How to Create an Effective Business Emergency Plan

As a small business owner, being prepared for emergencies is essential. Disasters such as hurricanes, cyberattacks, power outages, and pandemics can strike at any time, disrupting revenue, operations, and your reputation. The difference between businesses that recover quickly and those that don’t often comes down to one thing: preparation.

Here’s how to build a business emergency plan to ensure financial resilience:

  • Identify Potential Risks and Threats
    • Conduct a risk assessment tailored to your industry and location.
    • Common risks might include hurricanes, tornadoes, and flooding, as well as cyber threats and supply chain disruptions.
    • Include financial risks alongside operational risks, consider:
      • Cash flow disruptions if you can’t operate for days or weeks.
      • Supply chain delays that drive up costs.
      • Unexpected expenses for repairs, temporary staff, or technology fixes.
    • Work with your accountant or banker to calculate your cash flow runway (how many days of expenses you could cover if revenue stopped).
  • Secure Access to Cash and Credit
    • Emergencies often bring unexpected expenses before insurance or aid arrives. Having liquidity on hand can make the difference between surviving or closing.
      • Maintain a cash reserve for at least 30–60 days of core expenses.
      • Establish or review a business line of credit for quick access to funds.
      • Ensure your accounts are set up for online and mobile banking so you can move money even if your office is inaccessible.
  • Protect Against Cyber and Fraud Risks
    • Crises create opportunities for cybercriminals. After disasters, businesses often see an increase in:
      • Phishing emails posing as relief organizations.
      • Fraudulent wire requests targeting accounts payable teams.
      • Ransomware attacks exploiting remote work systems.
    • Activate multi-factor authentication (MFA) on your business accounts and train staff to verify payment requests, especially during disruptions.
    • Talk with your banker about fraud prevention tools such as Positive Pay.
  • Review Insurance and Business Interruption Coverage
    • Not all insurance policies cover income loss during downtime. Review your policies for:
      • Business interruption coverage to replace lost revenue.
      • Cyber liability coverage for data breaches and ransomware.
      • Property and casualty insurance that reflects current asset values.
  • Ensure Business Continuity in Payments and Payroll
    • Set up direct deposit for payroll so employees are paid even if you can’t access your office.
    • Explore digital treasury services like automated payables and receivables to keep money flowing.
    • Maintain updated vendor and customer contact lists for payment or billing adjustments.
  • Prepare Customer Communication for Financial Stability
    • Emergencies can erode customer trust if not handled well. Proactive financial messaging reassures customers.
    • Have pre-drafted messages ready if your hours, services, or digital systems are affected.
    • Be transparent about how customers can continue doing business with you, whether through online payments, ACH, or credit card acceptance.
    • Reassure them that your business has a financial continuity plan in place.
  • Review and Update Annually with Your Bank
    • Schedule an annual review with your bank and insurance partners.
    • Update your plan after any significant business change, such as expansion, new product lines, or major investments.
    • During emergencies, strong partnerships matter. Your banker can:
      • Provide rapid access to credit or short-term funding.
      • Help with fraud protection tools like Positive Pay.
      • Connect you with community relief programs and SBA resources.

Emergencies may be unpredictable, but your financial readiness doesn’t have to be. By planning ahead, you can help ensure your business weathers any storm.

At Colony Bank, we’re committed to helping business owners prepare not only for growth, but also for resilience. Talk with your business banker about strategies to safeguard your cash flow, protect your accounts, and strengthen your continuity plan.

Financial Education

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