If you're like most small-business owners, disaster preparation probably falls on the "I'll-do-it-tomorrow" to-do list. The problem with that? Tomorrow never comes, and that means you're just one very bad day away from losing everything you've been working for.
It doesn't have to be that way. Three preparedness experts weigh in on recent disasters and offer tips on how to get your business up and running when calamity hits.
A Flood Where You Don't Expect It
Jeff Schlegelmilch (@jeffschlegel), the deputy director at the National Center for Disaster Preparedness at the Earth Institute at Columbia University (@columbia_ncdp), says people should start expecting the unexpected when it comes to the weather.
Take for example, the last month's historic flooding Baton Rouge. According to NPR, many people ignored the warnings because they didn't live on designated flood plains. As a result, they found themselves unprepared and in trouble.
"It's being referred to colloquially as a '1,000-year event,'" he says. "But that term is being rendered a bit meaningless as we get more of these extreme weather events."
Schlegelmilch recommends all businesses have disaster recovery and business continuity plans that take an "all-hazards" approach.
"Some things are very specific to the threat itself," he notes. "Like with floods, you have to prepare for a lot of water. But some things you are going to have to do no matter what kind of disaster you're facing."
How to prep: According to Schlegelmilch, most small businesses can start their disaster prep with three steps:
- Identify your essential functions. Ask yourself two questions: "What do I do?" and "What do I need to do what I do?" The answers will help you prioritize and plan.
- Identify your threats. Schlegelmilch describes threats as the hazards you are likely to encounter. For example, a business near a large body of water would most likely see floods as a threat.
- Identify your vulnerabilities. A vulnerability is the how your business may be impacted by a threat. Say your business is by that large body of water but is also located on a hill. The potential impact on your immediate property may decrease, but you would still want to consider access for employees, customers, and suppliers.
Bonus tip: Schlegelmilch notes, "Encouraging families to prepare, and even incentivizing this as part of employee engagement, will help them as well as the organizations they work for in a disaster."
Check out the National Center for Disaster Preparedness's article "5 Actions Steps to Preparedness" for more information.
A Disaster for Your Supplier
According to the New York Times, volunteer firefighters were already on the scene when the West Fertilizer Company exploded in West, Texas. The blast leveled nearby homes, the local middle school, and a nursing home. Worse, 15 people lost their lives and nearly 200 suffered injuries.
The report notes investigators ultimately determined that a lack of oversight at all levels contributed to the explosion. For the company, that included storing ammonium nitrate in a wooden warehouse without a sprinkler system.
Clearly, taking steps to protect your employees and your property from hazardous materials on your site is a huge part of risk management. But what if you were a business that used West Texas Fertilizer as s supplier?
How to prep: Founder and CEO of Continuity Corp., LLC (@continuitycorp) Keith Erwood (@kerwood) recommends small-business owners ask their suppliers tough questions to be sure contingencies are in place.
"But don't just ask wide-open generic questions," he says. "Ask meaningful questions as it relates to your business."
For example, Erwood suggests asking…
- How quickly can you get X process back up and running?
- What kinds of time delays can we expect on X product or service that you provide to us?
- Will you test contingencies with us?
Erwood also thinks it's a good idea to have more than one supplier for a product or to find suppliers that source materials from multiple locations.
Bonus tip: "A small-business owner can require their suppliers to provide proof of a business continuity plan if they want to continue to keep them as a customer," says Gail Moraton, the business resiliency manager for the Insurance Institute for Business & Home Safety (@disastersafety). She adds that the supplier can eradicate any personal or confidential information.
An Explosion Down the Street
According to Crain's, when an explosion rocked New York's East Village in 2015, the aftermath rippled throughout the neighborhood. The report notes the decreased foot traffic meant weeks of lost revenue for retail stores and restaurants.
You don't have to be in the epicenter to feel the effects of a disaster. But how do you manage your neighbor's risk?
Erwood says you can plan for disasters that impact your region, neighborhood, or even just your office building.
"Have the capability and contingencies in place to be able to relocate and let your customers and suppliers know you are in fact still in business despite a disaster. That will likely increase trust and many of these people will be happy to still do business with you," says Erwood. "You may also find that you pick up a few new customers if your competition isn't readily available."
Another part of your plan could be securing additional revenue streams, says Moraton. For example, she says a retailer who depends on walk-in business may want to add e-commerce as a way of reaching "beyond their area."
"Finding alternate ways to stay open for business or the ability to adapt to their current conditions will allow employees to return when other businesses in the area may not be able to re-open," says Moraton.
How to prep: Business continuity planning can be overwhelming, but the Insurance Institute for Business & Home Safety offers two free tools to assist:
- OFB-EZ, a business continuity toolkit that takes you from identifying risks to testing your plan.
- EZ-Prep, a severe weather preparedness and response planner that includes checklists for safety procedures, supplies, and step to take before, during and after storm.
Bonus tip: With the appropriate insurance, you can most likely afford repairs to your property. However, disasters usually mean you're losing revenue while still paying bills. This is why it's a good idea to add Business Interruption Insurance to your Commercial Property Insurance. If a covered property event forces you to halt operations, Business Interruption can usually cover ongoing expenses.
Get more tips for disaster planning in "Roundup: Insureon's Best Business Preparedness Resources."
About the Contributors
Keith Erwood is a business resiliency and disaster preparedness expert with over 20 years of experience. As the founder and CEO of Continuity Corp., LLC, he helps executives, business owners, and managers create effective risk management, business continuity, and disaster recovery programs that enable their operations during disruptions. In addition to his work in disaster prep, Erwood spent 13 years with the New York City Fire Department as an emergency medical technician.
Gail Moraton joined Insurance Institute for Business & Home Safety in 2011 as the business resiliency manager. She is responsible for the Open for Business® program, a business continuity and property protection planning tool for small to mid-sized businesses. She formerly worked for the Mercury Insurance Group in Clearwater, Florida, as a business continuity program officer and senior business systems analysts. Moraton is currently a member of the Greater Tampa Bay Association of Contingency Planners. She is also certified as a Certified Business Continuity Professional (CBCP) by DRI International.
Jeff Schlegelmilch is the deputy director for the National Center for Disaster Preparedness at Columbia University’s Earth Institute. In this role, he oversees the operations and strategic planning for the center. He also oversees projects related to the practice and policy of disaster preparedness. His areas of expertise include public health preparedness, community resilience, and the integration of private and public sector capabilities. Prior his role at Columbia, he was the manager for the International and Non-Healthcare Business Sector for the Yale New Haven Health System Center for Emergency Preparedness and Disaster Response.