When Disaster Strikes: Creating a Business Continuity Plan

The pipes in the office on the floor above yours burst and your entire floor is flooded and all the computer equipment is destroyed. There is a weeklong ice storm that shuts down the power in your building and no one can work there until it is restored. There is a flu epidemic in your town and half your staff is unable to work for several days.

These are just a few among many events that could occur that could temporarily shut down your business. What would you do then? Do you have a business continuity plan?

In this two-part series we will cover what should be included in a business continuity plan and how you get started creating one.

You have probably also heard of a disaster recovery plan. That is essentially the same as a business continuity plan but because of our human nature and our “that can’t happen to me” mentality, business owners and CEOs often neglect to get around to creating one so the industry often uses the term business continuity plan instead. While there are some distinctions, the two types of plans are often referred to as BC/DR — business continuity, disaster recovery so that’s the term I’ll use.

I will address three elements that should be included in a BC/DR plan: how will employees communicate, where will they go and how they will continue to do their jobs. Let’s address each of these.

1. How will your business communicate?

Every business should have an emergency communication plan and a person designated to be in charge of declaring a disaster and implementing that communications system. Determine whom your business will need to communicate with: off-site employees, families, vendors, customers, emergency responders. Make sure you have up-to-date contact information for everyone and assess the availability of alternate means of communication, for example using your Facebook and Twitter account to communicate with the public on your situation.

In the old days, groups of people used to communicate with phone trees – a network of people to spread information, set up like a pyramid with one person calling two people, who each call two until everyone is notified. Set up a phone tree for your business as a back up in the event other types of communication are shut down.

2. Where will your employees go?

The most important rule in a BC/DR plan is people first. You must first secure everyone’s safety before moving on to the resumption of business operations. If the offices are not inhabitable the next issue is where the people and operations will go. The BC/DR plan needs to include a designated relocation area.

You will also want to have a teleworking policy in place for employees for whom that is appropriate.

3. How will your employees continue to do their jobs?

This step is obviously the critical one for the continuity of your business. Assuming you have a place to go and all your data backed up and available off-site, how will your employees access it?

The days of lining up desks and phone and getting back to work are over — getting the necessary systems up and working can be much more complicated these days. Your plan needs to include how you can get employees functioning again as soon as possible.

Creating an effective BC/DR plan is time-consuming and complicated. But your business really can’t afford not to have one. Next week we’ll discuss how to go about creating one.

Look for me November 10 at 4:30 at the Book Festival of the Marcus Jewish Community Center of Atlanta. I’ll be discussing my book,  ”How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.” The event is free and open to the public. Click here for more information.

Scout Motto Still Applies: Be Prepared

“Before anything else, preparation is the key to success.”

Alexander Graham Bell

I watched a sad video today of some of the devastation wrought by Hurricane Sandy in Sea Bright, New Jersey. Block after block of small businesses were totally wiped out. Of those not yet boarded up, all that was visible was a huge, gaping, black interior.

Many of them may rebuild. But a lot won’t. “Small businesses that don’t have a plan in place generally don’t survive after a disaster, whether it’s a flood or a tornado. We see that anywhere from 40-60 percent of those that are hit like that simply don’t come back to business,” said David Paulison, former executive director of the FEMA, in an interview in 2009.

A street in Sea Bright, New Jersey showing the affects of Hurricane Sandy

Truth is, there may not be much you can do to prepare your business if you live by the ocean and are in the direct path of a massive “Frankenstorm.”

You can gather up as much inventory as you can, then ensure that you and your loved ones are in a safe place and hope for the best.

While most business owners won’t ever have to worry about the effects of a massive hurricane, other disasters — natural and manmade — can affect a business anywhere.

I’m currently serving as the court-appointed receiver for a historic hotel. The current owners bought it in 2008 and planned to spend $10 million renovating it, but after they shelled out $7.5 million, water pipes burst and damaged several floors of the property. The owners shuttered the property and tried to liquidate their debts on the hotel through bankruptcy. No go.

So a judge appointed me as receiver to sell the hotel and use the proceeds to pay down the bond debt.

The hotel had been shut down for two years, with no heat or air conditioning. Can you imagine how it looked? And smelled? Let’s just say this is a job bigger than Febreze.

That’s why I say my job is like being a janitor. I’m called in to clean up other people’s messes. This one is going to take more than a mop, a bucket and some disinfectant spray.

The lesson is that you have to be prepared. Better to have a plan and never need it. Remember all those Y2K preparations? My basement was full of drinking water for years. But I never regretted being prepared in the event those dire warnings had come true.

While very large companies often have emergency programs often small and medium-sized companies do not.

If you don’t have a plan, it’s time to make one. Some of the basics to consider when making your plan include:

Investing in disaster insurance. You can get policies that cover the structure of your building, loss of inventory items and even interruption insurance that reimburses you if your company can’t conduct business. (Note that many business insurance policies exclude food and earthquake damage so you may wish to purchase additional coverage if those are areas of concern.)

Backing up your computers with off-site storage. You hear a lot these days about “the cloud.” That’s just a fancy name for a remote server. I know one guy who set up a cloud in his basement so all his computers are backed up away from his office. He also has a generator to keep everything humming.

Setting up plans to conduct business at another location. There are companies that back up all the information needed to run your business and provide the temporary facilities to perform the task.  If disaster strikes, you can show up there the next day and be open for business.

Creation of a list of emergency phone numbers and addresses and contact information for staff, business contacts and major clients. Sure, you have all that information. Somewhere. Make sure you can find all that information fast if you need it.

There’s plenty of information available on how you can prepare your disaster program.

• For small businesses, visit the Small Business Association at PrepareMyBusiness.org.

• For larger businesses, visit Ready.gov/Business

• Visit this IRS site for information on how to safeguard your essential records

• FEMA has additional information for businesses at www.fema.gov/protecting-your-businesses

Just remember the Scout motto: Be prepared.

I’ll close with another of my favorite quotes on the topic by Winston Churchill: “I’m just preparing my impromptu remarks.”