Disaster Recovery Guide for Small Business

Editor's note: This post was originally published September 17, 2018, and has been updated for accuracy, comprehensiveness and freshness on September 25, 2025.​​​​​​​​

Think about what would happen if your small business went dark for three days. No payment systems, no access to customer data, no way to fill orders. The downtime adds up fast, and with it, both lost revenue and lost trust.​​​

Why is disaster recovery important for businesses? Downtime isn't just inconvenient—it's expensive. Small businesses can lose thousands of dollars per hour in power outages. Beyond immediate revenue loss, disasters can trigger compliance penalties, damage your reputation, and even force permanent closure.

​​​​In this guide, we’ll show you how to create a disaster recovery plan for a small business that actually works for you. From the core pieces every plan needs, to sample playbooks and a final checklist, everything is laid out so you can go from “no plan” to “ready for anything” without the guesswork.​​​

What is a ​small ​business disaster recovery plan?

A business disaster recovery plan is your roadmap for restoring systems, data, and operations after any disruption. Think of it as your business's insurance policy against the unexpected.

Recovery vs. continuity: what's the difference?

Disaster recovery focuses on restoring technology and operations after an incident. Business continuity covers how your business keeps serving customers during the disruption itself.

1. Your disaster recovery plan for a small business should address five key areas:
2. People (employee safety and roles)
3. Processes (critical workflows)
4. Technology (systems and data)
5. Facilities (workspace alternatives)
6. Vendors (supply chain backup)

Core components of a small business disaster recovery plan

​​​​Risk assessment and business impact​​​

​​​​The first step in building a disaster recovery plan is knowing what could actually disrupt your business.​​​

​​​​Common risks to consider​​​

• ​​​​Natural disasters such as floods, earthquakes, and hurricanes
• ​​​​Severe weather events like ice storms or tornados
• Extended power outages
• Cyberattacks, including ransomware
• Hardware or system failures
• ​​​​Supply chain breakdowns

​​​​Identify critical processes​​​

​​​​Next, look at the processes your business cannot afford to lose. These usually include:​​​

• ​​​​Payment processing
• Order fulfillment
• Customer service
• Scheduling and communication tools​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​

​​​​Measure the impact​​​

​​​​Ask yourself: how long could each process be down before serious damage occurs? Think about both ​​financial impact​​ and ​​customer impact.​​​

​​​​Priority ranking tip​​​

​​​​Start by ranking processes based on how quickly they affect revenue. Then factor in customer satisfaction. This gives you a clear picture of which areas to protect first.​​​

​​​​Critical systems and data inventory​​​

​​​​After you’ve identified risks, the next step is to build an inventory of the technology that keeps your business moving. Think of this as your playbook when things go wrong — a clear picture of what you use, where it lives, and who owns it.​​​

​​​​Your list should cover:​​​

• ​​​​Systems and applications​​ like accounting, point-of-sale, scheduling, and email.
• Devices and equipment​​ such as servers, laptops, desktops, tablets, and phones.
• Data sources and databases​​ whether stored locally, in the cloud, or on third-party platforms.
• System owners​​ who are responsible for each tool or process.
• Physical locations and dependencies​​ so you know what breaks if one piece fails.
• Data locations and frequency of change​​ because data that updates hourly needs more protection than files that rarely change.

​​​​This inventory connects directly to your recovery goals, which is where the next section comes in.​​​

​​​​Recovery objectives​​​

​​​​Now that you know what you have, the question becomes: how quickly does each system need to be restored, and how much data can you afford to lose? These are called recovery objectives, and they’re the benchmarks that guide your strategy.​​

​Determine the maximum amount of downtime that your systems can handle. This is called your Recovery Time Objective (RTO). Consider systems like payment processing, email systems, and accounting software. Map out how much time you can afford to be without these critical systems.

