Life is uncertain. The small business owners who found themselves in the path of Superstorm Sandy never expected their buildings to be so badly flooded or to have to go without electricity for more than a week. Nor did the small business owners of Lawtell, La., expect to have to evacuate their facilities because of a train crash that resulted in a toxic spill.
But these things happen, and when they do, they can have devastating consequences for businesses. Active orders can’t be processed. New orders can’t be taken. Customers who have urgent needs (often related to the same disaster that is affecting the business) sometimes have to turn elsewhere for help — and often don’t return. In fact, according to the Federal Emergency Management Agency, 40 percent of small businesses struck by a major disaster never open their doors again.
Among the numerous threats that small businesses face:
Hardware or mechanical failure: The Disaster Recovery Preparedness Council’s 2014 Annual Report indicates that about half of all business interruptions result from the failure of a server, network or other piece of equipment. Businesses must be prepared to respond to such failures.
Human error: According to the Uptime Institute, 73 percent of data center outages are caused by human error. These mistakes range from unplugging the wrong cable at the wrong time to making a minor but disastrous change in a software setting.
Security threats: PwC’s 2015 Global Security Survey reveals that cyberattacks increased by 48 percent from 2013 to 2014. Small businesses must be able to continue operations in the event of a successful attack. They also have to ensure that they maintain information security even in the event of some other type of disaster.
Natural disasters: Mother Nature is an unstoppable force. Although Superstorm Sandy and Hurricane Katrina are infamous for the damage they caused and the effect they had on hundreds of businesses, they weren’t the only threat to the East Coast. An average of about 10 named storms occur during each Atlantic hurricane season. Businesses also must prepare for the devastation that can be wreaked by tornadoes, floods, blizzards and earthquakes.
Being prepared for disaster does more than just preserve the status quo for the duration of a storm or power outage. It also preserves customer relationships that can pay dividends for years to come.
In addition, companies that keep operating during a local disaster can win business away from their less prepared competitors — often permanently. Few things enhance a company’s brand image more than a dramatic demonstration of its reliability, even under extremely adverse conditions.
Small businesses can also suffer serious legal and regulatory consequences if they lose data during an outage, because that loss can prevent them from fulfilling their contractual obligations or filing reports required by government agencies. A good business continuity plan can enable small businesses to reduce their insurance premiums. Every company should, therefore, make appropriate investments in business continuity.
For more information on continuity plans, read the white paper “Disasters of Any Kind Can Negatively Affect Small Businesses.”