By Guest Author Lee Doernberg of Liquid Capital Funding
This has been a year of major weather disasters, from the earthquake and tsunami in Japan to the deadly tornado in Joplin, Missouri. It’s resulted in many business owners wondering if they would recover. The key to managing crisis situations is planning for them.
A Disaster Recovery Plan (DRP), also known as a Business Continuity Plan (BCP), details how a company addresses potential disasters. This includes taking measures in advance to minimize the effects of a disaster, which would allow the company to maintain key functions or quickly resume operations.
Here are some steps to follow to prepare for and minimize the impact of a disaster.
Identity Your Risks. Brainstorm the five worst events that could damage your company and how you would handle them. For example, are your operations susceptible to fire? If so, regularly inspect alarm systems and fire-fighting equipment to ensure they work properly. Conduct fire drills and train your team how to respond to a fire.
Establish Priorities. Evaluate operations, personnel, information and processing systems, documentation, vital records, and policies and procedures for each department. Define what needs to be done, and in what order, should a department, computer center or other key facilities be destroyed or become inaccessible.
Determine Recovery Plans. Research and evaluate alternatives for functioning in case of a disaster. If your data center becomes inoperable, a hot site provides all the equipment needed to continue operations, from office space and furniture to telephone jacks and computers. A cold site provides office space but you would provide and install the equipment needed to continue operations. Prepare written agreements for these arrangements. Address issues such as the length of your contract, facility conditions, cost, security, hours of operation, and staffing requirements.
Be certain your plans include a checklist of specific tasks to tackle early on. This list would include contacting customers, suppliers, family, and friends; contacting your bank; if applicable, contacting your merchant services provider to arrange to continue to accept credit card payments; documenting damages with photos and notes; and keeping your staff informed.
Document Critical Data. Gather information needed to continue operations in a new or temporary setting. This may include data files, telephone numbers, an inventory of equipment and office supplies, your insurance policy and financial records.
Although natural disasters are a rare threat to corporate operations and a company’s survival, other types of disasters can create as much peril. These range from stolen corporate documents to workplace violence. Integrating security measures into your overall crisis management program is important, too.
The Small Business Administration has partnered with Agility to offer business continuity strategies for entrepreneurs via their Prepare My Business website.
The Disaster Recovery Institute Canada (DRI Canada) offers disaster recovery planning knowledge through education, assistance, and the development of a resource base; certifies qualified individuals; and promotes the credibility and professionalism of certified professionals in Canada.
I hope this e-newsletter provides information your clients and prospects would find helpful. As always, if you know of anyone in need of working capital solutions, I would appreciate your referrals.
Liquid Capital Funding
* Sources for this article include Management Today, and Inc.com.