According to the United States Department of Homeland Security, businesses face three general types of hazards:
- Natural hazards, such as hurricanes, tornadoes, floods, earthquakes, and pandemics
- Human-caused hazards, such as acts of violence/terrorism and accidents
- Technology-related hazards, such as equipment, software, or systems malfunctions
Emergency plans for businesses should contain proactive measures to protect small businesses against these hazards and to help them recover if one of the hazards occurs.
Planning ahead can help to protect the lives of employees. In addition, many companies get back into operation more quickly after a disaster through emergency preparedness planning. Plus, if a business plans to seek small business funding, many lenders will want to see business disaster plans before loaning out money.
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How to Create an Emergency Business Plan
Because no two businesses are alike, no two business disaster plans will be, either. Typically, though, the following steps can help guide most companies through the creation of their plan.
1. Create a Business Emergency Plan Committee
Work days can be busy — so it can be all too easy to put this type of planning off for another day. It makes sense to consider creating a committee that’s tasked with creating a plan and given a deadline for its completion.
Pick committee members strategically, aiming for a mix of types of expertise. For example, you might want to include someone who’s familiar with your office security and someone with experience in IT so that you’ll have multiple types of disaster covered.
Then decide how to create the business emergency plan in an organized, logical way. For example, if the first focus would be on natural disasters, committee members could decide to establish an off-premise meeting place for employees, list phone numbers of first responders, describe how temporary equipment can be secured post-emergency, and so forth.
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2. Assess Risks and Threats
Committee members will want to prioritize the threats that seem most likely when they’re making the business emergency preparedness plan.
For example, if a business is in a geographical area where hurricanes are a threat, planning for that eventuality should be a priority. For another business, tornadoes may be the bigger threat.
Go beyond considering only the most immediate threats, though, and create plans for scenarios that may seem less likely, such as an active shooter scenario or a major cyber attack. The good news is that no business needs to reinvent the wheel when it comes to creating plans for immediate responses after a disaster. The federal government has info sheets and preparedness plans for a wide range of disaster-related scenarios.
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3. Conduct Impact Analysis
After determining the immediate actions to take after a natural or human-driven disaster, consider the potential business impact of each scenario.
These effects can include lost income if the company needs to close for a period of time and/or disrupted supply chains that could affect the company’s ability to fulfill orders.
Also consider disaster recovery costs, such as new equipment purchases, and what it will take to reassure customers and suppliers that your company will be back on track and doing business again soon. Think about if any new initiatives need to be put on hold while disaster recovery steps are taking place.
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4. Create a Plan Draft
Writing a business emergency preparedness plan may feel similar to writing a business plan, as you may have done when the company was created, but with a more targeted focus.
To create an emergency business plan:
- Make sure the plan is comprehensive. Try to think each scenario through so you don’t leave out any important considerations.
- Create a plan that’s easy to understand. Communication can be difficult during a time of crisis, so keep things simple.
- Be sure the steps are straightforward. Try to minimize ambiguity and keep it clear exactly what needs to be done in what order.
- Assign roles. Clarify now who in the company will handle which tasks so that no one is in doubt during a time of crisis.
- Note important information. This includes where any emergency equipment and/or backup business records will be stored.
- List (and update) the types of business insurance you have that are relevant to the emergency. Make sure to include contact information for the insurance companies and policy numbers.
It’s also a good idea to consult with a lawyer and/or experts like your local police or fire department to make sure your plan is following the law and any recommended procedures. Here is another example of an emergency preparedness plan to guide your business in this stage of the process, and you may want to consider this list of related resources from the U.S. Chamber of Commerce Foundation.
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5. Test the Plan
Ready.gov notes numerous benefits to testing and training. These practices clarify roles and responsibilities for company staff members and helps them learn what’s expected of them if an emergency takes place.
Testing and training also reinforces the procedures listed in the company’s plan and gives team members a chance to identify and fix any gaps or weaknesses before an actual emergency occurs.
