Six steps to prepare your small business for a disaster

Let’s hope and pray that you never have a disaster however the chances increase daily.

Many of you reading this have most likely followed the looting and rioting that occurred following the Grand Jury’s decisions in Ferguson, Mo and New York City.  The actions of the rioters and looters on small businesses was deplorable and I sincerely hope, yet doubt, that those responsible for breaking into stores and looting will be arrested and prosecuted. Sadly, many of those businesses had not appropriately prepared for such an incident.

As a small business owner there are several things you should do in advance to protect yourself, your employees and your business during a disaster.

First, you must develop a disaster preparedness plan.

This planning is as essential as developing a business plan. Having a disaster plan in place will make the difference between being shut down for a few days, and losing your livelihood forever. The plan should be thoughtfully designed to cover all possible contingencies. You may never face a riot however the chances of an earthquake, fire, flood, tornado or even a robbery in western Kentucky is significant.

Second, get your insurances in order.

We recommend that you have a personal and ongoing relationship with your insurance agent. Choose one who understands the needs of your business and meet with him/her annually to assess and reassess your needs.

If you are in a store-front business such as a convenience store you will need business-interruption insurance. This is the type of insurance that replaces income lost when a business suffers downtime due to a covered peril, which means that you must understand fully what perils are covered.

Many insurance companies no longer cover such things as terrorist, rioting and looting events. Know and understand fully what you are paying for and be a good business person by shopping around for the right agent and a company that will meet your needs.

Here is what I mean by this – your agent is the person you will depend upon to facilitate and handle claims and settlements for you. This person’s behavioral, management and personality styles should at least be complementary to your own. However, if you tend to be a tentative person who will not fight for your rights, you may wish to ensure that you have an insurance agent who will and is truly on your side.

A few years ago, we actually changed our insurance agent even though the company we had insurance with at the time charged a lesser premium. Why? Frankly, this insurance agent would not promptly return our telephone calls, answer our questions with clarity or handle our issues and reimbursements quickly and fairly.

If this is your agent – he/she needs training in customer service and you are not paying him/her to be less than customer focused. Find an agent that meets your expectations and that you are comfortable with while understanding that you as a customer is of paramount importance to him/her.

Third, remember that normal hazard insurance doesn’t cover floods.

It is vitally important that you make sure you have designated flood insurance. Also, ensure that you fully understand what your insurance covers and what is not covered.

Fourth, as the business owner, you should ask yourself the following questions:

  • Am I prepared to relocate temporarily? Where might we do this?
  • What would happen if my suppliers were shut down due to an emergency or disaster?
  • Do you employees know what to do in case of an emergency or a disaster?

For example, employees should know where all the emergency exits are located in your building.  A safety coordinator should be appointed and trained. This is the person who will take responsibility for making sure that all the fire extinguishers, security systems and close-circuit television cameras work and that all emergency exits are operational.

This person will plan and conduct safety and fire drills and develop evacuation and business recovery plans. Obviously in many small businesses this will be you as the owner!

Fifth, backup and store vital business records offsite.

Information stored on paper and computer, should be copied and saved on a backup hard drive at an offsite location at least 50 miles away from the main business site, advises the Federal Emergency Management Agency (FEMA).

This is where we would disagree with FEMA. We recommend using “cloud” computer services to back up your information so they can be accessible from anywhere at any time. Setup and use a password system and ensure that you and at least two other trusted employees have access to that password.

Sixth, develop a simple, easy to follow “business recovery communications” plan.

Assign key employees as facilitators who during a disaster will contact suppliers, creditors, other employees, customers, and utility companies to get the word out that the business is still viable and is in need of assistance in the recovery.

Get yourself trained and train at least one preferably two other persons to be a media spokesperson to keep the public informed of your rebuilding efforts, if necessary.

Finally, recognize and understand that the more strategic planning you do on the front-end the better. The last thing you need to be doing is planning for a disaster when it is underway or impending.

Our mantra about preparing and strategically planning for a disaster has remained the same the past 40-years: “Always plan for the worst, while praying for the best.”

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