With hurricane season less than a month away, Doeren Mayhew clients on the Gulf Coast have extra reason to review the disaster recovery plan for their business – but what about the rest of us? A “disaster” can come in many forms, and statistics tell us that the majority of businesses don’t have a plan in place to address scenarios such as:

  • A fire, flood, hurricane, tornado or ice storm that damages, destroys or isolates your business’ premises.
  • A power surge that fries your computer systems and the intellectual property it contains.
  • A virulent computer virus.
  • A power failure that leaves a warehouse full of perishable goods susceptible to decay.
  • A business disaster, taking the form of a sudden bankruptcy of a major client or supplier, or a sudden and serious illness to a key team member who has irreplaceable knowledge.
  • The direct or indirect effects of a terrorist attack.

Analyzing the Business as a First Step

When considering financial matters, an accounting firm such as Doeren Mayhew can help you analyze your business to determine insurance needs as well as how much to spend on disaster recovery.
Insurance can cover not only your loss of property, but also the costs related to income interruption. This will depend on, for example, the financial consequences of catastrophic failure in various parts of your operation.
With your CPA, work out the amount of time you can afford to be shut down, which will give you a better idea of how to invest in procedures to get your business up and running again.

Planning to Ensure Your Business Can Navigate a Crisis

How quickly your company can get back to business after a disaster depends on emergency planning done today. Ready.gov offers the following considerations when devising your plan:

1. Which staff, materials, procedures and equipment are absolutely necessary to keep the business operating?

  • Identify operations critical to survival and recovery.
  • Include emergency payroll, expedited financial decision-making, and accounting systems to track and document costs in the event of a disaster.
  • Establish procedures for succession of management. Include at least one person who is not at the company headquarters, if applicable.

2. Which suppliers, shippers, resources and other businesses must you interact with on a daily basis to run the business?

  • Develop professional relationships with more than one company to use in case your primary contractor cannot service your needs. A disaster that shuts down a key supplier can be devastating to your business.
  • Create a contact list for existing critical business contractors and others you plan to use in an emergency. Keep this list with other important documents on file, in your emergency supply kit and at an off-site location.

3. What will you do if your building, plant or store is not accessible?

  • Consider if you can run the business from a different location or from your home.
  • Develop relationships with other companies to use their facilities in case a disaster makes your location unusable.

4. How will you ensure payroll continuity?

5. What will your crisis management procedures be, and who will carry them out?

  • Make sure those involved know what they are supposed to do.
  • Train others in case you need back-up help.

6. With whom do you need to share your plan?

  • Ensure the plan is communicated to all staff, with emphasis on those with responsibilities within the plan.
  • Meet with other businesses in your building or industrial complex.
  • Talk with first responders, emergency managers, community organizations and utility providers.
  • Plan with your suppliers, shippers and others you regularly do business with.
  • Share your plans and encourage other businesses to set in motion their own continuity planning and offer to help others.

For assistance analyzing your business as a first step in disaster planning, contact Doeren Mayhew’s Michigan CPAs, Houston CPAs or Ft. Lauderdale CPAs.