MONEY MANAGEMENT

A column on personal finance prepared by the Virginia Society of Certified Public Accountants

DISASTER RECOVERY PLANNING FOR SMALL BUSINESSES

(June 23, 2004) — It’s a matter of survival. All businesses — regardless of size — should have a disaster recovery plan, according to the Virginia Society of CPAs. In the event of a disaster, a recovery plan is critical for getting the business back up and running as quickly and as cost-effectively as possible. No single disaster recovery plan will fit all businesses. Consider the types of disasters most likely to occur and how they are best addressed. Remember, too, that the nature of a disaster will impact businesses differently. Before you can put a plan together, identify and prioritize the vital elements your business needs to continue operating after a disaster. For most businesses these include key personnel, the business premises, information, documentation, and key assets such as computers, equipment, or vehicles.

Focus on Prevention

While you have no control over some unfortunate circumstances, others can be combated with preventative measures that can help minimize losses. For example, evaluating the adequacy of your fire prevention and safety systems with periodic tests will provide assurance that the systems are working effectively. To safeguard your computer equipment and data, use surge protectors and the most up-to-date virus protection software. Also, make sure you have a reliable means to back up your data.

Protect Employees

If an emergency takes place during the workday, the most critical priority is to protect employees. Develop a plan to safely and efficiently evacuate your worksite and be sure all workers understand the process. Appoint safety “leaders” who will be responsible for directing other employees in an emergency.
In the aftermath of any disaster, it’s important to keep in contact with your employees and, if necessary, their families. Maintain a phone list with the home and cell phone numbers of all employees and their emergency contacts. Be sure the management team and other key employees have copies. You may want to set up a “phone tree” to facilitate passing information from employee to employee. You should also have a current list of all key vendor and customer contacts.

Identify a Temporary Location

Could your business survive if a disaster rendered its premises temporarily or permanently uninhabitable? It could, if you have a plan in place for relocating to an alternative site. Identify a site that would be both accessible to your employees and convenient for customers or clients. In addition to the site, think about what you would need in terms of equipment, telephone lines, and related support, and make a contingency arrangement with appropriate vendors.

Prepare an Information Retrieval Plan

The foundation of a sound disaster recovery plan is the ability to protect and quickly restore a company’s critical computer data and programs. Information stored on computers, particularly critical software and data, must be backed up regularly onto a tape system or rewriteable CDs that are stored off site in a secure location. If the nature of your business warrants it, you can arrange to have your data automatically backed up, securely encrypted, and transmitted electronically to a data storage facility. It’s also important to protect vital paper documents such as contracts, employee records, and financial and insurance records by making copies and storing them off site.

Maintain an Accurate Equipment Inventory

Your equipment and machinery inventory should specify the brand, model, and other information related to recovery or replacement of key equipment in your business, along with contact information for vendors that could provide such equipment in a hurry. Keep the list current and store it off-site.

Keep Your Plan up to Date

The best disaster recovery plans are reviewed and updated at least annually.

Don’t Think, “It Can’t Happen to Me”

By investing some time and effort now, you can help ensure that your business will be up and running in the event of a disaster. A CPA skilled in risk assessment can help you determine cost-effective recovery strategies.

The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at www.vscpa.com.