An emergency can strike at any moment, so your business needs to be as prepared as possible. The best way to do this is to create an emergency preparedness plan. It outlines the steps your business will take to be ready for any threat or disaster, whether natural or human-made. Here’s how you can prepare your business.
1. Identify potential hazards and vulnerabilities
Before you can prepare for emergencies, you need to know what you’re up against. Start with a hazard assessment to identify the biggest threats to your business. List all common dangers, from natural disasters like tornadoes, floods, or ice storms to physical threats such as fires, theft, or workplace accidents. Don’t forget digital and financial risks, such as cyberattacks, data loss, supply-chain disruptions, or major economic downturns.
The following tools can help you discover and document threats:
- Risk assessment templates: Save time using prebuilt forms in financial or project software, or download templates that you can use in word processing or spreadsheet platforms. For a basic PDF, try the free risk assessment tool from Ready.gov.
- Hazard vulnerability assessment (HVA) forms: Brick-and-mortar businesses like restaurants, retail shops, and warehouses should complete an HVA. It identifies risks related to your facility’s physical location and day-to-day operations.
- Industry-specific checklists: Trade associations, insurance companies, and government agencies offer hazard assessment worksheets and checklists. These can help you comply with legal or insurance requirements.
- Accounting software: Use cash flow forecasting tools to run scenario planning and 12 to 18-month cash-flow stress tests. This process identifies risk events that could impact your company’s financial stability.
2. Assess and prioritize the risks that threaten your business
Figure out which threats matter most so you can prepare for those first. Use a basic risk analysis table or chart to rate each hazard by the probability of it occurring and how much damage it could cause. From there, you can conduct a business impact analysis to see how each potential threat could affect your operations. This assessment predicts the level of business disruption and can help you create a recovery strategy.
3. Review your processes for preventing and reducing risk
Risk management strategies are crucial to emergency preparedness planning. They increase operational and situational awareness, helping small businesses reduce hazards and potential losses. As part of your larger financial disaster planning, consider creating a recession-proof business plan using information from your risk assessment.
Review your processes by taking stock of resources and systems that you have in place to protect your business. Include physical setups, like sprinkler systems, fire alarms, emergency lighting, and escape ladders, as well as business practices for tracking physical and digital assets. Then make a list of the specific actions you can take to prevent threats and reduce their impact.
Evaluating insurance and financial needs
Look over your financial accounts and insurance plans to ensure all information is up to date and in good standing. Confirm contact details, including email and phone numbers, for emergency policies like business interruption insurance and local financial assistance resources. Plus, remember to update documentation listing your company’s inventory, equipment, and valuables. If you create a list for insurance and casualty loss claims, use disaster loss workbooks from the IRS.
Think about the following:
- Payroll services: Ask your payroll provider if they have a fiduciary bond. This is a type of insurance that protects your business from financial losses if the vendor dishonestly or fraudulently manages your payroll.
- Insurance policies: Make sure you have the correct insurance for your business. There is a type of insurance to cover nearly every risk your business might face, and the right insurance can protect your business from financial ruin.
- Cash flow: Keep enough cash on hand to make small purchases if ATMs are down. Also, consider what you would do if you need additional funds for emergency supplies or repairs while waiting for disaster assistance loans or grants.
- Backing up critical business data and files
Recordkeeping requirements apply to your business, even if your physical or digital setup is compromised. It’s essential to back up all business data and files, including bank statements and tax records. You should store all company data on a secure hard drive off-site. In addition, you can back up data in the cloud, ensuring access if disasters affect physical backups.
If you have physical files, make two copies. Store one copy at work and another copy at home. That way, if one location or the other is destroyed, you’ll still have the files you need to get your business back up and running.
Preparing and maintaining emergency kits
Prepare at least one emergency kit for employees and customers. Store it in a central location and set up a reminder to check expiration dates annually.
The following emergency kit list is not exhaustive but is a good start for medical and survival items you can include:
- First-aid supplies, including gauze, bandages, antiseptic, and pain relievers.
- A flashlight and spare batteries.
- Phone charging device.
- A battery-powered radio with weather alert functions.
- A warm blanket or emergency thermal wrap.
Look over your financial accounts and insurance plans to ensure all information is up to date and in good standing.
4. Outline emergency policies and procedures
Develop general guidelines that can apply to most emergencies, like where to go during a tornado warning or how to inform staff and customers if your business has to close unexpectedly. You can also add emergency action or emergency response checklists for specific situations, like a natural disaster or ransomware attack. These should be part of your overall response, recovery, and continuity planning.
Emergency communication planning
Prepare a communication plan for contacting staff, customers, and vendors in an emergency. Gather and file this information in a single location where you can quickly access it.
That way, if an emergency happens, you’ll know how and where to reach anyone affected. You can inform them about the crisis and what you’re doing to manage the situation.
Evacuation and shelter procedures
If you manage a brick-and-mortar business, like a restaurant or store, you need to outline your company’s shelter and evacuation procedures. Imagine various emergency scenarios and how your employees and customers can shelter in place or exit the building safely. Keep a physical map of your region on hand and highlight evacuation routes, including backup options if roads are blocked or bridges are unusable.
Prepare for Disaster
Learn more about how you can receive a $5,000 grant from the U.S. Chamber of Commerce Foundation and FedEx if your business is ever the victim of a disaster.
5. Decide who does what before and during emergencies
Assign roles and responsibilities to everyone involved in emergency planning and the immediate aftermath of a disaster. This step determines who is accountable for doing things like checking safety equipment or supplies, shutting down systems, and contacting employees. Expand on these roles in your business continuity plan to move seamlessly from responding to an emergency to continuing operations.
6. Write and distribute your emergency preparedness plan
Turn your emergency preparedness plan into digital and print documents. For example, a physical location may have a binder for frontline staff that outlines procedures to follow, while managers keep a more detailed plan in the office. Create digital versions for hybrid teams and make sure everyone knows how to access contact information and procedures, no matter where they’re working.
7. Train, test, and update regularly
Practicing your emergency plans helps everyone work as a team if a crisis occurs. Add employee training and drills to safety meetings, and walk through the common types of weather warnings or workplace hazards they might encounter. Review your strategy every six to 12 months or when site conditions or staff changes require an update. Continuously improve your plan by adding scenario-specific preps, such as recession preparation tactics.
Jamie Johnson contributed to this article.
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