7 Steps You Need to Take Before Disaster Strikes
“What do we do now?”
That is the question most-often asked after a crippling disaster strikes small businesses. Owners, surveying the wreckage that once was their livelihood, try to come to grips with the fact that they never anticipated such devastation would find its way to their business storefronts. Yet, somehow it does. Every year, small businesses around the country close their doors forever as a result of fires, flooding, hurricanes, tornadoes and other natural and manmade disasters.
From Hurricane Sandy to the tornado in Moore, Oklahoma; flooding in Colorado to seasonal fires in southern California, small businesses have witnessed, first-hand, the ravaging effects of Mother Nature on their companies year-in and year-out. According to Department of Labor statistics, more than 40 percent of businesses never reopen after disaster strikes. In the following two years, more than 25 percent of the surviving companies will also close their doors.
Why don’t more companies have a real disaster plan in place? According to the American Red Cross, 70 percent of small businesses don’t consider themselves at risk for disaster in the future. They also found that 49 percent of businesses don’t have any disaster plan in place. I am stunned by these statistics! If you put all your money, time, energy, and resources into your company, why wouldn’t you do everything possible to mitigate the risk of failure? I ask the same question to service professionals who don’t carry disability insurance. All you are doing is playing Russian roulette with your company.
To paraphrase a popular quote, if you fail to plan (for disaster), then plan to fail. If you want to stay in business, then take action this week on the following seven steps to planning for disaster.
1. Make copies and backup files. Imagine losing everything in your office! Look around and see what you would need to rebuild your company. Make copies of critical documents and move them to another location. Your emergency checklist should include business account information (e.g. bank info), backing up files on your computers, important phone numbers, and passwords. I suggest backing up this information to the cloud. If disaster strikes your business, it’s likely to also hit your home and nearby bank branch. Cloud-based services are both turnkey and affordable for most small businesses today. Additionally, you will have access to your critical information as soon as you are able to turn on a computer.
2. Have an evacuation plan in place. If you have employees and office space, put together an evacuation plan in the event you need to quickly leave the office due to a disaster. Separately, create an emergency-supplies drawer or cabinet and stock it with a first-aid kit, flashlights, batteries, candles, matches, and other items you might need in the event of an emergency.
3. Test your plan. At least once or twice a year, run through your evacuation plan to make sure your employees know what to do. The best times to test your plans are 30 days before storm or disaster season.
4. Be prepared to work remotely. When Hurricane Sandy blasted the northeast in October 2012, many companies were forced to have their employees work from home for an extended period of time. This approach created a second disaster for businesses that were unprepared for the difficulties of trying to conduct business as usual without having a remote-working plan in place. This is also a plan you should test at least once a year.
5. Have a (tested) backup plan ready to go. If a natural or manmade disaster displaces your company for more than just a few days, you need to have several options ready to go in the event that plan B doesn’t work. Plan C may require you to find short-term work space outside the affected area. You may also have to discuss a new working relationship with vendors and customers until you can get back into your office space and return to a normal business routine. What you don’t want to do during a recovery period is make difficult decisions that could severely hurt your business.
6. Review your insurance. It’s no fun dealing with insurance companies when you’re trying to keep your doors open and your business running after disaster strikes. It’s even worse when you find out that you didn’t have the right coverage for your company. Don’t find out that your business isn’t covered after disaster strikes. Call your insurance agent today to discuss your policies and see if you have the right protection in place. One call can literally save your company.
7. Stay on top of your receivables. If most of your revenue comes from one or two geographic locations, imagine the direct hit your business will take if your customers are out of business for an extended period of time. The last thing on their minds will be money owed to your business. In all likelihood, if they go out of business, any money owed to your company will go with them. It’s imperative to make sure your receivables are as close to current as possible. If your customers are in areas with seasonal storms, try to collect your receivables as early as 30 days before storm season hits.
Three Important Resources
To help you prepare your company for the worst that Mother Nature (and man) has to offer, here are three important resources. You should visit them today and download the available information to help you get ready:
Ready Rating Program (RRP) – A free, self-guided assessment tool from the American Red Cross, RRP is designed to help businesses and organizations become better prepared for emergencies. Members complete a 123-point self-assessment of their level of preparedness and have access to tools, tips and best practices to help improve their level of preparedness.
Ready Business - Part of the www.Ready.gov website, Ready Business helps companies develop a five-step preparedness program by providing tools to create a plan that addresses the impact of many hazards. Visit the site this week to start getting your business ready!
Your Plan - A free app developed by the Insurance Information Institute, Your Plan features property protection guidance as well as disaster preparedness checklists for hurricanes, wildfires, tornadoes, earthquakes, severe winter weather and evacuations. You can set up reminders to complete tasks, track your progress and share checklists with your social network. The app also includes a Google Crisis response feed with access to local emergency information.
You now have seven steps and three resources to prepare your business for any natural or man-made disasters that come your way. Don’t risk everything you’ve worked so hard to build by not protecting it from disaster. Don’t become a statistic. Instead, be a business that defies Mother Nature.
As the founder and CEO of Brian Moran & Associates, Brian helps entrepreneurs run better businesses. He was formerly the executive director at The Wall Street Journal, overseeing the financial and small-business markets across the WSJ franchise. From 2002 to 2010, Brian ran Veracle Media and Moran Media Group, content companies in the SMB market.