Expect the unexpected:

You have no doubt heard the old saying that "bad things happen to good people." Of course we all know this to be true.

There are so many "bad things" looming out there that can put an abrupt end to your business if you aren't prepared. You can't prevent natural disasters like ice storms, earthquakes or tornadoes. Other dangers such as fire, flood, theft, loss of key employees, new competitors, etc., add to a seemingly endless list. What can a business owner or manager do to reduce these types of risk?

Regardless of your company's size, whether you own a small home-based business with no employees or a large thriving company, you still need to be prepared to deal with unexpected calamities. Every firm needs to develop contingency plans for its business.

You may have heard the terms "disaster recovery plan," "emergency preparedness plan," "business resiliency plan," "crisis risk management plan," or "business continuity plan." Most medium or large companies have some type of formal plan in place. However, if you operate a small business, it can be difficult to develop some type of plan.

Why is it important for you to have a plan in place? According to the Institute for Business and Home Safety, an estimated 25 percent of firms will not reopen after a major disaster.

Conduct a risk analysis. What type of risks does your company face? Is your company dependent on just a few customers for most of your revenue? If so, work to diversify your customer base since one of these major customers could be adversely affected by a disaster. Consider what you would do if major transportation routes were closed or your suppliers shut down. How are you affected by the actions of your competitors?

Take a realistic look at your business. Evaluate the assets your company owns, both tangible and intangible. Are your assets adequately insured? If they were destroyed by fire or a flood would you be able to replace them? How long would it take to re-open your business, relocate temporarily or move to a new location? Do you have business-interruption insurance that will replace lost business income while your business is closed?

Your important company information consists of your customer lists, accounting records, tax documents, legal contracts and other important documents. You need to have a duplicate copy of all your computer data files or paper files at a location away from of your business. If disaster strikes your business location, your important company information and your business will survive. If you utilize paper documents, are they scanned in electronically and stored off site so this copy can't be destroyed by fires, floods, theft and other disasters. If you utilize computer-based accounting, sales management and other data systems, do you back up your files to an Internet storage site or an external hard drive that is stored off site? Do you backup data on a daily basis? Computer hardware can be destroyed or stolen. Computer software and data files can be destroyed or damaged by computer viruses, natural disasters or defective equipment.

If you have employees, have they been trained on what to do in case of an emergency or a disaster? Have you examined safety issues for your employees and customers in your company or your home if you have a home-based business? Have you taken precautions to care for the welfare of your employees and customers during storms, fires, or times of adversity? You need to have an emergency plan in place and train your employees.

Good communication is crucial to your company. What if you experience a loss of power or an interruption of phone, e-mail and Internet service and are unable to communicate with customers, employees and others? Develop an emergency communications plan that you can activate in case of a disaster. You or your employees will need to contact customers, suppliers, creditors, media and utility companies to make certain others know that your firm is still a viable business.

The following websites contain useful resources and additional information on emergency preparedness:

• U.S. Small Business Administration: www.sba.gov/services/disasterassistance
• Federal Emergency Management Agency: www.fema.gov/business/guide/index.shtm
• Department of Homeland Security: www.ready.gov/business/
• Institute for Business and Home Safety: www.ibhs.org
• National Federation of Independent Business: www.nfib.com

While everyone is busy and it is difficult to find the time to plan, the future survival of your business depends upon your being informed of those unexpected difficulties that may arise and how you can deal with them effectively.

This story was featured in the September 2010 newsletter

- Karen Bradshaw, business specialist, MSSU Small Business and Technology Development Center

(This article is reprinted with permission from the Joplin Tri-State Business Journal.)