Most business owners spend a lot of time planning for growth. They think about sales, hiring, customers, expenses, equipment, and what they want the business to accomplish next.

But there is another question worth asking: What would happen if your business suddenly could not operate tomorrow?

An emergency does not have to be a major hurricane or widespread natural disaster. A power outage, fire, burst pipe, cyberattack, equipment failure, loss of internet service, or unexpected loss of access to your building could interrupt normal operations.

For a small business, even a relatively short disruption can create problems. Employees may not know what to do. Customers may be unable to reach you. Important records may become inaccessible. Bills and payroll still need to be handled even when normal operations have stopped.

September is National Preparedness Month, making it a good time to review whether your business is ready for the unexpected. The U.S. Small Business Administration recommends approaching emergency preparedness in three basic steps: assess your risks, create a plan, and make sure you can actually execute that plan.

Here are several areas every business owner should consider.

1. Identify the Risks Most Likely to Affect Your Business

Every business faces different risks.

A company located near the coast may need to think carefully about hurricanes and flooding. A business operating from an older commercial building might be more concerned about electrical problems, fire, or plumbing failures. Other risks have little to do with geography.

Consider what would happen if:

• Your internet or phone system stopped working.

• Your building became inaccessible for several days.

• Your computer systems were unavailable.

• A critical piece of equipment failed.

• Your business experienced a cyberattack.

• A key employee was unexpectedly unavailable.

• Your accounting or customer records could not be accessed.

The goal is not to imagine every possible disaster. Instead, identify the situations most likely to seriously disrupt your particular business.

Then ask:

Which parts of our business would need to be restored first?

That question can help you focus your preparedness efforts where they matter most.

2. Know Which Business Functions Are Essential

Not every task has the same priority during an emergency. Identify the functions your business absolutely needs in order to continue operating—or to resume operations quickly.

Depending on your business, those may include:

• Processing payroll,

• Communicating with customers,

• Accessing customer records,

• Receiving customer payments,

• Paying critical vendors,

• Processing orders,

• Scheduling employees,

• Accessing accounting records, or

• Maintaining certain equipment or systems.

Once those essential functions are identified, determine what each one depends on.

For example, if payroll must continue, who can process it if the person normally responsible is unavailable?

If customer service is essential, how would customers contact you if your office phones were down?

If your normal accounting computer was damaged, could authorized personnel securely access the information another way? 

Documenting these answers before an emergency makes it much easier to respond when normal routines are disrupted.

3. Make Sure Important Records Are Backed Up

Think about how much information your business relies on every day. Accounting records, tax documents, customer information, employee records, contracts, insurance information, vendor contacts, and other documents may all be necessary to keep your business operating. Now imagine losing access to those records without warning. Regular backups are an important part of business preparedness.

Review where your important information is stored and ask:

• Is the information backed up?

• How frequently is it backed up?

• Is the backup stored somewhere separate from the original?

• Who has access to it?

• Has anyone confirmed that the backup can actually be restored?

A backup that has never been tested may provide less protection than you think. Businesses should also consider what information should not be widely accessible. Protecting confidential customer, employee, and financial information remains important even during an emergency.

4. Create an Employee Communication Plan

When something goes wrong, employees need clear information quickly. 

How would you notify everyone if the office could not open tomorrow morning?

Who would make that decision?

Who would communicate with employees?

Does management have current contact information for everyone?

A simple communication plan could include:

• Primary employee phone numbers,

• Alternate contact information,

• A designated person responsible for notifications,

• Instructions for working remotely, if appropriate,

• A backup communication method, and

• Clear guidance about who employees should contact with questions.

Employees should also know their individual responsibilities during an emergency.

If only one person knows how to complete a critical task, that can become a major vulnerability.

Cross-training employees and documenting important processes can help reduce that risk.

5. Decide How You Would Communicate With Customers

Your customers do not necessarily need every detail about an emergency, but they do need to know how it affects them.

If your business temporarily closes or experiences delays, how will customers find out?

Depending on your business, you might communicate through:

• Email,

• Your website,

• Social media,

• Recorded telephone messages, or

• Direct communication with key customers.

Prepare basic procedures before you need them. It may also be helpful to decide who has authority to post emergency updates and who has access to the necessary accounts. A quick, clear message can reassure customers that the business is responding to the situation and let them know what to expect.

