Running a business is hard enough without worrying about wildfires or hurricanes. But a solid plan can help your business stay open and productive if disaster strikes.

Many of us think that natural disasters happen somewhere else to someone else. Even if we have some inkling that we might be at risk, we’re lulled into a false sense of security in the belief that we’re prepared. Big mistake.

“In many small- to medium-sized businesses [SMBs], there’s a sense that ‘I am protected.’ It turns out that over 45 percent [of SMBs] don’t have a disaster preparedness program,” says Monica Girolami, the director of SMB and cloud global product marketing at Symantec, which conducted a survey among 2,053 SMBs around the world. As a result of this lack of preparedness among SMBs, 40 percent of small businesses that are forced to close due to natural disasters never reopen, according to the Insurance Information Institute.

The cost of failure and its negative impact on the U.S. economy are massive. Indeed, insured losses for global natural catastrophes and man-made disasters totaled $116 billion in 2011, according to reinsurance provider Swiss Re. In the U.S. alone, a particularly violent tornado season resulted in insured losses of more than $25 billion. Last year was the second-costliest year for disaster losses after the $123 billion spent in 2005, when a series of hurricanes — including Hurricane Katrina — battered the U.S.

Whether the increasing number of catastrophes is coming from unpredictable weather patterns due to global warming or simply bad luck, fear can be a particularly strong motivational tool. So what is the best way to avoid the confusion, frustration and loss of business that result from disasters? Be prepared.

The following list is what every catastrophe preparedness plan should include to make sure you can stay open and productive if disaster strikes your business.

1. Conduct vulnerability and risk assessment. The location of your business plays a big part in your risk exposure. “We look at every potential, and push [companies to think] through [every] scenario that might happen,” says Cole Brown, vice president of loss control at CBIZ Insurance services. Are you near an airport or train tracks? What are the chances of tornadoes, hailstorms, or wind or lightning strikes? Are you near a fire danger zone?

“The risk management and modeling will determine what might happen in the future,” says Brown. There are statistics, tools and data that determine the vulnerability of your location. An assessment runs about $1,000 to $1,200, but your insurance company might provide this assessment as part of its services.

2. Buy insurance. Use your risk assessment to identify how much business insurance you’ll need. “Make sure you’re insuring to 100 percent value in the event of a total loss,” says John O’Connor, vice president of Travelers Insurance. There are affordable policies available. Travelers Insurance, for example, has a business owner’s policy that starts at $500 in annual premiums.

3. Develop a business continuity/disaster recovery plan. When the risk assessment is completed, create five potential scenarios that could happen. Sit down and ask yourself what you would do in each situation. Break everything down into small steps. These might include designating an official to make operational decisions and then implementing a secure process for relaying vital information to employees.

Next, assemble a disaster recovery team composed of people who know your business best. Have them establish a recovery location where employees can work without interruption. That means having access to phone lines, computers, the Internet and company information. “You want to make sure that the fundamental infrastructure is staying alive,” says Girolami, who indicated that more and more SMBs are adopting virtualization and cloud technologies. “You want to make sure you are protecting your information completely.”

A few other things to consider: Have a plan to meet emergency cash flow requirements, and keep enough cash on hand to handle any immediate needs. Also, make sure you have a list of important emergency contacts, including your insurance company.

4. Formulate a crisis communication plan. This will guide the communication and messaging process to all external stakeholders. “Appoint a spokesperson to tell customers and creditors that your business is still open,” says Pete Appello, executive vice president of small-business banking at Capital One Bank. “Reassure stakeholders that you are taking the necessary steps to stay in business,” he adds.

5. Test your plans. “You can have the greatest plan in the world, but have you tested it?” asks Brown of CBIZ Insurance. Without testing it, how do you know it will work if a real crisis happens?

6. Update and test your plan annually. Businesses change over time — that means your business continuity/disaster recovery plan needs to be updated and tested each year. Appello also recommends meeting with key stakeholders annually to discuss critical components of the plan that would require their participation.

Following these steps will “put you ahead of a lot of businesses,” says Brown. And that’s a good situation to be in.

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