What Most Leaders Get Wrong About a Disaster Recovery Plan for Small Business

Most small and mid-sized businesses don’t think about disaster recovery services until something forces the conversation.

A ransomware alert.

A server failure.

A cloud outage.

A natural disaster.

An employee clicking the wrong link at the wrong time.

What happens then? Many leaders assume they’re more prepared than they actually are, and might just say “IT handles that.” But a disaster recovery plan for small business isn’t just a technical issue. It’s a leadership decision about risk, continuity and the consequences of getting it wrong.

At Fairdinkum Consulting, we work with growing organizations that depend on uptime. For them, resilience isn’t theoretical—it’s operational. Here’s how business leaders should think about data backup, the disaster recovery process and true preparedness.

Data Backup vs. Disaster Recovery: What’s the Difference?

The first mistake? Confusing backup with true recovery.

In other words, a structured server backup strategy can support continuity. But you need a small business disaster recovery plan to define:

• What critical systems come back first
• How long recovery efforts should take
• Who is responsible for what
• How communication happens internally and externally

That’s a plan for resilience, not just storage.

Why Small Businesses Often Have False Confidence

We frequently hear statements like “our files are in the cloud” or “backups are running automatically.” But cloud services and file sync aren’t the same as backup. And backup alone doesn’t define recovery speed as mentioned earlier.

Common SMB gaps:

• No defined recovery objectives: Recovery Time Objective (RTO) or Recovery Point Objective (RPO)
• No documented recovery strategy or order
• No executive understanding of downtime impact
• No recent restore test

Without clarity, recovery becomes improvisation—and no business should be improvising during a crisis.

What Should Be in a Disaster Recovery Plan for Small Businesses?

An effective disaster recovery plan should define four core areas for clarity:

1. Business Recovery Priorities

Not every system matters equally. From accounting systems to the CRM, email to file sharing and line-of-business applications, leadership must prioritize the most critical business functions in a business impact analysis (a structured review of how downtime affects revenue and operations).

What needs to be operational in 2 hours? What can wait 24–48 hours?

IT cannot answer that alone, but strategic IT planning and advisory services can help business owners prioritize accordingly.

2. Recovery Objectives (in Plain English)

The result of the above analysis should also clearly define two things: how long you can afford to be down and how much data you can afford to lose.

These are known as your Recovery Time Objective (RTO) and Recovery Point Objective (RPO). RTO defines the maximum acceptable downtime before serious operational or financial impact occurs. RPO defines how much data loss—measured in time—you can tolerate.

For example, if backups run nightly and ransomware strikes at 4 p.m., are you prepared to lose a full day of work? If restoring servers takes 36 hours, what would that interruption cost in revenue, payroll disruption or client confidence?

These are not technical metrics. They are financial and operational decisions that leadership must own.

3. Clear Roles & Communication

A disaster recovery plan isn’t just about servers, it’s also about leadership coordination and key contacts. During an incident, you need clear ownership so everything operates smoothly—from contacting clients and speaking with legal to engaging cyber insurance and approving shutdown decisions.

4. Backup Strategy That Supports Recovery Goals

Your backup architecture should directly support your defined recovery objectives, and your plan should clarify:

• Where backups are stored (local, cloud, offsite)
• How often backups run
• How long data is retained
• Whether backups are immutable (protected from ransomware encryption)
• When backups were last tested (because regular disaster recovery testing is what confirms recovery actually works).

Does Microsoft 365 or Cloud Software Need a Backup Plan?

Yes. Cloud software like Microsoft 365 still needs backup.

This is one of the most misunderstood areas in SMB environments. Many leaders assume: “It’s in the cloud, so it’s backed up.” But cloud providers operate under what’s called a shared responsibility model. They ensure the platform is running. They do not guarantee recovery from every scenario that affects your data.

For example, Microsoft 365 does not protect you from data loss as a result of:

• Accidental deletion of emails or files beyond retention windows
• Malicious deletion by a disgruntled employee
• Ransomware-encrypted files that sync across devices
• Long-term retention needs beyond default policies

A disaster recovery plan for small businesses should explicitly address SaaS platforms like Microsoft 365, Google Workspace and other cloud tools—not just servers. That means clearly defining what cloud data is backed up, how long it is retained, how quickly it can be restored and who is responsible for managing the recovery process.

Remember: Cloud availability does not equal data recoverability. And if your organization depends on cloud platforms daily, that distinction matters more than ever.

The Real Cost of Downtime for SMBs

Enterprise companies can absorb prolonged outages. Small and mid-sized businesses typically cannot.

Downtime can have a wide-ranging impact, disrupting payroll processes, productivity and revenue. And that doesn’t count the strained vendor relationships, weakened client trust or potential regulatory exposure you might face. A single day of downtime can ripple across billing cycles, sales pipelines, vendor payments and client commitments. For some organizations, even a few hours offline can exceed the annual cost of a properly structured disaster recovery solution.

Remember: Resilience Is a Leadership Decision

What most leaders get wrong isn’t effort. It’s ownership. Technology plays a critical role in recovery, but leadership defines what level of risk is acceptable when disaster strikes.

A well-defined recovery strategy isn’t just a technical safeguard. It’s a strategic commitment to protecting revenue, preserving client trust, maintaining operational stability and supporting growth without relying on fragile infrastructure. These are business priorities, not IT preferences.

As you reflect on your own readiness, consider a few simple questions: Do we clearly understand how long we can afford to be down? Have we aligned our recovery expectations with financial reality? And does our plan fully account for the cloud platforms our teams rely on every day? If those answers aren’t immediate and confident, there may be work to do.

If you take one thing away from this post, let it be this: resilience isn’t built in the middle of a crisis. It’s defined well before one occurs.

At Fairdinkum, we help SMB leaders approach recovery thoughtfully and strategically—aligning technology decisions with real operational and financial priorities. If you’re unsure where your organization stands today, now is the right time to evaluate your disaster recovery readiness—before an incident defines your recovery strategy for you.