Protecting your small business from natural disasters

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According to the Federal Emergency Management Agency (FEMA), more than 40% of businesses never reopen after a disaster, and for those that do, only 29% were still operating after two years.  That is a sobering statistic and one that deserves some exploration given the events across the US over the last month

During the month of September, FEMA is sponsoring National Preparedness Month to educate the public about how to prepare for emergencies, including natural disasters, mass casualties, biological and chemical threats, radiation emergencies, and terrorist attacks. which features activities across the country to promote emergency preparedness.  More than 3,000 organizations – national, regional, and local public and private organizations – are supporting emergency preparedness efforts and encouraging all Americans to take action.

Relative to small business risk management and disaster preparedness, there are useful links on Ready.gov for Business 

While we don’t have to manage our lives and businesses worrying about the next doomsday to come true, we, as small business owners should prepare for some of the more realistic risks facing our business.

Using the Ready.gov site, businesses can do much to prepare for the impact of the many hazards they face in today’s world including natural hazards like floods, hurricanes, tornadoes, earthquakes along with technology-related hazards such as the failure or malfunction of systems, equipment or software.

There are obviously different types of risks to small businesses relative to the type of business and the physical and geographical location of the business.  If you’re operating a retail establishment in a zone prone to flood, hurricane or other natural disasters such as tornadoes, the most important aspect to a disaster plan is your insurance agent.  As the owner of a small business you’re responsible for the well being of yourself, your family, your employees and their families.  If you’re wiped out, they’re wiped out.  This is no small burden that all small business owners carry with them.

From a recent CNBC article on disaster preparedness for small business – Some disasters, like a hurricane, give you time to collect important items before you flee. Others, like a fire, offer no warning whatsoever. Things like invoices, contracts, tax returns, budgets and insurance policies are essential to businesses, though. And some will be critically important when you’re dealing with an insurance company or applying for relief funds.

“A lot of small businesses don’t have a process to protect themselves,” said Mike Crincoli, president of The Neat Company, a document scanning/cloud storage company that caters to small businesses.  “Things like expenses and contacts and client data are very important, so it’s essential they have a system to protect their records,” he said. “It’s very important to stay ahead of it.”

Steps a business can take to mitigate risk relative to natural and man made disasters in relation to financial and business documentation

Have you ever lost your wallet?  If so you know the sinking feeling you got in the pit of your stomach knowing you were in immediate financial danger and then you had to go through the painful steps of canceling cards, ordering new cards and getting you back to where you were before.  Now magnify that feeling by a factor or 100 and you may begin to understand the pain of losing some or all business financial documents.  Imagine having to recreate a year’s worth of receipts and expenses for an IRS audit….or re-creating invoices, contracts….etc.

From the perspective of business and financial document loss, we’ll explore the risks and some very simple and affordable ways you can eliminate, not reduce, the risk of loss

Paper-based risk – Many small business still operate in a paper-based fashion. From invoices to contracts to business expenses, small business owners manage their business files in traditional filing cabinet storage.  Whether your business is home based or out of the home, the primary risks for document loss are fire and water damage.    While there are fire and water proof storage cabinets, these are often expensive and carry physical limits to how much they can actually hold.  In the absence of physical protection, there’s the option of scanning to an external digital media such as an PC and/or and external storage device.

Digital Risk – Assuming you’re business operates in a partial or whole digital fashion, you’ve got documents stored on PC’s.  While you may have taken positive steps to move away from paper, the risks are virtually the same unless you’re leveraging backup media stored in a separate location.

Simple steps to eliminate the risk of document loss

Digitize now – not later – Now – There are many benefits to getting off paper as much as possible, if not altogether but mostly, paper is an easily damaged medium, is difficult to manage and provides no insight into your business health.  If you’re like many small business owners and are storing financial documents of any kind in paper format, you are at risk from many threats, natural disaster or otherwise.

Scan and file your documents dating back at least a year.  You can then store paper documents in offsite, climate controlled storage.  If you have a high volume of paper documents, consider a business scanning service to do a one-time bulk scan for you and then scan as you go moving forward.

Create a data backup on an external hard drive – these devices cost as little as $100 and allow you to back up virtually your entire PC’s file structure.  You can then keep this device stored in a different location or in a fire/flood-proof safe.  Just keep in mind, it’s only as good as your habits…meaning if you don’t get on a regular schedule of backups, the device provides no value.

Back up via the cloud – while digital is great, a laptop is just as susceptible to a fire or flood as a piece of paper.  While some may be concerned with the cloud from a security standpoint or just mystified by the notion of the cloud, all business can benefit from the peace of mind of knowing that your critical documents are at least backed up by a reputable cloud services or software vendor.

Go full cloud – There are a myriad of apps on the market that cover everything from expense and spend management to billing to accounting through contact management and collaboration.  Cloud software provides the benefit of having low to no start up costs while ensuring the information and documents contained within are always available and safe from harm.

Regardless of the strategy you employ….it’s most important that you employ some form of disaster recovery plan.  There’s a reason why 40% of small businesses never recover from natural disaster and it’s mainly because they don’t have the infrastructure, resources and training needed to completely recover and get back up and running and generating income fast enough.  Having a good backup strategy for your financial documents is but one component but….like losing your wallet….is extremely painful.

This article presented by:
The Neat Company
Neat provides expense, bookkeeping and document storage solutions for small businesses and sole proprietors. Our suite of web and mobile software help eliminate paper-based expense and spend tracking for your business and reduce onerous bookkeeping tasks.
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