During the testing, a business may realize that alarms should be louder, for example. Or it could recognize that the planned meeting spot may not be adequate in a large-scale emergency. Addressing these gaps ahead of time will help to foolproof the plan.
The company can use these rehearsals as a reminder to ensure that the plan complies with local laws and codes, as well.
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6. Make Improvements
Writing a business emergency plan is not a one-and-done process. After testing and training, ask for feedback from experts both within and outside of your company. For example, you might want a representative from your local fire department to weigh in on your fire emergency plans.
You might ask these experts, as well as your staff, for input on areas where the plan could be improved upon, for instance, and then brainstorm solutions.
Then test those improvements. As your business changes and grows, your plan will likely need to be modified again, and experts recommend that the plan be reviewed at least annually.
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7. Distribute the Plan and Train Your Team
Once the business emergency plan is approved, make sure that everyone in the company gets a copy and is trained in how to respond to emergencies.
When a new employee is hired, make this training a part of the onboarding procedures. The Occupational and Safety Health Administration (OSHA) notes that all staff members should know their individual roles and responsibilities, understand the communication procedures, know where to take shelter, and be aware of the location of emergency equipment and how to use it.
Companies may also wish to train employees in first aid procedures and how to protect themselves against bloodborne pathogens.
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8. Plans for Emergency Funding
Unexpected situations can cost companies money, so it may be beneficial to know how to get emergency business loans, if needed. There are numerous types of emergency financing, and it can make sense to think about both the short- and long-term implications of each before you actually need the money.
Factors you might want to consider when you’re looking at different kinds of emergency funding include the total cost to borrow, taking into account the interest rates and fees charged, as well as repayment conditions and terms. Payments may be due monthly or weekly, and the latter could cause problems with business cash management, especially during an emergency. Also consider how long it might take to apply and get funded for each type of loan.
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Types of Emergency Funding
Here are a few of the most popular forms of emergency small business funding.
- SBA Economic Injury Disaster Loans. The Small Business Administration (SBA) offers Economic Injury Disaster Loans (EIDL) with the aim of helping small businesses with financial challenges resulting from a disaster. These loans offer low interest rates and loan terms up to 30 years. On the negative side, the application process may be lengthy and there are restrictions on what you can use the loan for.
- Business Line of Credit. If you want to be prepared for an emergency that may or may not happen, you might want to consider a business line of credit. Much like a credit card, a line of credit makes a certain amount of funding available for you to draw on at will. If you don’t draw on it, you won’t need to pay it back. If you do draw some out, you’ll be charged interest only on that amount.
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Alternatives to Emergency Loans
If you’re already in the midst of an emergency or if none of the options above appeal to you, you may be wondering how to apply for a business loan when you’re actually in the middle of an emergency.
Lenders today include both traditional brick-and-mortar institutions and online ones. In an emergency, an online lender may be particularly appealing due to its special advantages.
Advantages to online small business loans include the following:
- More flexibility in the amount that can be borrowed, the loan term, and the qualifications required.
- Less paperwork and faster processing times.
- Easier to compare online loans, thanks to web-based comparison tools.
- Borrowers with high risk levels may be able to qualify more easily with online lenders.
Disadvantages to online borrowing include:
- Online loans may be more expensive in terms of interest.
- There’s usually limited in-person interaction involved in an online loan.
- Some online lenders may not be well-established yet.
It’s a good idea to make sure that the online lender you choose is trustworthy. Check to see if it’s registered in your state, if it’s a lender that you’ve heard of, and if it has good recommendations and reviews. Look up its Better Business Bureau rating and check to see if it abides by the Small Business Borrowers’ Bill of Rights.
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When an emergency strikes, it’s too late to prepare. That’s why having a business emergency plan in place is necessary. If your business and your staff know what to do ahead of time for various contingencies, you may be able to minimize the danger and damage from what could otherwise be a disaster.
Knowledge is also key when your business needs a loan, whether it’s to tide you over due to an emergency or to finance a major equipment upgrade.
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