According to numerous studies, small businesses are much more likely to fail within a few years after a disruption than larger businesses. One reason this occurs is that small businesses lack the money to prepare for risks. Large businesses have the funds to pay for businesses preparedness, such as business continuity, and are more likely to survive disruptions. However, there are some simple steps that a small business can take to manage such risks.
First, the small business owner needs to determine what the risks of the business are. This can be performed by identifying the natural hazards that occur in the businesses’ geographic area, such as hurricanes in Florida. Also, identify the risks that could occur at the business’ site or facility, such as fires and power outages. Once the risks that threaten a business are understood the risk management process can begin. Depending on the cost of the business, you can determine how much money you are willing to spend on managing the risks. Some risks may cause such little damage that it would be easier and cheaper for the business to recover from the risk once it occurs, while other risks may be so costly that insurance might be cost efficient for the business.
Next, let’s go over a few of the common risks that all businesses must contend with, which are the loss of a key business supplier or vendor and critical documents. Here are some basic steps to manage supply chain disruption:
- Gather the contact name, phone number, and email address of the key contact for your suppliers and vendors in case a disruption does occur
- Contact your key vendors and suppliers to find out what services they will provide during emergencies and how they will reimburse you if they cannot meet their contractual obligations due to a business disruption
- Identifying and contracting with alternative suppliers and vendors as backup if your current suppliers cannot service you
Lastly, critical documents are vital to a business operations and legal requirements. These documents could be insurance forms, business licenses, or service contracts. A few steps to protecting these critical documents are:
- Placing these documents in a fire and/or water resistant safe; this can also protect the documents from airborne particles which deteriorate the documents over time
- Making copies of the documents and keeping the originals at your business or at an alternative site, such as your home or band safe deposit box
- Store the documents off-site at a critical document storage facility which specializes in critical document protection
- Locate a critical document restoration company and gather their contact information in case your critical business documents are damaged; a document restoration company can salvage documents that have been damaged by fire, water, mold, etc.
- Purchase a back-up hard drive to back-up your critical electronic files on a scheduled basis
In conclusion, as the aftermath of Hurricane Katrina showed, individuals and businesses cannot only rely upon FEMA and other government agencies to look out for their best interests in regards to disruptions and disasters. One step we can take is to prepare for and manage risks ourselves.
Josh Stevens lives in Miami, FL and recently started Stevens Consulting there. He has 6 years of experience in business continuity and risk management. He is completing a Graduate Certificate in Business Continuity from Boston University. You can contact him at (815) 999-2232 or at firstname.lastname@example.org.