SelfInformed

July 2011


Through Rain Or Sleet Or Summer Heat

Friday, July 01, 2011
Your Business Should Have A Weather Backup Plan

By Kim O’Connor

Natural disasters—like businesses—come in all different shapes and sizes.

A big one like Hurricane Katrina decimates a region and destroys almost half of the small businesses it touches. The Red Cross estimates that 40 percent of small businesses never manage to reopen after a major disaster.

The scary thing is that a disaster doesn’t have to cause large-scale devastation to put your business under. In this economic climate, even a few days of downtime can spell financial disaster.

A common thunderstorm might cause a tree to fall on your home office. A seemingly harmless snow day can stretch into a weeklong business interruption. A temporary power outage can render vital data inaccessible at a crucial moment.

Extreme weather can strike just about anywhere.

Yet a 2010 survey of small-business owners conducted by insurance provider Travelers found that 44 percent of participants had no plans in place for how their business would survive a disaster.

The good news is that a few simple steps can help you avoid a catastrophic loss. Here’s how you can get started on a backup plan for your business.

Figure Out What’s Important

Think about all the resources that drive your business. Consider every area of day-to-day operations, such as:
  • People (employees, suppliers, shippers, etc.)
  • Inventory
  • Supplies and equipment
  • Procedures
  • Data
  • Facilities
You may need to make a list depending on the complexity of your business.

Which of these factors seem most critical? Ask yourself what you would require to maintain bare-bones operations in crisis mode.

For example, a restaurant owner might identify facilities and suppliers as the resources most vital to the health of her business, while a retailer may rely heavily on inventory to stay afloat. A graphic design firm may determine that people are its most precious resource.

Assess The Risks

Now that you’ve identified the drivers that are most critical to the survival of your business, think about the ways in which those resources could be compromised.

Equipment can fail. Supplies can be disrupted. Inventory can be wiped out.

Then determine which scenarios seem most likely to occur based on the fragility of the resource, common problems in your industry, and regional variables such as weather patterns.

This exercise is called risk assessment, and it’s more or less a pared-down version of what insurance underwriters do to calculate a policy’s premium.

As you craft a backup plan for your business, focus first on protecting critical resources that are at high risk. Mitigate that risk whenever you can.

For example, restaurant owners and retailers might work with a variety of suppliers so business doesn’t grind to a halt if a vendor becomes compromised.

Another smart strategy is to brainstorm temporary workarounds in case of a crisis. For a talent-driven business like a graphic design firm, you (or your employees) might be able to work remotely if the office floods.

Safeguard Your Data

Fifty-seven percent of small businesses don’t have a plan to deal with a disruption to their electronic resources, reports a 2011 survey conducted by Symantec Corporation, which provides security, storage and systems management solutions.

Data loss is probably the most common disaster that can befall a business. The good news is it’s preventable.

“It’s important for small businesses to back up their data to stay up and running in case of a disaster,” says Jason Fisher, director of a product management group at Symantec. “It’s also essential to have tested that plan to ensure that critical data is always available.”

For most small businesses, an online backup solution (there are many) offers simple implementation and secure storage. In addition to backing up your systems (including files and applications), make a habit of electronically scanning paper files that you keep in your office.

Another idea is to create a special emergency file with important contact information, insurance policies, financial records, and other mission-critical documents so the information you need most will be easily accessible during a crisis.

Develop An Emergency Communications Strategy

For disasters that cause regional disruptions, communicating well with your team and with your customers is key. You should have more than one way to contact anyone you work with regularly.

If you depend on foot traffic, plan to keep customers informed by posting signs, updating your website or leaving current information on an outgoing voicemail message. Twitter and Facebook are great ways to get the word out, too.

Email customers to let them know that shipments will be delayed. Call clients if you need to cancel meetings. Most of the time, people will remain patient and understanding if you’re willing to keep them posted as the crisis unfolds.

Review Your Insurance Coverage

One of the most important steps you can take to help your business survive a disaster is to make sure your insurance is adequate.

Loretta Worters, vice president of communications for the Insurance Information Institute, a nonprofit organization that educates consumers, says that small-business owners often make false assumptions about their coverage.

For instance, many owners of home-based businesses don’t realize that a regular homeowners insurance policy rarely provides for home office losses.

Other commonly overlooked areas are earthquake and flood coverage (which usually require separate insurance policies) and business interruption insurance, which covers lost income if you’re out of commission for more than 48 hours.

Worters also emphasizes the importance of working with an insurance provider that’s familiar with your industry.

“Make sure you have an agent that understands your business so you have the right type of coverage,” she says.

A knowledgeable provider can help you avoid unforeseen gaps in your policy.

Learn More

Planning for a disaster can seem overwhelming or even depressing, but remember that you don’t have to form a comprehensive plan in one sitting.

Every step you make will be a move in the right direction.

You can get started on a backup plan by consulting with the NASE’s Business Strategy Experts. These professional consultants will answer your questions and give you tips for developing a workable plan. And NASE Members can access to the experts at no charge.

You can also check out the American Red Cross Ready Rating Program. It’s a free, self-paced program designed to help businesses prepare for emergencies.


Kim O’Connor, a freelance writer in Chicago, knows a thing or two about bad weather.


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