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Flames erupt from the Enterprise Products plant after a series of explosions triggered the blaze which burned out of control at the facility near downtown Houston on February 8, 2011.

RICHARD CARSON

If you own a small business, you probably have a business plan, a financial plan and a tax plan. But do you have a disaster recovery plan?

If you don't, a disaster might put you out of business. Permanently.

Here are some tips on how to develop a disaster recovery plan for your small business.

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Assess the risks

"Many disasters can strike a small business, including fire, flood, earthquake, power failure, vandalism, sabotage, pandemic and terrorism. But in this day and age, the biggest risk is loss of data due to a computer crash, says Steve Brown, a senior manager with Soberman LLP in Toronto. "If something happens to your computer system, you're out of business."

Analyze what each of these disasters could do to your business and then design a recovery plan that meets your organization's specific needs.

Set objectives

"The main purpose of a disaster recovery plan is simple: business continuity," says Saverio Rigillo, an associate with Fazzari Partners Chartered Accountants in Vaughan, Ont. "Business interruptions cost money and time you won't get back."

The other major purpose of a disaster recovery plan is preventing a disaster in the first place. "Understanding what could happen and developing a plan to deal with it can also help identify preventative measures you can put in place, such as a back-up electricity supply, surge protectors and anti-virus software," Mr. Brown says.

Secure your critical data

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"Decide what data is critical to your company, back it up regularly and keep the backups off-site," Mr. Brown advises.

Focus on the data that exists only in your records, such as customer and staff information, as opposed to data you recover from other sources. "Keep in mind that if your place of business is inaccessible, you will need a way to contact your staff at home, so make sure you have that information stored off-site," Mr. Rigillo says.

In addition to securing data, larger businesses should also consider arranging backup operating locations and equipment.

Determine how you will communicate with your customers

"External communications is extremely important if disaster strikes," Mr. Rigillo says. "If possible, your plan should include the ability to send a broadcast e-mail to customers letting them know what has happened and how long the business interruption will last. You can also place a message on your phone's voice-mail to let customers know what the situation is."

Review your plan

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"Those responsible for the plan should meet regularly to review and update it," Mr. Brown suggests. "Make sure your employees are familiar with the plan so they know what to do if disaster strikes."

Don't do too much … or too little

"Your small business may not need an elaborate disaster recovery plan, but you can easily put a simple plan in place that identifies such things as how long it would take you to recover critical data and get back up and running," Mr. Rigillo says. "If you take the time to assess what you could lose in the event of a disaster, you will soon realize that developing a plan is worth the investment of time and money."

Tuesday: How to execute a successful disaster recovery plan and salvage your business. Look for it on the Your Business website.

Special to The Globe and Mail

This article is courtesy of the Institute of Chartered Accountants of Ontario.

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