Even when you do everything to prepare your small business for success, some factors are out of your control. If your business experiences a disaster, it could negatively impact your operations and earnings. As a result, your business could fail. But a disaster recovery plan for your small business could protect it against these situations. 

This guide will discuss creating a disaster recovery plan for a small business, including: 

  • What is a disaster recovery plan? 
  • Why is a disaster recovery plan important? 
  • How can you write a disaster recovery plan?

You may also benefit from our article on creating a business continuity plan.

What is a disaster recovery plan?

A disaster recovery plan outlines how you’ll prepare for and react to an unexpected event that impacts the running of your business. Events could include natural disasters, such as floods or storms, IT issues, or human-caused problems, such as fires, terrorism, or sabotage. Events like these may disrupt or damage your business’s daily operations and necessities. 

With this plan in place, you can revert to emergency methods to keep your business going. As a result, you can decrease the negative impact on your production and earnings.

Why is a disaster recovery plan important for your small business? 

Without a disaster recovery plan for a small business, it may not survive an unexpected and disastrous event. For example, say there’s a flood in your shop that prevents you from opening. Depending on the damage, it can take some time to restore the shop and continue business as usual. Even more, your products and documents could face water damage. 

Though you may have insurance to cover some of these business expenses, a disaster recovery plan will help you react to this event and continue to operate your business. You may have a backup location to work while you renovate your shop. In addition, you may decide to focus on online sales. 

On the other hand, say you face a security breach or your IT crashes. Planning ahead will help you predict these possibilities and plan with backup data or paper copies.  

To a lesser degree, what if there’s a snowstorm that affects your mobility? A well-established plan will help you respond and shift your plans so you can remain productive. Without thinking of these things in advance, you may not be able to do anything until the disaster passes. If you don’t create a plan, you’ll scramble to figure out what to do after the fact. Alternatively, a disaster recovery plan can save your business from failure in these situations. 

How can you write a disaster recovery plan? 

Now that you understand why having a disaster recovery plan for a small business is so important, you may wonder how to write one. We’ll cover the essential steps. 

Considering the possibilities 

Before you put together a disaster recovery plan, consider and list the potential disasters that could affect your business. First, think about which disasters your area may be prone to, such as natural disasters related to your climate. How might a storm or flood impact your business?

If your business relies heavily on IT, and you lose data or access to accounts, think about this could affect your operations specifically. Then, consider world or political events that could negatively affect your business. With possibilities in mind, you can perform impact analysis. 

Impact analysis helps you determine how these events will impact your business. For example, if you cannot open your coffee shop for three days because of a snowstorm, how will that affect your earnings? You might look at your average daily coffee shop sales to estimate a number. Overall, impact analysis will help you develop a successful and well-rounded recovery plan. 

Knowing what to include 

Once you understand the potential disasters and their impacts on your business, you can outline a plan to react and recover from these events. For example, 

In your recovery plan, include: 

  • An introduction of your plan and its purpose
  • Immediate incident response methods
  • Procedures for reacting to different situations 
  • Your responsibilities when recovering 
  • Financial considerations and a budget for your plan 
  • Essentials lists, documents, or policies 

It’s important to outline where you’ll work and how you’ll continue to earn sales if you face a negatively impactful event. Knowing how to react will help you stay afloat. 

But you may also want to consider advanced planning to recover from losses caused by disaster more easily. For example, consider incorporating a savings plan to develop an emergency fund. This fund can support your business in these uncontrollable situations. Additionally, you could plan to take out a loan

On top of an emergency fund, you may want a method to protect your data, supplies or equipment. For example, you could search for insurance policies or backup data on a cloud server.

Testing the plan 

Once you finish your disaster recovery plan, you’ll need to test it to ensure that it will effectively protect your business. To do this, try to run through a drill of your plan. Testing the plan is crucial in determining if it’s realistic and reliable. Also, check in with your disaster recovery plans every six months to see if it needs updating. This way, you can be prepared for the unpredictable. 

Manage your small business finances with Countingup 

To create and maintain your disaster recovery plan, you’ll need to stay on top of your business finances. But financial management can be stressful and time-consuming when you’re self-employed. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation and receipt capture, you can track how much you spend on your business to better plan for negative impacts. 

Plus, the app generates cash flow insights to help you understand your performance. With features like these, you can confidently keep on top of your business finances wherever you are and better plan for disaster. 

Start your three-month free trial today. 

Find out more here.