After the unfortunate string of hurricanes that recently hit key parts of the U.S., thousands have been left affected, including hundreds of businesses in Houston, Southern Florida, and Puerto Rico.
Although acts like these are rare, preparing your business for such disasters could help avoid long-term closures or worse. Should such an event occur again in the future, implementing a corporate disaster plan could be crucial for your company’s recovery.
Creating, documenting, and testing a disaster recovery plan is critical in today’s business world, especially if you want to look for buyers/investors for your firm. More and more professional buyers are adding questions about disaster preparedness to their due diligence checklists. If you come up short on this, or have no plan at all, buyers will be concerned.
The great news is that with some simple planning and organizing, you can create a fairly robust disaster recovery program that will give buyers confidence should a catastrophe strike and, most importantly, protect the company from financial upheaval. Here are some basic guidelines (of course the larger the company, the more sophisticated these steps will become).
First, most importantly, set up a system where your key data from all departments is backed up regularly (daily if possible), and then at least once a week, that back-up data is transferred to an offsite location for safe storage. It is a good idea to use a third-party location for this and ensure that it is several miles (or more) away from your office to safeguard that the back-up facility is far enough away to be protected from what may impact your office.
Secondly, it is a good idea to create a corporate “calling tree” in case disaster is imminent. Again, this can be very basic. Key managers should have home phone numbers and cell numbers for all of their direct reports. In case of an emergency, for example, when the office will be closed, the person at the top of the tree contacts the department heads, who then reach out to all their employees with key information about the pending disaster and steps to take (i.e., staying out of the office). This is a great way to communicate quickly with employees.
If you want to really protect yourself and your business, you can actually contract with companies that specialize in creating back-up locations where employees can gather if the office is shut down for an extended period of time. Although this can be expensive, having a separate facility some miles away can be a great way to ensure that your business has continuity.
Since most businesses cannot afford to maintain a backup location, another great idea is to allow associates to work from home (assuming that their homes are safe) during and after a disaster occurs. This is a great idea to pursue because today the technology exists where you can have nearly 100% of your workforce “virtual” for a short period of time in case the office is shutdown or impossible to reach.
Most importantly, no matter how simple or sophisticated your plan is, it is vital to TEST it. Just because it looks great on paper does not mean it will actually work. The only way to be ready for a disaster is to prepare and work the plan in advance. Not only will this allow your associates to understand how the strategy is supposed to work, it will also allow you to determine where your gaps are in the plan. Odds are good that when you test it, you will find that you completely forgot something in your disaster recovery.
Again, these are just some simple ideas that you can implement in advance of any catastrophe occurring in your area. Granted, no plan is perfect and as we have seen, Mother Nature can be quite powerful and damaging. However, when it comes to talking to buyers, having a plan in place to discuss during due diligence can make a huge difference in how they view your company (and how they structure your deal).
Keep in mind that the one common issue that all buyers share is this: a fear of risk and uncertainty. If both are present in a transaction, they will factor it into their pricing model either by reducing what they will pay or requiring you to stay on for a number of years under an earn-out so some of these details can be addressed. It’s far better to create something in advance than be required to as part of the transaction.
If you would like some sources to give you more ideas on creating a disaster plan, use these links:
And if you are interested in learning more about how buyers view risk & uncertainty and how you can better position your company for due diligence, attend one of our complimentary exit planning conferences. An investment of a few hours of your time could pay off handsomely down the road, as you will learn how to prep your company to be “buyer ready.” To learn more call us at 972-232-1121 or visit our website and provide us with your contact information.
No matter what, be sure to take the time in advance to better prepare your company and your staff for any emergency that might arise. Doing so will ensure that your business can better survive whatever nature throws at you.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
© 2017 Generational Equity, LLC. All Rights Reserved.
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
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Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
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