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There are some threats that all businesses face, such as fire, theft, fraud or vandalism. Other threats are more specific to an industry, such as equipment failures, or to a location, as in the case of flooding. Assess what could potentially go wrong, the impact it would have on your business, and how likely it is to occur. Once you have identified and prioritized your business’ vulnerabilities, you can take steps to address those threats.
Be sure the building in which your business is located conforms to local building codes and that the electrical system is up-to-date. Train your employees in fire safety and consider installing a sprinkler system. If you have a security system, check it frequently to ensure it is in good working order.
You know what your business needs to operate. If a physical location is critical, search for alternative sites now that you could use in an emergency. Could you operate out of your home or a nearby storefront? Businesses that rely on equipment -- heavy or office -- should keep an inventory of brand and model information and identify backup sources. Food-related businesses dependent on refrigeration should consider purchasing an emergency generator. A generator can also provide a supply of electrical power to maintain operations for a time.
Don’t overlook preparing for disasters that may impact your suppliers. Having alternative sources for any business-critical supplies you need to operate your business is important. It’s a good idea to place occasional orders with those vendors as well.
For most companies, business records are essential. Any business owner with extensive computer applications and files should regularly back them up to a tape system or CDs stored offsite. If it’s warranted, look into computer services that automatically back up your data and electronically transmit it to an offsite data storage facility. Be sure to store paper copies of important contracts and financial information, as well as employee, vendor, and customer records offsite as well.
One of the key ways you can protect your business is with proper insurance. You should meet with your insurance provider to determine if your business insurance policy covers the areas where your business is most vulnerable. If you have a home business, you may need to buy extra policies or riders.
Business owners should look into purchasing business interruption insurance, in addition to a liability policy. Business interruption insurance works like disability insurance in that it compensates you for lost income related to a disaster. The income it provides could help you meet payrolls, pay vendors, and purchase inventory until you are back in business again.
There's a great deal you can do -- both before disaster strikes and afterwards -- to get your business back on its feet quickly. A CPA skilled in risk assessment can help you create a comprehensive plan. Once you have a plan in place, be sure to review it regularly.