Is Your Business Disaster-Ready?
By Jeff Wuorio
Reprinted with permission from the Microsoft Small Business Center

Hurricanes, earthquakes and other natural events are disasters in every sense of the word. Lives are lost, property decimated and entire communities disrupted.

For your small business, these events can be just as devastating. But there's a great deal you can do — both to prepare before a disaster strikes and afterwards, to get your business back on its feet quickly.

Here are 10 tips to better protect your business and, if damage occurs, what you can do to speed your recovery.

First, here are tips to help you protect your business:

1. Identify what you need to protect. Many businesses spend far too much time piling up the sandbags without considering what really needs the most protection. Your first step in adequately preparing your business for a disaster is to identify what matters most and take steps to address that. "If you run a food service business, if you lose electricity for 24 hours, you can lose $50,000 to food spoilage," says Donna Childs, co-author of "Contingency Planning and Disaster Recovery: A Small Business Guide." "Look into backup power supplies and make sure any possible damage is covered in your insurance policy."

2. Develop a specific disaster plan. Next, map out precisely who will do what if some sort of disaster occurs. Who will be in charge of evacuation or of making certain that important documents and data are safely secured? Designate a meeting spot outside of your business. Share the plan with your employees and keep it up to date. "The last thing you want is trying to figure out what to do while a disaster is unfolding," says Childs.

3. Get your insurance in order. This means more than just knowing where your policy happens to be. Specific issues include:

  • Check your policy endorsements. Vanilla insurance may not cover specific areas that matter to your business. Add them on as need be.
  • Consider business interruption insurance. Akin to disability coverage, this insurance is designed to compensate you for lost income after a disaster. (The compensation amount is based on how much revenue you would have earned in a given time period.)
  • