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5 Tips to Prepare Your Business for a Disaster

2017-10-27 | by Gene B. Reynolds, CPA

Prepare Business for DisasterReynolds and Associates witnessed firsthand the effects of a natural disaster on businesses in the city of Houston this past August. Though we were deeply saddened for our community and colleagues who were affected by the aftermath of Hurricane Harvey, we were also uplifted by each of the courageous Houstonians who came together in support.

Through this experience, we learned the importance of preparing your business for a disaster. It is the nature of these disasters to strike when we least expect it so it’s critical to plan ahead.

The Importance of Disaster Preparation

As we all recover together, consider these five important items that should be on your checklist to prepare your business in the unfortunate event of another disaster.

1. Prepare Alternative Communication Methods

First, focus on your people. You need to be able to communicate with your team if a disaster prevents employees from being able to reach the office or if your office is affected in a way in which team members cannot access the building.

If email is your primary method of communication, have a backup method. Some employees may lose Internet or mobile access during a disaster, preventing them from being able to check-in via email. This also applies to remote workers who do not work at your physical office.

The key is making sure you have updated, complete contact information records for all employees if you need to make a call or drive to a physical address to check on your employees. Be sure this information is stored in a place that can be accessed offline.

We depend heavily on electronic communication to operate our businesses. However, if electronic capabilities are knocked out, you need to be prepared to communicate with your team through alternative means.

2. Update or Purchase Business Insurance

It’s good practice to periodically review your business insurance policy as part of ongoing operations. As it relates to natural disasters, you should review your policy to determine if your office location and assets such as inventory and equipment are covered.

If your primary assets are covered, you should consult with your insurance provider to review the coverage terms. Some insurance policies are better than others about providing full, partial, or minimal insurance coverage for businesses affected by disasters.

If you do not have coverage or if your assets are not fully protected, consider a new policy. For guidance on which policies to consider, whether you need specific add-ons, and how much you can expect to be covered for, read this article on SmallBizTrends.com.

3. Store Your Records in a Secure Location

Proper data security and record keeping is a vital part of any business in today’s era of cybersecurity crimes and data breaches. So, it’s a good idea to have a secure data storage location at all times, not just when preparing your business for a disaster.

Prior to Hurricane Harvey, our firm completed a server switchover to enhance the security of our data and our clients’ data. We were thankful to have completed this process earlier in the year.

If your company migrates to a more secure server, be sure to update your policies and procedures for accessing data. This is important if your team needs to work from home or view documents on their phone during a disaster situation.

Setting restrictions and limitations on the server will ensure data stays protected if an employee or client attempts to access the data from an unsecure location. However, if the connection is secure, the individual will still have the ability to perform tasks from a remote location.

You should also ensure that documents and data are routinely backed up to a secondary secure location such as the cloud; especially if you need to access previous records that otherwise could be lost during a natural disaster. Reynolds and Associates is aware of many Houston area companies whose records were stored on a local server, which created problems accessing client records after Hurricane Harvey.

4. Conduct a Business Impact Analysis

The U.S. government’s disaster readiness plan stresses the importance of conducting a Business Impact Analysis (BIA) to determine your exposure to risk in the event of a natural disaster.

This analysis will provide your company with valuable information about:

  • Vulnerabilities in your business systems
  • Hazards that could compromise operations
  • Critical or time-sensitive issues to address
  • Overall impact of these risks on financial and operational activity

Using this information, you will be able to prioritize short-term and long-term updates that will protect your business in the event of a natural disaster.

You should also consider whether your company requires a Succession Plan. We know this is a sensitive subject for many business owners. That’s why we’re available to discuss your unique needs and help protect the business you worked hard to build.

5. Ensure You Can Handle Payroll

One of the biggest concerns for businesses in Houston during Hurricane Harvey was how to pay employees. This was a concern for businesses who use a paper method for cutting and distributing checks.

The issue was that either the payroll team could not reach employees to pay them or employees could not reach the physical office to receive their checks. Businesses simply did not have a plan to run payroll remotely.

Reynolds and Associates recommends that businesses switch to a digital method to handle payroll by making direct deposits. This ensures that payroll is automatically completed even during a natural disaster.

If your company needs to switch to a digital method or if you need to migrate software for handling payroll, we recommend QuickBooks Pro to automate the payroll function. The features include complete paystubs, W-2s, and tax capabilities. To help get you started on this process, our firm is available to support you as certified QuickBooks ProAdvisors.

Communicate Your Plan to Employees

Once you go through the steps of preparing your business for a disaster, be sure to communicate the plan to employees. This will ensure that everyone understands the process for staying operational if an unfortunate event affects your business.

As we all continue to recover from Hurricane Harvey, we hope that you are able to use these tips for your business. To discuss the items that should be on your checklist, be sure to contact us today to discuss your business needs.

About the Author

Gene B. Reynolds, CPA

Gene is the Founder and President of Reynolds and Associates, a Houston-based CPA Firm. He has spent 42 years helping Houston entrepreneurs navigate their enterprises through both calm and stormy waters.

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