its forms, from severe weather to equipment failure.

Get more tips for disaster-proofing your business in our insight “Why Is a Disaster Recovery Plan Important?

And, if you are interested in learning more about how business buyers view risk and uncertainty and how you can better position your company for due diligence, attend one of our complimentary exit planning conferences. An investment of a few hours can pay off handsomely when it comes time to sell your business as you will learn how to make your company “buyer ready.”

To learn more, call us at 972-232-1121 or visit our website and provide us with your contact information.

By Jessica Johns Pool.