Whether a weather disaster comes as flood, hail, high winds, lightning or something else, the result for about one in four of small businesses affected is the same — they never reopen. That’s according to the Insurance Institute for Business and Home Safety (IIBHS), a Tampa-based industry organization that researches ways to manage disaster risks.
Know Your Risks
To keep from joining that unlucky 25 percent, start by knowing the hazards. A free online tool from The Hartford lets you enter your business type and location to find out how you can plan for the risks you are most likely to face. You can also take their Business Insurance Guide. This online tool helps you determine the combination of insurance that is appropriate to protect your business.
Post-disaster communication is important for every firm. At minimum, says Gail Moraton, business resiliency manager for IIBHS, tell employees how to find out if the business is open or closed in the event of a weather emergency. For instance, you could designate a call-in phone number or direct them to a website with the latest information.
Disasters affect businesses differently. An accounting firm may be able to operate almost anywhere with phones, electricity and computers. A manufacturer might need access to specific machinery in a single location. So identify functions critical to your particular business and ask how disaster could affect them. Managing risks could mean purchasing a generator for emergency power, cross-training employees to replace workers who can’t make it in, retaining a backup Internet service provider, or arranging for mutual support with a similar company willing to share facilities in time of need.
Share the Plan
Bring employees into the planning process. Informed employees are better prepared to get a disaster-struck business up and running. Sharing concerns about disaster impacts can help employees think, for instance, about arranging for backup childcare so they can still come to work if schools are closed.
Think About Third Parties
Suppliers and vendors may need to be notified if inventory is lost or production is temporarily halted. Moraton says IIBHS recommends having multiple copies of contact information for all parties that could be affected by a disaster. Keep digital copies of employee and vendor phone numbers and email addresses in the cloud or off-site. To be extra sure, consider storing printed hard copies in your automobile trunk.
Keep It Updated
Revisit a disaster mitigation plan twice annually. “A plan that’s two years old isn’t going to be any good, especially if you have new employees or vendors who have changed their information,” Moraton says.
Open For Business and OFB-EZ are free online templates for disaster planning from IIBHS. The Small Business Administration also has a suite of preparedness information and tools free for any business. And the Federal Emergency Management Agency offers a free short primer on its certification program for disaster resiliency.
Don’t Get Overwhelmed
Disaster planning may appear complex. But moves as obvious as strengthening a roof can pay dividends. “If you keep the roof on the building, chances are much greater that you’re never going to have the disruption in the first place,” notes David Golden, senior director of commercial lines at the Property Casualty Insurers Association of America, a Chicago-based trade group.
Whatever you do, tell your agent or broker about your preparations. The information could figure in the pricing of your business interruption policy, Golden says. That way, even if you’re never struck, planning for disaster could help you stay in business.