Back to top

Encompass® Agency Insights

Disaster Prep Tips for Small Business Owners


As a small business owner, you invest more than just money into building your business. It represents a tremendous amount of time, energy, resources and personal sacrifices. Now, imagine if your business were gone in an instant through no obvious fault of your own. An estimated 40 percent of companies will not reopen following a major disaster, according to the Insurance Information Institute.

While it is easy to get caught up in running your business day-to-day, it’s equally important that you properly plan and prepare for disaster situations.

Is your business ready? Consider this checklist from and SBA’s “Small Business Disaster Preparedness Guide” as you begin preparing your business’s disaster plan:

1. Utilize an “all hazards approach”.

Some disasters may seem more likely than others and, consequently, we may overlook the risk for others. If your business is located in California, for example, the risk for an earthquake is likely top-of-mind. But failing to plan properly for all potential disasters can expose your business to unnecessary risks that could have been avoided.

Additionally, remember that disaster preparedness encompasses more than just natural disasters, like floods, tornadoes, earthquakes and hurricanes. Small business owners also need to consider the impact of a widespread illness (like the H1N1 flu pandemic), acts of violence, terrorism, and the failure or malfunction of technology systems. These disasters could have just as devastating an impact on your business as a flood or earthquake. The Department of Homeland Security recommends that small businesses follow an “all hazards approach” for disaster planning.

2. Conduct a Business Impact Analysis (BIA).

The Department of Homeland Security recommends conducting a “Business Impact Analysis” (BIA) to determine which time-sensitive or critical processes will be immediately impacted by a disaster. It is recommended to conduct a “Business Impact Analysis” (BIA), consider the following:

  • Which financial and/or operational processes will be immediately disrupted?
  • How does disaster timing and duration impact this disruption (e.g., damage to a store before the holiday shopping season could substantially hurt yearly sales totals)?
  • What is the estimated financial impact including lost/delayed sales and income, increased expenses, contractual penalties, and the possible delay of new business plans?
  • What resources/business processes are essential for minimum business function?

3. Understand disaster impact cost/recovery.

A completed BIA report should document the impact of potential disasters on business function and include strategies for mitigating this impact, according to the Department of Homeland Security. To do so, prioritize the order of events for business restoration. Which financial or operational systems must be addressed first to bring minimum function back or mitigate financial loss? Who are the employees that will be essential to bringing these systems back online? The answers from this exercise will be used to create your Business Continuity Plan.

4. Create a Business Continuity Plan.

A Business Continuity Plan will define roles and responsibilities for key emergency response team members and a continuity team leader, identify succession of management, delegate authority, and prioritize recovery efforts. Outline communication strategies for your employees. Who will be responsible for contacting employees after the emergency or initiating the emergency response plan? Who will contact key contractors or vendors to keep them apprised of the situation? Even if your company has just a handful of employees, it is still important to establish clear roles for continuity and communications to avoid confusion during the emergency. offers a Business Continuity sample plan to help guide your plan process.

A group of Encompass agents

Customer Centric. Agent Focused.

Our simple, tailored approach to coverage offers powerful benefits to you and your clients.

Become an Agent

The general information contained in The Encompass Blog is provided as a courtesy, and is for informational and entertainment purposes only. The contents of this website are subject to periodic change without notice. Information provided on The Encompass Blog is not intended to replace official sources. Although attempts will be made to ensure that the information is accurate and timely, the information is presented "as is" and without warranties. Information contained on The Encompass Blog should not be mistaken for professional advice. Information contained herein should not be considered error-free and should not be used as the exclusive basis for decision-making. Use of website information is strictly voluntary and at the user's sole risk. We encourage you to obtain personal advice from qualified professionals when making decision regarding your specific situation.

Other resources linked from these pages are maintained by independent providers. The Encompass Blog does not monitor all linked resources and cannot guarantee their accuracy. Statements, views and opinions included in an independent provider's material are strictly those of the author(s). These views may not necessarily represent the opinions or policies of The Encompass Blog, the Encompass family of companies or its agents, officers or employees.

ECC Monitor: OK