6. Review Your Insurance Coverage

Insurance is another important part of emergency planning. Business owners should periodically review their policies with their insurance professional and make sure they understand what is—and is not—covered.

Questions worth asking may include:

• What types of property damage are covered?

• Is equipment covered?

• Is inventory covered?

• Do we have business interruption or business income coverage?

• Are certain disasters excluded?

• Are our current coverage limits still appropriate?

• What documentation would we need to submit a claim?

Businesses change over time. You may have purchased equipment, expanded operations, increased inventory, or moved locations since your coverage was last reviewed. Do not assume that a policy purchased several years ago still matches your current business. The SBA also recommends that business owners check with their insurance providers as part of their disaster-preparedness planning.

7. Keep Critical Contact Information Accessible

During an emergency, you may need information quickly.

Consider maintaining a secure list containing important contacts such as:

• Insurance agent or carrier,

• Bank,

• Payroll provider,

• Accountant or bookkeeper,

• Attorney,

• Landlord or property manager,

• Utility companies,

• IT provider,

• Important vendors,

• Emergency repair companies, and

• Key employees.

Do not rely entirely on a list stored on one office computer. Make sure authorized people can access important contact information even if the normal office systems are unavailable.

8. Think About How You Would Handle Financial Obligations

A temporary closure does not necessarily stop financial obligations. Payroll may still be due. Loan payments may still need to be made. Vendors may still expect payment. Automatic withdrawals may continue. Business owners should understand what financial commitments would continue during a temporary interruption and who would have the authority and information necessary to manage them. Maintaining accurate, up-to-date financial records can be especially helpful in this situation. It is difficult to evaluate your cash position during an emergency if your bookkeeping was already several months behind before the emergency occurred.

Consider reviewing:

• Available cash,

• Expected customer receipts,

• Upcoming payroll,

• Outstanding bills,

• Automatic payments,

• Credit availability, and

• Other short-term financial obligations.

This can help you understand how long the business could continue meeting its obligations if revenue were temporarily interrupted.

9. Document Important Procedures

Many small businesses depend heavily on knowledge that exists primarily in someone's head. One employee knows how payroll works. Another knows the password or procedure for a critical vendor system. The owner is the only person who knows how to contact certain customers. That works—until one of those people is unavailable.

Identify important processes and document them. You do not need a hundred-page manual. Simple instructions can make a significant difference.

Document things such as:

• How payroll is processed,

• How deposits are made,

• How customer invoices are generated,

• How important vendors are contacted,

• How key software systems are accessed,

• Where important documents are stored, and

• Who has authority to make financial or operational decisions.

Store those procedures securely and review them periodically.

10. Test Your Plan

Writing an emergency plan is only the beginning. The SBA recommends practicing emergency plans with staff rather than simply creating a document and putting it away.

Try asking your team a few hypothetical questions:

- The building is unavailable tomorrow. What happens first?

- The person who normally runs payroll cannot be reached. Who takes over?

- Our computer system is unavailable. Can we still access customer and financial information?

- Our phone system is down. How will customers reach us?

You may quickly discover gaps that were not obvious when the plan was written. That is exactly why testing is useful.

Preparation Is About More Than Natural Disasters

It is easy to hear the words “emergency preparedness” and picture a hurricane, tornado, wildfire, or flood. Those are certainly important risks, and the SBA provides preparedness guidance for several types of natural disasters. But business interruptions can also result from much smaller, more localized events.

The SBA notes that business continuity planning should identify critical business functions and processes, organize responsibilities, and evaluate recovery strategies.

For a small business, the practical question is simple: If something interrupted normal operations today, how quickly could we get back to business?

A Little Preparation Can Make Recovery Much Easier

No emergency plan can prevent every disruption. The purpose of planning is to reduce confusion, protect important information, establish responsibilities, and help the business resume operations as efficiently as possible. The SBA encourages businesses to assess their risks, develop a response plan tailored to their operations, and practice that plan with employees.

September is a good time to have that conversation.

You may never need to use the plan. But if the unexpected happens, having one already in place can make a difficult situation much easier to manage.

Would your business be ready tomorrow?

---

Under U.S. Treasury regulations, any tax advice in this communication is not intended or written to be used to avoid IRS penalties. Tzinberg & Associates provides this information for general guidance only. It does not constitute tax advice, accounting services, investment advice, or professional consulting. Consult a professional adviser before making decisions or taking action, as the information is provided "as is" without any warranties regarding its completeness, accuracy, or timeliness.