I used to use Outlook to download all my e-mail to my computer and had all my files stored on my hard disk. After that disk crashed, I lost a big chunk of e-mail and all my files.

My hard drive failed after I was forced to do a hard restart after downloading an Apple iPhone upgrade that stalled.

My wife had her own consulting practice . . . Her entire financial life was on her laptop. Her laptop died and the data was gone!

I had two hard drive crashes in the prior two years. Both were recoverable using software, but very scary.

I mistakenly deleted most of the data on my production system during an upgrade. Needless to say, this led to very frantic efforts to find a reliable copy of the data to restore the system back to normal.

I thought I lost all of my Quicken data, which included about 12 years of household financial information. It turned out that I had a backup file but had not backed up for about 12 months. I was able to re-create those 12 months using bank statements, but it was incredibly painful and took a long time.

We've had crashes on servers that held valuable customer data. The crashes were due to hardware failures, probably because the hosting provider was not providing adequate cooling. I have also seen data losses happen where files were being kept on laptops and not in central file repositories and the laptops were lost (usually in an airport). Again the usual result has been the expense of re-creating the work, but I can think of one instance where a significant contract was probably lost due to the loss of a presentation just before orals.

These are excerpts from many e-mails that I received during my research for this article. For an entrepreneur, your files are probably your most important business assets. That is where you keep critical information about your customers, your products, your employees, your finances and much more. We spend so much time creating excellent documents, yet we don't spend much time protecting them.

Computer experts will tell you that computer hardware, especially hard disks, fail--and they fail often. So you are just a disk crash away from losing all your hard work. And that can result in loss of productivity, loss of time, loss of clients and loss of your company's hard-earned creations.

Data crisis happens like a tornado. It doesn't give much warning. The hardware fails, the hard disk dies and it takes your data with it. And you end up wondering why you didn't have a backup plan despite your good intentions. Most folks become diligent about backups only after they experience painful data losses. But don't let that be you. Why go through the pain before shaping up? This a case where an ounce of routine backup prevention really is worth pounds of IT cure.

Data Backup and Recovery 1-2-3
Most IT experts agree that you should keep three copies of your mission-critical data. Here is an easy 1-2-3 plan you can use to avoid data disasters.

1. Working copy. This is where the "live" copy of your files resides. For individuals, this is usually the local storage on PCs, Macs or laptops. For small companies, this should be a central server, where the team agrees to obtain the latest version of any shared files.

2. Near-site copy. This is where you have some type of external storage where you back up your "live" files to. Most folks use an external USB hard disk for this purpose. This external drive is attached to a personal computer in case of an individual, or attached to a server for a group. These disks are getting more and more affordable. You can buy disk drives with 1 terrabyte of capacity for less than $150. Near-site storage is called that because it is generally located at the same site as the working copy.

Rich Hoyer, president and founder of HD IT Services, which specializes in IT services for small companies, strongly recommends against using tapes and tape drives for this purpose. According to Hoyer, most tape drives don't have enough capacity for today's data requirements. In addition, tape drives rely on humans to rotate the tape. And unlike disk drives, some tape backups look successful but end up producing unreadable tapes.

Of course, for this to work, you need to make sure your files are backed up to the disk drive. The best strategy is to not rely on your memory to do this. There are different ways you can automate this backup. On a PC, you can use Microsoft SyncToy, a free download, to automate the backups. On new Macs running the Leopard operating system, there is a built-in Time Machine program that makes it easy to back up files to an external drive. You just have to make sure these programs are set up properly.

3. Off-site copy. This is where you keep a copy of the data in an off-site location. In case of fire, flood or other damage at your location, you will still be able to retrieve your data from this off-site spot. Many folks use online backup services for this purpose. The most popular ones are Mozy and Carbonite. Mozy has three types of services to choose from, starting from $4.95 a month per computer for unlimited amount of data storage. Carbonite offers a plan to back up an unlimited amount of data for $54.95 a year per computer. Anecdotally, I have gotten better feedback on Mozy than on Carbonite. In addition, Jungle Disk is an online storage service powered by Amazon and Rackspace. Jungle Disk sells a gigabyte of storage for 15 cents.

There is an emerging set of services that allows you to store your data online in the "cloud" and synchronize your files and folders across multiple devices. These services can also be used for backup purposes. Such services include Windows Live Mesh and Sugarsync. Windows Live Mesh offers 5 gigabytes of storage for free and Sugarsync offers 2 gigabytes of storage for free.

Selection Criteria
In choosing a provider and a plan, you should consider the following questions:

• What size storage do they offer?
• Are there limitations on data uploading speeds?
• How many backup versions do they keep?
• What kind of customer support do they offer? E-mail, chat, phone? At what hours?
• How easy is it to restore the files?
• How many hours and/or minutes of data loss can you tolerate?
• How secure are your files?

Gotcha's
To use online backup services, you must have high-speed internet connections. Even with fast connections, the first time you back up your files to an internet service, it will take a long time. For example, uploading 10 gigabytes of data on an internet connection with upload speeds of 768 kbps (kilobits per second) will take about a day. This time will drop down to about half a day on a faster upload connection. Incremental backups will take much less time but will still slow your computer. So it's better to schedule the backups when you won't be using the machines.

Recovering a file from an online service may take a long time. For this reason, Hoyer suggests hiring a local IT service provider for your backups so the provider can be accountable for restoring your files.

Bottom line
With all the many affordable options available to entrepreneurs and small businesses today, there is no excuse for not protecting your valuable electronic data assets. Just follow the 1-2-3 method to save your business from data disasters.

Note: I am deeply appreciative of my Stanford alumni groups for providing great input for this article!