Advice: Draw Up a Business Disaster Plan

Written by Chris Penttila of Entrepreneur.com



When Trinise Prosper, 37, returned to New Orleans two years after Hurricane Katrina, she and two of her sisters, Antoinette, 44, and Brenda, 32, decided to start a full-service bakery. But getting their new business, Sweet Savors Bakery, off the ground wasn't easy. The sisters applied for a federal small-business grant and never heard back.

New Orleans lacked phone and credit card service at the time, and supplies were more expensive. "We did everything out of pocket," says Trinise. "It was very hard to get [the business] up and running. We pulled together and got it done."

Sweet Savors Bakery opened in New Orleans' Gentilly District in March 2007 and now employs 10 people. Still, the wreckage Hurricane Katrina left behind profoundly impacted the sisters, who had all worked for another sister's bakery business that was destroyed in the storm. That experience taught them to always prepare for the worst, and today, Sweet Savors Bakery has a disaster insurance policy that covers the company's products and equipment, as well as the building it leases.

The company also has a written disaster plan that addresses floods, fires and other events. "If you don't have [a plan]," Trinise says, "you're setting yourself up to fail."

In fact, having a disaster plan can actually help your business grow during good times, says Donna Childs, author of Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses. She sees three distinct benefits to having a disaster preparedness plan in place.

First, a plan can reduce your insurance premiums and free up money for investment in growth initiatives. Second, a plan underscores the resiliency of your supply chain -- something that can make your company more competitive for government and corporate contracts. Third, a plan enhances your operational efficiency.

"Disaster planning necessarily requires that you understand how your business works," Childs says. "Instead of doing things in an ad hoc, informal way, you start putting systems in place that will improve your efficiency."