What if hackers break into your computer system and delete vital customer and employee data?

What if an unexpected ice storm knocks out power to your office—and all the other offices 20 miles away—for a week?

What if, late at night, an electrical fire destroys the contents of your office?

What if an F5 tornado, with winds blowing more than 300 miles per hour, tears across your state, leaving your employees homeless?

What if the last two active hurricane seasons weren't anomalies, but the pattern for years to come? Could your business survive being hit by a wall of water and wind?

If your answer to these questions is, “I don't know,” you're not alone. Many small businesses lack plans to weather—and recover from—a disaster, whether it's natural or man-made, unique to their business or affecting an entire region.

The consequences of being unprepared can be dire. As many as 40 percent of small businesses never recover from a disaster, and many more spend months clawing their way back to profitability. Similar to the emotions many people experience while writing a will, planning for a disaster that could cripple your business can seem daunting—even a bit morbid. But the process doesn't have to be as difficult as some may think, and experts say strong disaster preparedness can even improve small businesses' day-to-day operations.

BEFORE THE STORM Researchers at the National Federation of Independent Business (NFIB) discovered in the summer of 2004 that many small businesses were unprepared for the spate of hurricanes that hit Florida. That prompted the organization to create a survey specific to the issue of disaster preparedness. The results showed that small businesses anywhere in the country were vulnerable to disasters, and that those events—both natural and man-made, such as computer viruses—“are a lot more common than we thought,” says William Dennis, senior research fellow at the NFIB Research Foundation. In fact, 30 percent of respondents said they'd been closed for 24 hours or more within the previous three years due to a natural disaster.

Often, it's tough to see the need for a disaster plan, particularly if a business owner is already stretched thin with daily operations and hasn't been negatively affected by a disaster in the past. Charlie Sidoti, vice president of risk control services for OneBeacon Insurance, says that many business owners' estimates for the time and effort it takes to recover from a disaster are “wildly optimistic.”

Bob Snowden, president of Grand Rapids, Mich.–based Snowden Builders, admits that he hasn't formally prepared his company for a disaster. He assumes that the company's data is being backed up and says that cell phones would “probably” be the employees' means of communicating. “I don't have anything in place,” he says. “I'm not prepared for it. I'm sure we would come up with something. Hopefully that never comes.”

Learn more about markets featured in this article: New Orleans, LA.