7 Steps to a Business Disaster Preparedness Plan

The only thing predictable about natural disasters is that they will keep happening, and often, without sufficient warning. In fact, 1 in 10 small businesses have faced financial troubles from weather-related disasters, according to the Small Business Association. While most of those companies reported losses of less than $25,000, higher-revenue firms and businesses with more than 50 employees were more likely to report losses exceeding $100,000.

According to the Federal Emergency Management Agency (FEMA), about 25% of businesses do not reopen after disasters. Having an emergency disaster plan and a continuity of operations plan in place can reduce that risk and help the business recover faster.

The experiences of business owners who have survived hurricanes, tornados, floods, or fires highlight the importance of solid preparation. By readying your organization, you can protect your employees, operations, and revenue from the outsized impacts of a crisis and shorten the time it takes your company to recover. Consider the following seven steps for developing a natural disaster response plan and increase the resilience of your business in the process:

1. Evaluate your potential vulnerability. The first step in preparing an emergency disaster plan is understanding the scope of the threat. Review what types of disasters have occurred in your area and research what the impact was on local businesses. Consider connecting with your business banker, insurance agent, internet service provider, and other key services to learn more about the historical effect disasters have had on local businesses and any lessons they learned along the way. That initial research will inform areas of risk you may not have considered. As you move toward developing a plan, evaluate the digital, human, and physical vulnerabilities that could be affected by a disaster. This includes your workforce, digital connectivity, payments and financial data, factories, distribution systems, and more.
   
2. Create a disaster planning committee and emergency response plan.The next step is to form a disaster planning committee. Keeping these efforts within your human resources or operations teams may be tempting, but including representatives from all of your business lines and corporate functions is critical. You want to know how every aspect of your organization could be affected by a disaster, from finance and marketing to supply chain and IT. As this important group dives in, it should tackle multiple issues including leadership during an emergency, employee warning systems, evacuation routes, communication plans, facility vulnerabilities, digital redundancy, and financial impacts and safety nets. One piece of useful advice is to have a meeting after every natural disaster, regardless of whether it had any effect on your business. The idea is to build a regular " catastrophe gaming process," where employees act out disaster situations.
   
3. Review your insurance and make a financial plan. As previously noted, touching base with your insurance and banking partners is important. Connect with your insurance agents to understand the scope of your current policy and what benefits are provided. Ask about additional coverage for specific types of events, such as water damage or power outages, or riders that cover business operation interruptions. Among the lessons learned from recent hurricanes are floodproofing buildings, adding flood insurance, and diversifying supply chains to vendors less likely to be impacted by a disaster. In a similar vein, reach out to your business banker to learn about the resources available should your business face revenue losses or major damage. Consider establishing a line of credit, set up automated payments, and ask about your bank’s plans for emergency response in the event the bank is also affected by a disaster. This helps ensure you have the necessary capital and systems to keep payments timely and avoid default.
   
4. Back up documents and other critical data. Losing important data can lead to additional problems that plague your company even after the disaster. For example, an event that risks or destroys customer databases, employee HR information, or company financials could impact operations or force your organization to spend countless hours recreating information. Fortunately, you can limit the effects of data losses by making digital copies of important documents and backing up your data to a cloud-based storage service away from your main premises. You should also review who has access to cloud storage of vital data to give access to someone in a different region who would not be impacted by the disaster and would still have internet connectivity.
   
5. Plan for emergency power. In natural disasters, losing power for hours, days, or longer is common. When Hurricane Milton hit Florida in October 2024, 3.2 million Floridians lost access to electricity. That included 98% of people in one of the counties closest to where the hurricane made landfall. An ongoing power outage can have a ripple effect across your operations, leading to other potential problems. For instance, if your business needs to keep products at a certain temperature, going without power is more than an inconvenience—it’s a risk to your inventory. Review your emergency power options and invest in generators that can sustain key parts of your operations. Also consider an uninterruptable power supply (UPS) system and surge protectors to limit damage to computers.
   
6. Train your employees on how to respond.Creating a business emergency plan is a solid step toward reducing the impact of a disaster on your company. However, you also want to integrate your emergency preparedness into your corporate culture. Implement training so that employees understand what to do during a disaster. Model potential scenarios and identify gaps as you practice. Don’t forget to include plans for how your employees will alert customers, suppliers, and partners about the crisis and your company’s timeline for recovery. Alternative channels for communication, such as social media, can be especially helpful in communicating your plan and providing updates in a crisis. One strategy is to draft communications templates in advance to ensure business responses to a disaster are timely and on-brand in high-pressure situations.
   
7. Plan for your recovery.A significant component of your emergency response is designed to help mitigate your losses and survive a catastrophe. But you also want to create a recovery plan for getting your operations back to normal as fast as possible. Talk with your company leaders about how to restart the business, what makes sense in terms of phases or stages, and an expected timeline for returning to your status quo.

The Small Business Administration notes that the resilience of businesses after a natural disaster plays a vital role in the broader recovery process, helping to rebuild and strengthen the community after a disaster. Reopened businesses provide jobs and income for local residents, which is crucial for economic recovery. Also, the reopening of businesses can restore a sense of normalcy and hope, which is important for the mental health of the community.

In an ideal world, your business will never face a natural disaster. But if the less-than-ideal happens, having an emergency response plan will help your business weather the storm—or any other crisis.

Interested in learning more about how Fifth Third Bank can help your company plan for an emergency? Find a banker.