Disasters can arrive without warning and can bring about effects that linger for a long time after the disaster period has passed. They arrive in varying shapes and sizes caused by both natural and man-made disruptions. Do you know what to do when a disaster hits your area and your business? Will your disaster recovery plan cover the repairs and the financial hit to your business’s bottom line? Are you prepared to keep your business running in the time of a disaster?
This is a topic many don’t think about until it’s too late and a disaster is upon them. Many businesses provide services and products to customers outside the disaster area, and with that our customers and employees depend on us to maintain a provisional plan for continuity even in the worst of conditions.
An Ounce of Preparedness
Being prepared may seem like a low priority to some companies given the pace of day-to-day business and the myriad demands put upon people and organizations, but disasters can hit anywhere and sometimes with very little to no warning. And when they do, the unprepared business can find itself in very big trouble. The Federal Emergency Management Agency (FEMA) estimates that 40 percent of businesses do not reopen after a disaster, with another 25 percent failing within one year post-disaster. They attribute this to businesses being grossly under-prepared and unaware of what options exist should they require assistance. Creating a disaster recovery plan includes many considerations with insurance and available public service being just two.
Sadly, many business owners don’t fully understand what is and what isn’t covered by their property insurance, another item that needs close consideration before disaster strikes. Properly insuring the value of your business, understanding the geography of where your business is located and if flood or earthquake coverage should be a supplemental policy with your current insurance coverage, are vital considerations. Another situation to think about is, what you’ll do should there be a long interruption with your day-to-day business. What will happen if you can’t “reopen your doors” in a timely manner? You need to plan against how the downtime of your business will disrupt incoming revenue and profits; many insurance carriers offer business suspension coverage and depending on your business, it can be a lifesaver for your organization.
For the small business owner who is not properly insured, the Small Business Administration offers low-interest loans. For some owners, this may be a necessary option for re-establishing their business, especially if the business is not insured optimally.
Also, you need to consider your employees and how the disaster will affect them. If your business location is uninhabitable, they will be out wages and work. A supplemental policy called wage replacement insurance can be included in your policy if your business suspension coverage doesn’t already address covering employee wages.
There are guides and best practices, established by many reputable organizations, which can help pull together the information you need to be ready in the event of a disaster.
What to Consider
Depending on your business, some things to consider can be:
Though many businesses will not reopen, there are survival stories. Re-establishing your business after the onslaught of a disaster will not be easy, but it is doable if you plan ahead with a recovery strategy. There may be a lot of work in the recovery process or a little… either way, the devastation, regardless of how minimal, will impact your business to some extent. Of course, being proactive with a disaster recovery plan upfront will give you the peace of mind you need during a stressful situation and allow you to focus on getting back to business as usual.