Why every business needs a crisis plan

Posted by Jim Pietro on Apr 22, 2011 12:56:09 PM

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If you want one good reason why you should have a crisis plan for your business, think about the images of the Lowe's Home Improvement store in Sanford, North Carolina after a tornado ripped through it on Saturday, April 16. More than 100 customers and employees made it out alive thanks to the quick action of the manager and employees who carried out the store's emergency response plan.

Of course, crises aren't limited to the natural disasters we've been talking about since the devastating earthquake in Japan. They also include fires, hacked customer files, a major power outage, the recall of your best-selling product, a key customer who files for bankruptcy. In other words, anything that threatens the operation, performance, or reputation of your company.

So what should a business crisis plan include? While a lot will depend on the size of your company, the business you're in, and the major risk factors you anticipate, here are a few practical suggestions that apply to most small- to mid-sized businesses.

- Bring together your key people to imagine possible scenarios.

- Create a set of responses based on those scenarios.

- Review your insurance coverage - including business interruption insurance - to be sure you are financially protected in these situations.

- Back up your records with a web-based system.

- Keep detailed records of your holdings and your inventory - perhaps with photos or a video - to document losses for insurance and tax purposes. Be sure to maintain a copy in a secure, offsite location.

- Have a backup power plan, perhaps involving an emergency generator.

- Consider creating a mutual agreement with another business - even a competitor - to share space and other services if either was hit with a disaster.

- Select a location that can work as an operations center for your crisis team.

- Check out the emergency management services offered in your community.

- Develop a communications plan to stay in touch with employees, customers, vendors, and other key constituencies.

- Designate a spokesperson - and a backup person, just in case - to deliver the key elements of your message in an honest, straightforward way.

- Do a trial run.

I hope you'll never face a situation that will cause you to activate any of these strategies. But many people who have developed a crisis management plan say that developing the plan, keeping it current, and familiarizing their employees with it has improved their understanding of potential opportunities as well as problems. If you have questions, I invite you to give me a call.

Topics: Jim's Blog, business crisis plan, disaster planning, business insurance

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