​Next, figure out the amount of data loss you can accept. This is your Recovery Point Objective (RPO). Be sure to consider data like your financial transactions, customer communications, and marketing analytics.​

​​​​These targets are the bridge between what you rely on and how you’ll protect it.​​​

​​​​Recovery strategies​​​

​​​​With these objectives in place, it’s time to map out the strategies that make them achievable. Each system in your inventory should have clear tactics tied to its RTO and RPO.​​​

• ​​​​Data protection:​​ run daily automated cloud backups for critical data, weekly for less important files. Use image-based backups for entire machines and file-level backups for specific data. Always keep an encrypted copy offsite.
• Workarounds:​​ keep spare laptops or mobile hotspots on hand. Know what alternate internet connection you can switch to. Have manual processes ready for short-term operations and identify cloud-based substitutes for core apps if needed.
• ​​​​Facility alternatives:​​ make sure employees can work remotely or that you have a temporary office plan if your main site goes down.​​​

Roles and responsibilities​​​

​​​​A recovery plan only works if everyone knows their part. Assign owners so there’s no confusion during a crisis:​​​

• ​​​​Incident lead:​​ coordinates the overall response.
• ​​​​IT lead:​​ handles system recovery and technology.
• Communications lead:​​ manages staff and customer messaging.
• Vendor liaison:​​ works with third-party partners.
• ​​​​Facilities lead:​​ ensures the physical space is safe and operational.​​​​​​​​     ​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​

Communication plan

​​​​A strong disaster recovery plan isn’t just about technology it’s also about keeping people in the loop. Clear, consistent communication prevents confusion and helps everyone know what to expect.​​​

​​​​Internal communications​​ should define a primary channel (like Slack, Teams, or group text), a set frequency for updates, and ready-made message templates for common situations. This ensures your team isn’t guessing where to look for information when things get hectic.​​​

​​​​Customer messaging​​ deserves the same attention. Decide how you’ll share updates — whether that’s through a status page, email notifications, social media, or direct phone calls to key clients. Customers will be more forgiving if you’re proactive and transparent.​​​

​​​​Vendor notifications​​ are easy to overlook but just as important. Create a list of critical vendors, what details you’ll need to share with them, and how to reach their emergency contacts quickly. Having this sorted out ahead of time means you won’t be digging for phone numbers when time is critical.​​​ ​​​​     ​​​​​​     ​​​​​​     ​​​​​

Incident runbooks

​​​​Even the best plan falls apart without clear action steps. That’s where runbooks come in. These are detailed playbooks for your top risks whether that’s a cyberattack, a power outage, or a major hardware failure.​​​

​​​​Each runbook should spell out:​​​

• Who does what, and in what order.
• Where to find access credentials and contact information.
• What signals the “all clear” to return to normal operations.
• How the team will review the incident afterward to improve the response.

Think of runbooks as your emergency scripts. When stress is high, they take the guesswork out of what to do next.​​​

​​​​Testing and maintenance​​​

​​​​A plan only works if it’s been tested. Regular practice builds confidence and exposes gaps before a real disaster hits.​​​

• Quarterly tabletop exercises​​ let you walk through scenarios as a team, step by step.
• Monthly technical restores​​ prove that your backups actually work.
• Twice-yearly full disaster simulations​​ stress-test your systems and processes under realistic conditions.

Finally, make it a habit to update your plan whenever something changes whether that’s a new vendor, a major tech upgrade, or lessons learned from an actual incident. A stale plan can be just as dangerous as having no plan at all.​​​​​​     ​​​​​​     ​​​​​​     ​​​​​​     ​​​​​     ​​

Build your disaster recovery plan in one week

Day 1: List top risks and critical processes

​​​​Start by identifying the three most likely disasters for your business and location. Then list your five most critical processes such as payments, order fulfillment, or customer support and note how long each could be down before causing serious harm.​​​

Day 2: Inventory systems, data, and dependencies

​​​​Create a simple spreadsheet that captures all your systems, applications, and data sources. Be sure to include dependencies, like which tools rely on a single server or internet connection.​​​

Day 3: Set RTO/RPO and choose backup methods

​​​​For each critical system, define how quickly it needs to be restored (your RTO) and how much data loss you can tolerate (your RPO). Once those goals are clear, pick backup methods that match. For example, you might need hourly backups for payment systems but daily backups for analytics.​​​

Day 4: Draft roles, contacts, and communication plan

​​​​Write down who is responsible for each part of the response, from IT fixes to customer messaging. At the same time, set up communication templates and contact lists so updates can go out quickly.​​​

Day 5: Write runbooks for top three incidents

​​​​Choose your top three risks and create step-by-step playbooks for each one. These should spell out who does what, where to find access details, and how to know when it’s safe to return to normal.​​​

Day 6: Test a small restore and fix gaps

​​​​Pick one system and try restoring from backup. This small test helps you spot gaps and gives your team confidence that the process works.​​​

Day 7: Final review, store copies, schedule next test

​​​​Pull everything together for one last review. Save copies of your plan in multiple locations, then schedule your first full test so the plan doesn’t just sit on a shelf.​​​

Incident playbooks

Cyberattack or ransomware response

Immediate actions: Isolate affected devices from the network and disconnect internet access to prevent spread. Notify leadership and activate incident response teams immediately. Document everything for law enforcement and insurance.

