If you don't think a business recovery plan is necessary, meet Bobby and Janice Jucker, owners of Three Brothers Bakery, a family business with three locations in Houston, Texas. The company was founded by (naturally) three brothers and Holocaust survivors in 1949, and for decades, all was quiet on the disaster front. But in 2001, Tropical Storm Allison flooded their main location—where they do most of their baking—with three feet of water. That had been bad, but Allison was nothing compared to Ike. In 2008, Hurricane Ike destroyed the bakery's roof, which meant that rain got in. And, boy, did it get in. The bakery was closed for nine months, although thanks to business interruption insurance, the Juckers were able to keep their 27 employees on the payroll.
By 2015, Three Brothers Bakery had grown to its three locations—with 65 employees—when their first bakery had a Memorial Day flood that brought in another three feet of water. In 2016, still cleaning up from the previous year's flood, there was an April flood that didn't do much damage, but it rattled the Juckers. The year finished off with a fire in a 400-square foot freezer. It was contained, but the contents were destroyed—and during the very lucrative holiday season.
“We didn't get back to full capacity until January. We lost a ton of business," Janice Jucker says.
But that was nothing compared to 2017 when Hurricane Harvey blew through, bringing four feet of water into their bakery.
But unlike the incident that kept them closed for nine months in 2008, this time, the Juckers were only closed for 17 days. Because of their quick turnaround, in 2018 the Small Business Administration honored the Juckers with its SBA Phoenix Award for Small Business Disaster Recovery. So, um, congratulations?
“It's an award you never want to qualify for," Jucker says, good-naturedly.
So if your business doesn't have a business recovery plan, you should start thinking about… well, a lot of things.
1. Create an emergency list and go over your policy.
Your emergency list needs to be accessible, somewhere in the cloud, and maybe in a few strategic areas, such as a safety deposit box at the bank or somewhere at your house, if you're concerned that you may not have the internet access. You'll also want to keep in mind that there are a lot of ways to define a disaster. Your business may not be hit by a hurricane, flood or fire. Maybe you'll have a recall that takes out half your inventory, or there's a drought that affects your business in some way. You can't put everyone down on the list, but think of the realistic scenarios that could unexpectedly befall your business. Your insurance agent should obviously be on that list, of course, and your agent could even help you compile it.
In fact, Jucker says for years now that she has met with her Houston-based insurance agent once a year to go over everything on her policy, line by line. For instance, you may not be aware that if you have a brick and mortar business with a big sign outside—that sign may or may not be covered under your general policy. And fortunately, after Harvey roughed up their sign, the Juckers were able to use their signage insurance to pay for straightening it. If they hadn't had it, they would have been out $10,000.
“The sign was halfway on and off. They had to bring in a crane to fix it," Jucker says. “You don't think of those things on your own."
2. Plan how you might conduct business after a disaster.
It's impossible to plan for every contingency. But there are three areas you may want to focus on, according to Scott Teel, senior director of communications for Agility Recovery, a Denver-based firm that specializes in helping businesses stay operable after a disaster.
Those three areas?
1. Power requirements.
You may feel that if the power goes out, it won't be a big issue. Your business will persevere and run on a generator.
That's all well and good, but as Teel says, “before any organization can assist in providing generator power, you must first be able to properly identify and communicate your power needs."
Even the most well-developed recovery plan falls short if your employees are unwilling or unable to return to work and assist in the recovery.
—Scott Teel, senior director of communications, Agility Recovery
For instance, he says that you'll want to know what phrase your electrical service is. (“Is it single or three phase?" Teel asks.) And what voltage is your service? (“Typically, it's 208v, 240v or 480v," he says.) And how many amps do you need to power key systems? (“Tip: Determine your peak amperage draw over the past 12 to 24 months," Teel says.)
You get the idea. The bigger your business, the more complicated the generator and power issue becomes.
2. Access to your vendors.
That is, will you have it when you need it?
