Most Small Businesses Believe They’re Ready for Disasters, But Only 26% Actually Are, New Study Shows

According to a national survey commissioned by the U.S. Chamber of Commerce Foundation and funded by The UPS Foundation, there is a critical gap in disaster preparedness among America's small and medium-sized businesses (SMBs). While most SMB leaders believe they're ready for disasters, few have taken concrete steps to prepare. 

This gap poses significant risks not just to individual businesses, but to the economic stability of our communities. 

Here's what we found: 

Optimism, Overconfidence, and Recovery Realities 

• 94%

  their business would recover if affected by a disaster
• 26%

  have an actual disaster plan in place

Despite facing challenges like inflation, many SMB leaders remain optimistic about their future. However, this optimism often translates into overconfidence regarding disaster preparedness. While the majority (94%) believe they are ready to handle disasters, only 26% have an actual disaster plan in place. The gap between perceived and actual readiness poses significant risks to the recovery and resilience of small businesses. 

The reality of recovery is often more challenging than anticipated.  About a third (34%) of SMBs affected by disasters took six months or more to recover, with some taking over a year.  

Barriers to Preparedness and Trusted Resources 

A significant number of SMB leaders haven’t taken concrete steps to prepare for disasters, completing on average only 3.5 out of 17 recommended preparedness steps. This lack of action is often due to perceived low risk and high costs of preparing. 

Additionally, many small business leaders don’t know where to start or who to trust for reliable information. Our survey found that 58% haven't looked for resources about disaster preparation. When they do seek out information, 31% turn to search engines, while 36% consult their insurance companies. This indicates a need for small businesses to have greater access to more reliable resources to help them prepare for disasters. 

Regional Risks and Concerns 

• 29%

  of small business leaders know what kinds of disaster risks may affect them in their region

There are also regional differences in disaster concerns. Tornadoes are a major worry in the Midwest and South, while earthquakes are a top concern in the West. Flooding is a common concern across the Midwest, New England, and the South. Understanding these regional risks is crucial for targeted preparedness efforts. 

Economic Impact and Call to Action 

Small businesses are the backbone of our economy, employing almost half (46%) of America's private sector workforce. Ensuring their resilience is not just about protecting individual businesses but safeguarding our economy.  

The stakes are high: according to the Small Business Administration (SBA) and the Federal Emergency Management Agency (FEMA), 40% of small businesses impacted by disasters will close within a year. Even more alarmingly, a recent poll found that 27% of small businesses say they are "one disaster away from going out of business." 

The findings from our survey are a call to action. We need to bridge the gap between perceived and actual preparedness by providing SMBs with the right resources and support to build resilience against future disasters. 

By taking proactive steps, small businesses can become more resilient and better prepared for whatever challenges lie ahead. 

For the full set of findings and insights from the survey, click here.

About the authors

Rob Glenn

Rob coordinates the U.S Chamber of Commerce Foundation's efforts to connect government and private sector capabilities and expertise, enabling readiness for all hazards and advancing resilience.

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