Is Your Business Flirting With Disaster?

Consider what would have happened to your business if you had been in the path of the destructive tornados that struck Missouri in May of 2007. Would your business be able to survive? According to the Institute for Business and Home Safety, only 25 percent of businesses that close down following a disaster ever reopen.

Missouri has seen its share of disasters in recent years. Floods, ice storms and tornados are always a threat to Midwest businesses, which can also fall victim to fires or pipe bursts during a cold snap. To protect your business from such eventualities, consider the following:

• What should you do to protect your building, business equipment and outbuildings associated with the business? This might involve the purchase of plywood shutters or safety film, elevating valuable contents on shelves, restraining items such as desktop computers and hot water heaters or relocating combustibles.
  
  
• What if your suppliers are shut down? Develop a list of your most critical vendors, and notify them if you must close for a time. If they are affected by a disaster, find out what their plans are for reopening. Consider developing a relationship with other suppliers now in case your usual supplier closes.
  
  
• What records do you need? Every business owner understands the importance of backing up computer files, but not everyone does it. Some experts recommend that computer records should be backed up off-site at a location at least 50 miles from the business. This includes but is not limited to payroll, tax, accounting, customer, vendor, inventory and equipment records. Be sure to keep hardcopies of records such as insurance policies and leases in an off-site location as well. Consider documenting equipment, furniture and inventory through photos or videotapes.
  
  
• What if you are forced to relocate temporarily? Where would you go? How would you notify clients and vendors? Could your phone and other communication devices transfer to another location?
  
  
• What about insurance? Review your policy. Determine what perils are covered and which are excluded. Floods and earthquakes are often excluded from coverage unless added for an additional premium. Does the policy cover leased items? Does it cover property belonging to other individuals that is damaged while on your premises? Does it cover business property away from the business location? Should you consider business interruption insurance?
  
  
• Meet with employees and/or family members to develop an emergency plan, and review it on a regular basis. Be sure the plan includes evacuation strategies and a designated contact person outside the immediate area to whom everyone should report. Develop a list of contact numbers for employees so you can get in touch with their family members or medical providers if necessary. Be sure everyone associated with the business knows where the shutoffs are for water, electricity and gas and how to use them. Gas should be shut off only if you smell gas or if a broadcast message indicates this should be done. In some areas, if you shut gas off at the meter, it can only be turned back on by the utility company, which is a fee-based service.
  
  
• What emergency supplies should you have on hand? In addition to the standard smoke detectors, fire extinguishers and burglary alarms, consider developing a disaster kit with the following: NOAA weather radio, first aid kit, flashlight/batteries, pencils/pens, paper towels, plastic bags, camera/film, basic tool kits (wrenches/gloves/crow bar), a supply of bottled water, nonperishable food and some cash.
  
  
• How can you help customers? If you plan ahead, you may be able to continue serving customers. In case this isn't possible, have a plan for alternative resources for your customers. They will more likely remain loyal and return to you after you reopen if you have gone to the trouble of meeting their needs while you were unable to provide products or services.

Business owners invest substantial amounts of time and resources into developing the business, the customer base, supplier relationships and image, yet the Public Entity Risk Institute reports that fewer than five percent of small businesses have any form of documented disaster plan. Large companies often hire risk managers or outside consultants to handle this task. Small business owners usually have to do this planning on their own.

The preparation of a disaster plan may seem overwhelming. Fortunately, there is an excellent resource that can help small business owners develop a disaster plan in a relatively painless way. The Institute for Business and Home Safety Web site includes a complete "Open For Business Toolkit" covering topics such as "Developing Your Recovery Plan" and "Protecting Your Building and Its Contents." In addition, the toolkit provides templates for creating lists such as emergency, creditor, supplier and customer contacts, a disaster supply checklist and an insurance coverage discussion form.