How to Disaster-Proof Your Small Business

How to Disaster-Proof Your Small Business

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Forest fires, hurricanes, storms, earthquakes, and landslides can have a detrimental impact on your business.

Officials say the recent flooding in Louisiana has likely affected 80,000 homes and businesses across the state. In the community of Livingston, La., just east of Baton Rouge, it is estimated that 70% of homes and businesses were flooded.

After a natural disaster such as this one, nearly 40% of small companies won’t reopen, and even a few inches of flood water can cause thousands of dollars worth of damage, according to the Federal Emergency Management Agency. Here are some tips on how to prepare your business for a natural disaster.

Back Up Your Data

In the event of a disaster, your business could experience a sudden loss of power. Not having any electricity, even for a short while, could have far-reaching implications: You might not be able to send emails to clients and customers, or make telephone calls. A power outage could also trigger data loss, and you could lose important files and documents that are crucial for business growth.

Despite these risks, most small businesses don’t have a proper disaster recovery plan in place. The Contingency Planning and Strategic Research Corporation found that 96% of business workstations are not regularly backed up.

Data backup will provide your business with a safeguard if a devastating natural event occurs. If you invest in a physical backup site, choose a location that’s far from your business so it won’t be impacted by the same disaster. Alternatively, you can back up your data in the cloud, which will enable you to quickly access files from another site.

Thirty-three percent of IT professionals said their business lost money after data loss, according to a survey by cloud-based backup firm Carbonite. Meanwhile, 32% reported a missed business opportunity. Data backup can soften the blow.

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Review Your Insurance Policies

One in three small business owners have felt the impact of storms or extreme weather and lost an average of $3,000 per day due to being closed following a natural disaster, according to Eastern Kentucky University. Having an insurance policy that won’t cover the cost of repairs and cleanup can make a crisis even worse.

When small business owners search for a policy, most settle with property insurance that covers damage to buildings and expensive equipment. Sometimes this isn’t enough. Business interruption cover, which can be bolted on to most property insurance plans, compensates a drop in income as a result of an emergency, providing you with a steady income stream as you deal with the fallout of a disaster. Websites that let you check insurance policies from different companies are a great place to start. You can compare interest rates and find business interruption coverage that suits your budget.

Apply for Emergency Financing

A disaster can cause thousands of dollars worth of damage; however, some businesses might not have the emergency funds to help foot the bill. This is where credit comes in handy. It can provide your business with a much-needed lifeline in the midst or aftermath of a natural disaster.

Many business owners make the mistake of applying for credit after a disaster, and often have to wait several weeks to receive any cash. However, securing an emergency source of small business financing, such as a line of credit or business credit card, as a preventive measure will provide you with the peace of mind you need if an earthquake, tornado, flood, or hurricane strikes your business in the future. There are lots of financial products to choose from—check out some of the best ones, including no-annual-fee and low-interest credit cards, here.

Dealing with a disaster can be devastating for any small business owner. Planning ahead, though, could make it easier to cope with the aftermath. Remember to back up your data, review your insurance policies, and have emergency financing in place if you want to disaster-proof your business.


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