Dealing with disaster

It’s understandable that the day-to-day concerns for an owner-manager will be to keep customers happy, while also seeking opportunities to grow the business. Quite often, a disaster recovery plan will be at the lower end of a ‘to do’ list.

Besides, when it comes to a business disaster, that sort of thing always happens to somebody else.

For Nick Robertson, co-founder of online fashion retailer ASOS, the ‘it will never happen to me’ attitude proved costly. In Autumn 2005, the company moved depots to a brand new warehouse in a Hemel Hempstead industrial park and the company began to move up the gears as the Yuletide orders flooded in.

Early on the morning of 11 December 2005, however, a series of huge explosions at the Buncefield oil storage terminal seriously damaged ASOS’ new warehouse nearby.

‘In terms of disaster recovery we had no back-up,’ explains Robertson. ‘As a fast-growing company, the dynamics of the business meant that we had just one distribution centre.

Fortunately for Robertson, the nature of the business meant that, due to high demand, it only had around six weeks’ of stock. However, the website – the company’s only shop-front – was closed to transactions for five and a half weeks. ‘We shifted our staff from near Luton to the London office to complete the refunds of the 19,000 undeliverable orders,’ remembers Robertson.

According to a survey by the DTI, 70 per cent of businesses that suffer a ‘discontinuity’ in trading – not even necessarily five weeks of it – will be forced to cease trading. And, while we’re running with the stats, a Chartered Management Institute survey this year found that only 46 per cent of SMEs have business continuity plans and that just 37 per cent of those with plans will rehearse or exercise them.

Risk awareness

So, despite the possibility of going belly-up and losing everything, business owners’ perception of potential danger is fairly low. ‘SMEs don’t have the resources and management capability to make plans,’ asserts Dr Greg French, managing director of disaster recovery specialist Belfor. ‘They think that conducting contingency planning impacts their bottom line. Compiling a plan and testing it works is considered unnecessary because they don’t foresee anything bad happening to their business.’

Another reason to give serious consideration to disaster recovery is the introduction of a kitemark for continuity plans, British Standard 25999, which is expected to come into practice in 2007. It won’t be compulsory, but large firms that comply may insist their small suppliers have one.

Generally, the first step for a company with little or no contingency planning is just to start backing up your electronic data and taking it home at night. An advantage that growing businesses have over their bigger brothers is that it’s fairly cheap to get small amounts of data storage, a relatively easy disaster recovery technique. There are a vast variety of IT service providers out there that will very economically offer remote data storage and hosting arrangements, so staff can upload work files onto any home computer.

The next step up, and the foundation of a simple and cheap plan, involves looking at every part of your business, working out what could happen to it and how you’d deal with that eventuality. Then you need to put into place who will deal with it, be it a third party or an internal individual.

One thing that is essential to include in your plan, in the event of a substantial disaster, is to not stop trying to win new business. Alison Williams, chairman of market researcher FDS Group – another business that fell victim to fire – says that, because of temporarily putting business development on hold, even three years after the blaze the company hasn’t reached the level she’d expected to be at.

‘We had a disaster recovery plan, but it is much more thorough now. Our business continuity insurance is considerably increased, we have broadband from our offices in Kent to our offices in High Wycombe to offer continuous work in case of another disaster and our plan has provisions within it that will mean we shall not put new business development on hold.’

Williams’ current plan includes contact numbers of staff, customers, suppliers, insurance and utilities; details of emergency update lines for staff post-emergency; and detailed instructions and lists of who does what and when (including deputies for each role). ‘Plan for the worst case,’ she stresses, ‘then anything less will be covered.’

Related: Mastering disaster – Do you have a contingency plan?

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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