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Money Management (Distributed by the New Jersey Society of Certified Public Accountants)

Disaster Recovery Planning for Small Businesses


It's a matter of survival. All businesses - regardless of size - should have a disaster recovery plan, according to the New Jersey Society of Certified Public Accountants (NJSCPA.) In the event of a disaster, a recovery plan is critical for getting the business back up and running as quickly and as cost-effectively as possible.

No single disaster recovery plan will fit all businesses. Consider the types of disasters most likely to occur and how they are best addressed. Remember, too, that the nature of a disaster will impact businesses differently.

Before you can put a plan together, identify and prioritize the vital elements your business needs to continue operating after a disaster. For most businesses, these include key personnel, the business premises, information, documentation and key assets, such as computers, equipment or vehicles.

Focus on Prevention
While you have no control over some unfortunate circumstances, others can be combated with preventative measures that can help minimize losses. For example, evaluating the adequacy of your fire-prevention and safety systems with periodic tests will provide assurance that the systems are working effectively. To safeguard your computer equipment and data, use surge protectors and the most up-to-date virus protection software. Also, make sure you have a reliable means to back up your data.

Protect Employees
If an emergency takes place during the workday, the most critical priority is to protect employees. Develop a plan to safely and efficiently evacuate your worksite and be sure all workers understand the process. Appoint safety "leaders" who will be responsible for directing other employees in an emergency.

In the aftermath of any disaster, it's important to keep in contact with your employees and, if necessary, their families. Maintain a phone list with the home and cell phone numbers of all employees and their emergency contacts. Be sure the management team and other key employees have copies. You may want to set up a "phone tree" to facilitate passing information from employee to employee. You should also have a current list of all key vendor and customer contacts.

Identify a Temporary Location
Could your business survive if a disaster rendered its premises temporarily or permanently uninhabitable? It could - if you have a plan in place for relocating to an alternative site. Identify a site that would be both accessible to your employees and convenient for customers or clients. In addition to the site, think about what you would need in terms of equipment, telephone lines and related support, and make a contingency arrangement with appropriate vendors.

Prepare an Information Retrieval Plan
The foundation of a sound disaster recovery plan is the ability to protect and quickly restore a company's critical computer data and programs. Information stored on computers, particularly critical software and data, must be backed up regularly onto a tape system or rewriteable CDs that are stored off site in a secure location. If the nature of your business warrants it you can arrange to have your data automatically backed up, securely encrypted and transmitted electronically to a data storage facility.
It's also important to protect vital paper documents such as contracts, employee records, and financial and insurance records by making copies and storing them off-site.

Maintain an Accurate Equipment Inventory
Your equipment and machinery inventory should specify the brand, model and other information related to recovery or replacement of key equipment in your business, along with contact information for vendors that could provide such equipment in a hurry. Keep the list current and store it off-site.

Keep Your Plan Up to Date
The best disaster recovery plans are reviewed and updated at least annually.

Don't Think, "It Can't Happen to Me"
By investing some time and effort now, you can help to ensure that your business will be up and running in the event of a disaster. A certified public accountant (CPA) skilled in risk assessment can help you determine cost-effective recovery strategies.


If you would like to receive more information on various financial matters, subscribe to E-CPA, the NJSCPA's free, monthly email newsletter. To subscribe, visit www.njscpa.org/finances or email a subscription request to e-cpa@njscpa.org.

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Money Management is a weekly column on personal finance distributed by the NJSCPA.

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