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Think of it — in the last year the United States has experienced multiple natural disasters, such as severe droughts in the West, flooding in the Midwest and, of course, those unbelievable snowstorms along the Atlantic coastline, which caused great anguish for business owners due to revenue shortfalls. The question is: Is your business truly prepared for future catastrophes?

Insurance is critical

If you question even in the slightest whether your business needs a disaster plan, ask yourself, “Why do we have insurance?” You buy policies to protect your employees and property from financial losses stemming from occurrences such as fire and job-related injuries. But that allows you to mitigate only part of the risk. Your coverage will presumably help you recover what is physically lost, but it can’t bring back the revenue shortfalls caused by a disaster. Fortunately, there is business interruption coverage which reimburses a company for lost profits in the event of a covered loss, such as a fire or flood.

Many tangible assets, such as computers, are replaceable. Yet the cash flow stymied by, and profits lost to, ruined intellectual property, nonexistent sales or undelivered products may be permanent. That’s why your disaster plan needs to account for your most precious assets — your employees. They are key to maintaining both your company’s goodwill and its productivity during and after a crisis.

So, formulate a plan that, initially, protects them physically and, eventually, ensures their continued compensation. After all, they must care for their families and remain available to work.

Ask yourself …

Get started by brainstorming as many scenarios as possible that could devastate your business. What could stop your company from operating for a day, a month or a year? What happens if your key supplier shuts down temporarily or permanently, a hacker or technical problem crashes your website or you suddenly lose power? Seek out alternative suppliers as well as your key suppliers. That way, you won’t have to “put all your eggs in one basket.” Moreover, you should have on retainer a strong IT consulting firm with disaster recovery capabilities.

Another critical factor during and after a crisis is communication. You and your managers will need to concentrate on restoring operations, so appoint and train an employee to speak on your company’s behalf.

This person’s job will be to keep stakeholders abreast of your recovery progress. These parties include staff members and their families, customers, suppliers, banks, and even community opinion leaders. Train your spokesperson to conduct a multimedia campaign, spreading the word through channels such as your company’s voice mail, e-mail, website, newspapers and TV. And, of course, harness the power of a public relations firm and social media to get the word out.

Remember, though, you can’t always rely on technology to stay in touch. Yet this sobering fact shouldn’t stop you from anticipating crisis scenarios and rehearsing communication efforts.

Keeping it fresh

Whatever you do, don’t expect to create a disaster plan and then toss it on a shelf. Keep it fresh by revisiting the plan at least annually, looking for shortcomings. For instance, if you intend to move the company to a backup facility, set up and regularly test that location’s capacity to handle the sudden influx of people, supplies and equipment. And don’t forget to consider any new threats.

You’ll also want to keep your plan fresh in the minds of your employees. Be sure that everyone — including new hires — knows exactly what to do by holding regular meetings on the subject or even conducting an occasional surprise drill. And be prepared to coordinate with fire, police and government officials who might be able to offer assistance during a catastrophe.

Staying safe is the bottom line

As a business owner, you already have a ton of weight on your shoulders. But that shouldn’t keep you from ensuring the safety of all your employees, as well as your physical plant. Hopefully, you’ll never need to use your disaster plan. However, in case a disaster strikes, having such a plan will help keep your head clear and become the leader you are.