“During a normal business day, you probably rely on at least half a dozen different vendors at a minimum to perform your critical operations, including your internet provider, wireless provider and any number of IT professionals," Teel says. “During times of disaster, these same third-party entities can become potential choke points of recovery operations, as they are often overcome with requests from their customers."
So Teel recommends having identified and built a relationship with alternate vendors that perform duties considered critical to basic operations. "It's as simple as having an alternate vendor come in, explain that you're looking for competitive bids for ongoing services on your existing infrastructure and in doing so you're able to develop that relationship in advance," he says.
If that isn't practical, you may want to at least talk to vendors about their contingency plans—or, if you know a disaster is coming, work with them before something goes wrong. Josh and EmilyAnne Thomason are franchise owners of a Glass Doctor in Melbourne, Florida. They opened in October 2016 and have since encountered Hurricane Matthew and last year's Hurricane Irma. Before the last hurricane, Josh Thomason ordered supplies before the storm came in, knowing that navigating roads might be impossible for suppliers after it came through.
That won't work for every business—you don't want to order extra inventory, only to have that be destroyed along with the original inventory. But the Thomasons felt secure in ordering extra supplies, like sliding glass doors. As EmilyAnne puts it, their place of business is in the middle of a strip mall that is “a concrete block."
Teel also says that you might want to consider diversifying cellular carriers among your staff since perhaps one carrier will go out in your region, but another may stay on.
3. Help your employees before the disaster.
You're going to help your employees during or after a disaster, but don't forget about pre-planning to help them before one strikes.
Some disasters come up quickly with no time to prepare, but if a hurricane is coming or a monster blizzard is on the radar, and you're battening down the hatches and fortifying a brick and mortar location, Teel says that you shouldn't forget about making sure your employees are doing the same—and doing anything you can to help them and their families.
“If an employee's family is impacted by a disaster event at home, they are far less likely to return to work," Teel says.
And who can blame them? But those employees not coming into work may make your business's disaster even worse.
“Even the most well-developed recovery plan falls short if your employees are unwilling or unable to return to work and assist in the recovery," Teel says.
Assuming you expect your business to be running shortly after a disaster, you'll also want to have supplies at your business for employees, like food and water, Thomason points out.
“For us, before and after a hurricane are some of the busiest times of the year for us, so it's imperative that our staff is well fed, hydrated and taken care of," she says.
So the more you help your employees, the more you'll help your business.
3. Have the right insurance and additional cash on hand.
In the aftermath of every natural or man-made disaster, money is very important.
You probably want to think about two things in particular.
Duly noted, already, but it can't be stressed enough. “So many businesses are under-insured. That's probably the most common reason businesses don't recover," says Howard White, executive vice president at Maxons Restorations, a property damage restoration company headquartered in New York City. “Especially if you're in an at-risk area, you need business interruption coverage. Even if you're not in an at-risk area. Really, everything's at risk now."
2. Cash or a credit line.
“The faster you can get money, so you can run your business, the better," White says. “That's usually where everything falls apart."
White recalls that after the September 11 attacks, there were naturally a lot of clients his firm had to help, and their business, which had good credit, needed to extend its credit line to have the funds to do their restoration work. Their bank, however, apparently (understandably) rattled by the attacks, refused. White immediately went looking (and found) a new bank.
"You need a healthy line of credit to insure the survival of your business," White says. "If you own a hardware store, but you can't buy more shovels and flashlights to sell to your customers, what good are you?"
After Hurricane Harvey, Jucker had two months where her credit card had $100,000 monthly payments. She managed to pay both in full while waiting for an SBA loan because the business had learned to keep cash reserves in times of an emergency. "You should try to keep three months' worth of cash, minimum," Jucker says.
While it isn't easy putting together a business recovery plan together, it's far easier to do it before something goes wrong than after. And while you may see creating a disaster recovery plan as something that a pessimist does, it's actually a very optimistic strategy. After all, the longer you're in business, the more likely it is that among everything going right, something will also go wrong. Planning for the worst means that you're assuming your company is going to be around close to forever. Having a business recovery plan may just help you get there.