History shows that 25 percent of businesses that close because of a disaster never reopen. Following the COVID-19 pandemic, tens of thousands of small businesses nationwide never recovered and simply closed their doors forever. Many of us have seen the devastation wildfires, floods and tornadoes wreak on a business community and the years of recovery that ensue.   

The golden rule for disaster preparedness is to increase awareness, develop action plans and practice them regularly. The U.S. Small Business Administration (SBA) can help.

Disasters inflict devastating effects on communities Unfortunately, Colorado is prone to a variety of natural disasters — including floods, drought, tornadoes and wildfires. One of the most destructive disasters occurred in 2013, when more than 10 inches of rain fell in a 24-hour period and inundated Boulder and surrounding areas. Flash floods killed eight people and damaged nearly 20,000 homes and hundreds of small businesses. Only a year ago, the Marshall Fire destroyed or damaged more than 1,000 homes and 30 businesses in Boulder County.

Establishing a disaster recovery plan makes good business sense. Being prepared for any kind of emergency means you’ll rebound sooner with less effects to your financial capabilities. Creating a recovery plan also can provide you and your employees peace of mind in knowing what to do if disaster strikes.

Here are four critical steps a small business owner can take to prepare for a possible disaster:

Review your business insurance to determine what’s included in the policy and whether’s its sufficient to cover possible losses. Understand that most business policies don’t cover flood damage. Check into business interruption insurance, which covers operating expenses if you’re forced to temporarily close. Review if your policy covers business shutdowns caused by such events as pandemics and other health emergencies.

Develop professional relationships with alternate vendors in case your primary supplier isn’t available. Place occasional orders with them so they’ll regard you as an active customer. Create a contact list for important business contractors and vendors you plan to use in an emergency. Keep this list with other documents in an easily accessible place at a protected off-site location.

Create a crisis communications plan to communicate with your staff, customers, vendors and contractors following a disaster.  Secure primary and secondary email addresses for your contacts and update this list regularly.Use social media channels to provide real-time updates to your customers and community about your business.

If you sell goods, innovative technology or manufactured products, your inventory could be your most important asset. Plan to relocate your most valuable inventory during an emergency. Your inventory could also be your data. Ensure your business data is secured in the cloud and backed up on a removable storage device suitable for a grab and go situation.

Following a declared disaster, the SBA helps rebuild communities by providing affordable, timely, direct loans to businesses of all sizes, nonprofits, homeowners and renters to cover uninsured losses. Developing a workable disaster recovery plan is critical for entrepreneurs.

Aikta Marcoulier serves as the U.S. Small Business Administration Region VIII administrator. She oversees SBA programs and services in Colorado as well as Montana, North Dakota, South Dakota, Utah and Wyoming. Frances Padilla serves as the SBA Colorado District director and oversees programs and services across the state. For more information, visit www.sba.gov or follow the agency on Twitter @SBArockymtn and @SBA_Colorado.