Ninety percent of the companies not open for business five days after a major disaster fail within a year. Depending upon what you read, 40 to 60 percent of the businesses affected by a major disaster never re-open their doors. While these numbers may seem surprising, they are nonetheless intuitive. Any significant period without revenue is toxic to a business. Combine that with physical damage to the premises or assets and the results can easily force the closure of your small business.
A small business is frequently not as robust as a family. I have a modest walk-in medical clinic myself, and it can be fragile. Utilities, supplies, taxes and payroll wait for no man. Now toss in a disaster like a hurricane, tornado, earthquake, flood or fire and all bets are off.
The equation in my case is fairly simple. Sick people come in and we are compensated for our services. On the other side, every minute the doors are open, I am paying our receptionists, nurses, lab and x-ray staff as well as other medical providers while simultaneously keeping the lights on, the equipment maintained and the supplies stocked. Even in a perfect world, it can be hard to keep all the balls juggled so that income exceeds expenditures. When the power goes out or a storm keeps the sick folks at home, we feel the strain.
Additionally, while we try to manage our business conservatively, there are no enormous reservoirs of untouched assets at our disposal to tide us over for long periods. Just as is the case with your family, a little planning and forethought in times of calm can pay enormous dividends when disaster strikes.
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Road To Recovery
In a time when attention from most government entities is expected to bring pressure, pain and heartache, the U.S. Small Business Administration (SBA) has as its mission to help American businesses weather the crises that inevitably arise. The SBA has partnered with Agility Recovery to build a web-based resource to help small business owners prepare for unexpected calamity so that their businesses remain afloat to support their employees, provide their goods and services and, naturally, continue paying taxes.
The starting point is the website preparemybusiness.org. What you’ll find there is a broad range of resources to help get the juices flowing so business owners will be ready to get back up and running within as brief a window as possible and avoid the risks implicit in a long interval of inactivity. Most everything is covered.
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Checklists and planning resources are available to help prioritize operations and make contingencies for most reasonable scenarios. Earthquakes, floods, tornados, hurricanes and winter freezes are among a few. While I seriously doubt an army of the undead will come staggering unannounced into my medical clinic, the possibility of an ice storm or hurricane killing power and other services for a week or more is not unprecedented, even in the Deep South. Under those circumstances, having a plan to notify staff, establish what services we could provide in austere conditions, and get information to our patients can make sense out of chaos. Here are a few examples taken from their published resources.
- Create a disaster-recovery kit that sets aside critical materials needed in a crisis. Such a kit might include basic tools and clerical supplies along with copies of insurance policies, vendor contact information and backups of critical computer data for your business.
- Draw up a disaster communication plan that identifies vulnerable areas in phone or internet services, keeps an updated emergency contact list for employees and designates a media spokesperson for the business. Make a plan for off-site hosting of web-based services and identify local sources for radio and TV advertisements as well as signage vendors that may be required in a crisis.
- Identify critical business functions and establish priorities for resources. Establish which aspects of a business can be temporarily suspended without unduly affecting income or opening a business up to litigation.
- Establish an evacuation plan that encompasses communications issues and critical asset relocation. Recommend that employees maintain bug-out bags to facilitate short-notice travel in a crisis.
- Perform a detailed risk assessment to consider in advance the possible threats to your small business and establish effective countermeasures. Possible eventualities on the checklist range from a lightning strike to vermin infestation to a hazardous materials spill.
- Contact service providers to establish backup vendors in the event of localized infrastructure failure.
- Establish a shelter-in-place plan as well as a survival kit adequate to service employees who might be trapped on the business premises. Establish a plan and stockpile materials to strap down roof-mounted HVAC equipment or board windows.
- Make a winter weather plan that considers such possibilities as burst pipes, heating failure or icy roads. In my little Southern town, we had an unnatural cold streak this past winter that flooded dozens of businesses when temperatures dropped low enough to freeze inadequately insulated pipes.
- Establish a tornado response plan that designates shelter areas and codifies protocols for responses to watches and warnings. The time to figure such things out is not as the tinny electronic voice tells you a tornado is on the ground and headed your way.
- Conduct realistic exercises with critical personnel to war-game various real-world scenarios and tweak disaster-recovery plans. Nominate facilitators and set time limits to keep meetings productive. Designate responsible persons to execute action items with built-in accountability to ensure follow-up takes place.
Take Action Now
Additionally, there are hour-long webinars that are held regularly to explore specific aspects of business preparation and disaster recovery. Like family disaster preparations, protecting a business from the effects of weather, infrastructure failures or civil unrest is a function of planning, forethought and resource allocation. Researching this article made me think of some things that need to be done to harden my own business in the face of a crisis. As with most things, preparation is the key. For more information, call 866-364-9696 or visit preparemybusiness.org.
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This article was originally published in the SURVIVOR’S EDGE™ Fall 2015 edition. Subscription is available in print and digital editions here.