No one likes to think about what could go wrong, but when you run your own business, you can't ignore the risks. Chances are, every business will face unexpected challenges, difficulties, or even disasters at some point. What matters is whether you are ready to deal with them.
How can businesses prepare for unexpected challenges? It's impossible to think and respond to every potential business threat. Still, you can take steps to protect yourself and your business from financial, natural, and human hardships that may arise.
How to prepare your business for the worst
It's impossible to prepare for everything, but here are 11 proactive steps to protect your business from the most likely scenarios.
1. Assess your business risk factors.
The first step is to consider everything that could go wrong with your business, including natural disasters. Consider the following questions:
- Is your business located in an earthquake or hurricane zone?
- Are you near an area prone to wildfires or flooding?
- Do you handle perishable products?
- Is your equipment properly maintained?
- Does your business use sensitive data that could cause harm if it were somehow leaked or compromised?
2. Analyze critical business functions.
All business functions are important, but some are non-negotiable. Determine which critical roles and tasks are necessary to keep your business on track and which can be left alone for short periods of time.
3. Prepare for emergency response.
Ensuring workplace safety requires purchasing and maintaining safety equipment, marking emergency evacuation routes, and planning for immediate response in case of fire, flood, lockdown, power outage, or other potential disasters . Once or twice a year, rehearse your emergency response plan with your entire staff.
If an employee is injured on your premises, you can file a workers' compensation claim.
4. Back up everything.
Your business data and processes are likely to be digitized, so you shouldn't rely on just one server or copies of your most important documents and information. Back up your important data to cloud storage with enhanced cloud encryption and diversify your server locations (if needed).
You don't want to lose all your business information if there's a regional power outage or a flood destroys your local servers.
To learn more about cloud storage features, benefits, and pricing, check out our guide to the top cloud storage and online backup services.
5. Don't rely on individuals.
Suppose only one person knows all the passwords and how to access the emergency Internet server. Without them, the entire business would collapse.
Make sure at least two people know all your passwords. Be sure to have at least one other person she trusts who knows how to perform key elements of the other employee's key roles. If that's not possible, at least make sure your most important business processes are fully documented so others can take over when the time comes.
6. Get the right insurance for your business.
Good business insurance coverage is more than just having enough insurance. It is important to choose the right business insurance for your business needs.
Make sure your general liability insurance policy is robust and consider specialty insurance such as specific catastrophe coverage, cyber liability insurance, and equipment insurance. Talk to an insurance company that has experience providing insurance for small businesses.
7. Create an emergency fund.
Your emergency fund should be sufficient to cover your core business expenses for six months. This gives you a safety net in case your cash flow gets disrupted or a hurricane hits your office.
8. Maintain up-to-date contact information.
Whether you need to contact your team in the middle of the night to tell everyone not to come to work the next day, or make sure everyone gets home safely after a major storm, you need to be able to reach every employee at any time. It doesn't have to be.
Keep your records up to date and accessible even if the internet is down, you're trapped on a train, or you have to evacuate your building.
Use Google Person Finder or the Red Cross Safe and Well app to find out if your family or employees are safe after a disaster.
9. Plan remote communications.
Establish remote work capabilities and a secure and reliable way to communicate with all employees. By setting up your remote work plan and communication channels well in advance, you can ensure your business continues to operate even if your entire workforce is geographically dispersed or unable to come into the office.
10. Establish a chain of command in the event of a disaster.
Nothing makes a difficult situation worse than a lack of leadership. Everyone should know who to contact if something goes wrong and who will make decisions in an emergency. A clear chain of command prevents crises from turning into disasters.
11. Understand what resources are available to you.
Research local, state, or federal resources available to businesses after a natural or financial disaster. Resources include:
Statewide Disaster Recovery Fund
- State benefits such as unemployment benefits to employees while businesses are closed
- Low-interest loans from the SBA for property damage after natural disasters.
The U.S. Small Business Administration (SBA) provides low-interest loans and other resources to businesses affected by disasters. You can call the SBA at 1-800-659-2955 (TTY: 1-800-877-8339) or email Disastercustomerservice@sba.gov.