Business Interruption Insurance - Macbeths Insurance Brokers

The Dangers of Turning a Crisis Into a Catastrophe

If disaster struck your company, would you know what to do to keep it up and running? Or like many small business owners, do you think – or hope – that disasters only happen to others?

Although the chances of your offices being severely damaged by a fire are quite remote, it could still happen at any time and is out of your control. The potential danger to your staff means that by law you need have measures in place that can prevent a fire, procedures to evacuate staff and insurance to cover damage. But do you have any plan in place to enable you to keep running your business should your office go up in flames and you can’t use your premises?

If you don’t, you’re in danger of turning a crisis into a catastrophe that could see your business going under. If your operations are suspended, your revenue will dry up and your customers will go elsewhere, after which your business is unlikely to survive. But do you even know how long you could survive for?

If you have a strategy in place that can swing into action immediately, such as ensuring all staff can work from home and remote back up for your IT systems, you can keep the disruption of your business to a minimum, quickly defusing the crisis.

But fire is only one of many disruptions your business faces, and it’s one of the more common and obvious. So what can you do to protect your business from an impending crisis?

Cover the bases

Think carefully about all the crises that could hit your business, and the impact they are likely to have. Consider everything from your IT system crashing, to your top two salespeople joining a rival. Potential crises can vary from sector to sector, so make sure you take your specific circumstances into account. Then devise ways to handle each situation.

Work out how long you’ve got

The worst-case scenario in a crisis is that you’re business operations will be suspended. Consider how long your business would survive under such conditions. Take into account as many factors as you can, such as how quickly revenues would be lost against your business costs, from salaries to loans, and how soon customers would move to a rival.

Create a disaster recovery plan

Put a process in place that will enable you to spot and assess any potential crisis quickly, so you can then try to manage it, taking into account your previously devised plans for handling various crisis scenarios and how much downtime you think your business could withstand. The plan doesn’t have to be very long, but it should cover all the major factors that are crucial to keeping your business running. Test it out and practice implementing it, so that all employees understand the situation and know what’s expected of them.

Keep customers in the loop

In a crisis, don’t forget one of you most important assets – your customers. They are less likely to go elsewhere if you keep them informed about the situation, what you’re doing to deal with it and, if relevant, how long you think your business will be down for.

Get the right insurance

You can also protect your business against unforeseen crises with business interruption insurance. Your assessment of potential disasters and maximum possible downtime, plus your disaster recovery plan, along with the type of business and its sector, will help inform your insurers of the appropriate areas that need cover. This can prove invaluable by not only helping to pay for any physical damage or loss, but also covering business costs should your cashflow dry up, such as loan payments, salaries and supplier invoices.

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Author: admin | January 15th, 2015

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