Recovery steps:

• Verify backup integrity before beginning restore.
• Plan restore order based on business priorities.
• Communicate status to employees and customers.
• Contact law enforcement and cyber insurance carrier.

Severe weather or natural disaster

Safety first: Account for all your employees to ensure their safety. Activate remote work procedures if facilities are unsafe. Secure or relocate critical equipment when possible.

Business recovery: When you can, restore internet connectivity and essential applications. Implement alternate workflows for disrupted processes. Communicate revised service timelines to customers. Coordinate with vendors on supply chain impacts.

Extended power or internet outage

Immediate response:

• Switch to backup power if available.
• Activate secondary internet connection.
• Implement manual processes for critical functions.
• Set up mobile hotspots for key personnel.

Recovery actions: Batch-process transaction backlogs after restoration and verify data integrity across all systems. Update customers on service restoration timeline.

Budget-friendly recovery solutions for small businesses

Affordable backup options:

• Cloud object storage with automated lifecycle policies
• External hard drives for periodic offline copies
• Hybrid cloud solutions combining local and remote storage

Cost-effective redundancy:

• Secondary ISP service or cellular backup
• Spare devices for critical roles
• Shared workspace memberships for temporary office space

Managed services for small teams:

• Backup-as-a-service solutions
• Cloud-based endpoint management
• Managed security services

Vendors, insurers, and contracts

Key vendor SLA requirements:

• Guaranteed uptime percentages
• Support response timeframes
• Data export capabilities
• Contract termination rights

Insurance preparation: Keep cyber insurance policy details readily accessible. Understand business interruption coverage terms. Be sure to document claim procedures and required evidence. Always maintain emergency contact numbers for carriers, even when not in an emergency.

Essential contact management:

• Vendor emergency support numbers
• Escalation procedures for critical issues
• Account numbers and contract references

Common mistakes and how to fix them

Untested backups: Schedule quarterly restore tests to verify backup integrity and accessibility.

Unclear ownership: Assign named primary and backup owners for each critical system and process.

Third-party blind spots: Include vendor failure scenarios in your runbooks and maintain alternative supplier relationships.

Single point of failure: Store plan copies in multiple secure locations, both digital and physical.

Outdated information: Review and update contact information, procedures, and technology inventories quarterly.

How LegalShield helps protect your business during disasters

When disaster strikes your small business, legal issues often follow. Property damage, contract disputes, insurance claims, and regulatory compliance can overwhelm business owners trying to recover.

LegalShield's business legal plans provide access to lawyers who understand the complex legal challenges that emerge after natural or man-made disasters. Whether you're dealing with insurance companies, vendor disputes, or regulatory requirements, LegalShield Members have legal support when they need it most.

Key disaster-related legal services include:

• Contract review and dispute resolution
• Insurance claim assistance
• Regulatory compliance guidance
• Vendor and supplier legal issues
• Property damage and liability matters
• Employment law questions during recovery

LegalShield's network includes over 900 experienced attorneys across the United States and Canada. With three plan levels starting at just $49 per month, you get access to legal consultation, document review, professional letters and calls, and collection assistance—all without hourly billing.

Business disaster recovery isn't just about technology and processes—it's about having the right legal protection when unexpected challenges arise.

Prepare, test, improve

The best disaster recovery plan for a small business is one that starts small and grows over time. You don't need a perfect plan to begin—you need a tested plan that actually works.

Remember: every hour of preparation can save days of downtime. Every test you run reveals gaps before they become costly problems. Every update keeps your plan current with your evolving business needs.

Your business's survival may depend on the plan you create today. Don't wait until disaster strikes to realize you needed better preparation.

Ready to protect your business with legal support? Explore LegalShield's business plan options and join over 4.1 million members who have legal protection when they need it most. Because when disaster strikes, you shouldn't face legal challenges alone.

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Written by Elyse Dillard, Content Specialist at LegalShield. Elyse creates educational resources about legal and identity theft protection services. She works to make complex legal concepts more accessible to readers and has contributed to numerous articles on the LegalShield blog.

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