10/6/2020

Small Business Advice

How to Prepare Your Small Business Against Disasters

It's never fun to think about, but there are steps you can take now to ensure your business can successfully weather natural, economic and personal disasters

Eliza Washington

Business Writer

Whether it’s from the pandemic, natural disasters, social change, or the election cycle, 2020 has been an emotional roller coaster for most of us. With Covid-19, we’ve seen a massive change in how businesses approach their face to face portions of the client interactions, focusing more on their online presence and finding new ways to safely connect with their customers. 

However, even as the COVID vaccine becomes more promising, SBA research shows that disasters continue to affect small businesses long after the initial event has ended.


Now more than ever, you may feel you need to protect your interests against any number of external forces, but figuring out where to start can be intimidating. Here’s an overview of what the experts have to say about preparing your business to handle a disaster.

Natural Disasters

Exactly what type of natural disaster you’re likely to encounter will vary depending on where you are in the country. But whether it’s fires, floods or hurricanes, being prepared for a natural disaster is in your best interest.

Business management often requires a lot of important documents, and replacing destroyed paperwork can derail you when you’re already recovering from a destructive event. The IRS recommends scanning your records and tax forms to not only protect you from having to replace them, but to help you keep everything organized so it’s easier to find anytime you need it. Consider storing them on an external hard drive that can be easily grabbed in an emergency, or in an extremely secure online location, that you can access from any computer in the future.

Natural Disasters are known for devastating infrastructure. If you rent or own a brick and mortar business location, you may want to consider insurance. If you already have insurance for your business, make sure it covers natural disasters you may face in your region (for example, in California, earthquake insurance is often separate from boilerplate renter’s insurance).

Familiarize yourself with disaster resources available to you before and after a disaster occurs so you can develop a business disaster plan for before and after a major event. For instance, the IRS Disaster Resource Guide can help you catalog your property in case anything is damaged during a disaster. You can see how the IRS set up an example of how to catalog your property in their disaster workbook. Luckily, with free spreadsheet software, you can establish formulas to avoid errors. Regardless of the method you choose, always double check your entries!

It’s easy to get lost imagining the disaster itself, but it’s important to take a step back and think about what returning to work will look like for your business. This is why it’s a good idea to update your emergency binders and return to work plans. The first day after a destructive event will look different than the second week or the third month. And as your business changes, its needs during an emergency will change. If you don’t already have an emergency binder, you can build a hardcopy version or a digital version with your important documents and valuable information for navigating a crisis. 

When examining what preparations you need to make, it’s good to consider what you would need if you lost power for a week, or what would happen if you were unable to reach your business partner for 3-5 days. Is it worth investing in a generator? Could you access and operate the aspects of the business that your partner handles? Consider familiarizing yourself with how to apply for disaster relief if you need it. It can be uncomfortable, but these are all important questions to sit with before something happens that could derail the hard work you’ve put into building your company. Your future self will probably thank you immensely.

Economic Disasters

Economic disasters may be less frequent than natural disasters, but they can feel as sudden and devastating depending on how it affects your business. Some say we’re already headed for another recession.

The best way to stay afloat in a recession is to optimize your cash flow by building multiple revenue streams and getting financing in place for your business before you need it. Consider branching out where you sell (ie, developing an online store, or considering a local pop-up), and also expanding your products to different markets (especially those that may be affected by the times). After any kind of disaster, it’s normal for lots of people to apply for relief, so having something set aside for tough times can save you a lot of time and stress when those offices are inundated with applicants.

Know your cash flow so you are familiar with your businesses financial strengths and weaknesses and can better build additional revenue streams in case one dries up after an emergency. The US Chamber of Commerce editorial team recommends exploring opportunities suited to different economic conditions as well as creating a plan at the top of every year:

“The best thing you can do for your business, during good and bad economic periods, is have a thorough understanding of your financial numbers and projections. ‘Run your numbers and give yourself a top-level bird's eye view...Even if you start with an estimate [that's] a little bit off, that's better than going into the year without a plan.’”

In addition to building diverse revenue streams, it’s important to build up the systems in your business so that it doesn’t entirely depend on you holding it up. That way, if something like a natural disaster demands a lot of your time and attention, your business won’t suffer more than it already has to.

How you focus on developing and maintaining your customer base can also have a big impact:

“‘Business owners will often overlook this as they look for more customers, but don’t underestimate your relationship currency with clients who already know, like, and trust you and your business. It’s much easier to get a repeat client, through good service and delivering on your promises. It’s also considerably cheaper than getting new clients through ads or other means.

“‘One of the best ways to recession-proof your business is to find a way to position it in a unique way that appeals to one identity. For example, there are a ton of coffee shops and they are likely all positioned as standard ‘coffee shops.’ However, if one of them changed their name, names of the drinks, had areas for kids, and catered to the identity of parents, it would be the coffee shop for parents. It would stand out and attract a huge percentage of a certain type of identity or demographic—in this case, those that identify as parents.’”

Personal Disasters

Just like how every business should have an emergency protocol binder, you want to have information ready for your business partner and/or family on where to find important documents, keys, etc, in case you become incapacitated. You will also want to make sure your records are organized and accessible so business can resume in a timely manner, even if you can’t be there in person. You can even include some mentoring resources and information about updating things like your EIN. Share this information only with trusted individuals, of course. Although it can be depressing to think about, consider what someone would need to operate your business, if you weren’t there. Find a way to get that information to them now.

Building your business to sell it (without actually having to sell it) is a bit of an easy way to ensure that there are systems in place to hold the business up if your attention is needed elsewhere. Losing you would be a huge blow to your business, but it stands to reason that this advice could be very helpful in the event of your passing. While death can be overwhelming for anyone, if you plan ahead you can make it a little easier for your family and business associates.


Encountering a disaster is often a matter of bad luck, but if you plan ahead you have a better chance of taking any good luck you find in a bad situation and turning it into a solid recovery for your business. And while the thought of keeping your business going through a disaster can make you want to avoid the topic altogether, there is no one more qualified to ensure your business survives tough times than you. A tiny bit of preparation now will likely save you loads of stress down the line.


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