04-18-13 | Blog Post

Why Michigan SMBs Need to Create a Disaster Recovery Plan

Blog Posts

Disasters don’t wait until you’re ready.  They can happen at any time and in many ways like natural disasters (tornadoes, earthquakes, and floods), technical issues (hard drive failures, viruses) or humans (deliberate or accidental). And Michigan small and medium-sized companies (SMBs) are at risk.

According to AMI’s 2009 U.S. Small Business Annual Overview study, 70% of small U.S. businesses have experienced a data loss in the past year due to technical or human disasters.   Even with this high percentage of data loss, very few SMBs have disaster recovery plans.  Over half of Symantec’s SMB disaster preparedness survey respondents said that they do not have a disaster recovery plan in place. Surprisingly, 41% of respondents said that it never even occurred to them to put a disaster recovery plan together in the first place.

Why Have a Disaster Recovery Plan?

As a Michigan SMB business owner do you need a disaster recovery or business continuity plan?  You can ask yourself one simple question, “Can my business continue to function without <insert specific software application or system, communication service, data, etc.>?”

The next thing to consider is if it is financially worth using a disaster recovery solution. Ask yourself how much money would you lose if you were down for one hour?  One day?  You need to consider the cost of being unable to operate your business over a period of time.  Consider the number of lost transactions and the future loss of customers going elsewhere. Your disaster recovery solution should not be more expensive than the loss from the disaster unless your business would fail as a result of the outage.

A disaster could have a tremendous financial impact on Michigan SMBs.  This is especially true during a recession when competitors are looking for every opportunity to win your customers.

Financial reasons alone should encourage Michigan SMBs to develop a disaster plan, but there are other reasons as well.

  • Competitive Advantage – Having a disaster recovery plan and solution in place can be a competitive advantage.  For example, you own a Michigan real estate business and you are backing all of your data to an offsite disaster recovery service provider and your competition is not.  Then a disaster occurs.  You would be able to get your business back up and running while your competition would have a much harder time getting back to business.

  • Reputation – Even if your Michigan business survives a data loss, there is no guarantee that your reputation would still be intact.  Once a customer loses trust with a business, it is very difficult to get it back or it requires a lot of time and money to regain the trust.  And in today’s competitive marketplace, your competition can easily take your customers from you.

  • HIPAA, PCI, SOX Compliance – Disaster recovery plans are critical to be in compliance with business regulations like HIPAA, PCI and SOX.  Non-compliance could result in monetary fines, loss of business licenses and even prison time.  Well documented disaster recovery policies and procedures that are available for customers, vendors, and partners could be the difference of winning or losing your next project.  As one small business owner described it, “We get most of our business from insurance companies. They are very clear about how long we need to keep records and how their customers’ data can and cannot be used. If we didn’t meet these requirements we wouldn’t have their business. It’s just that clear.”

Example of Data Retention Regulations & Impact of Non-Compliance


Summary of Regulation

Non-Compliance Penalty


To be HIPAA compliant and to “protect the integrity, availability, and confidentiality of medical information, “business must retain health records (electronic, written and oral) for a minimum of 6 years.

Fines (up to $250,000) & possible imprisonment (up to 10 years).

Financial Services, including Real Estate

Retained mortgage loan files must be stored for the life of the loan and additional 6-10 years.

Fines (up to $100,000 for each violation) & possible imprisonment (up to 5 years).

Real Estate

Laws vary by state as well. For example, under California’s Business And Professions Code Section 10148 regulation, real estate companies must retain all listings, deposit slips, checks and other transaction documents for up to 3 years.

Fines & possible suspension or revoke of broker’s license

Financial Services

Under SEC Rule 17a, retain all communication for up to 6 years. It also defines the types of records (e.g. emails), how long and what types of media they must be stored on (e.g. nonrewritable media).

Fines & possible imprisonment

All industries

Following the Fair Labor Standards Act, a business must retain employee records related to wages, hours, conditions for 3 years.

Fines (up to $10,000). Repeat convictions may apply.

Source: Disaster Recovery Planning How Planning for a Disaster Can Save Your Business

  • Peace of Mind – Having a disaster recovery plan and solutions in place will give you peace of mind.  You can sleep better at night knowing that your business data and systems are protected in the case of a data loss or disaster.

Data Recovery Solutions for Michigan SMBs

According to a survey that was developed to examine how U.S. small businesses prepare for disasters, 94% of the businesses take steps to backup their financial data. However, six out of 10 of the businesses surveyed said they are only storing their backed up data onsite only.

Although this onsite data storage provides some protection, it has one distinct disadvantage over offsite data storage.  Onsite data can be destroyed in a catastrophic event like a fire in the building, a water main bursting or tornado.  In addition, onsite servers can also be stolen or the collected data could be lost on them.

Using a third party disaster recovery service provider or a colocation provider offers Michigan SMBs added protection and the peace of mind in the case of a catastrophic event.

Colocation data centers offer Michigan businesses an alternative to setting up their own disaster recovery site.  With colocation, you are setting up your network, servers, data storage, etc. at a third party location.  You still can have control over your servers and other equipment, while reducing costs like power, cooling, and personnel.

Using an offsite backup service provider is another option for Michigan businesses.  All of your critical data can be electronically backed up to a traditional, secure data center facility or by using the cloud. Disaster recovery in the cloud is the most reliable solution that costs less than half of the production environment.

Online Tech clients can also use our most advanced and comprehensive disaster recovery option – SAN-to-SAN Replication.  This offers our clients even faster recovery times and a solution that can failback gracefully to production once the disaster event is over.

Related Articles:
Using a Michigan Colocation Provider for Disaster Recovery
Seeking a Disaster Recovery Solution? Five Questions to Ask Your DR Provider
PCI Compliant Disaster Recovery

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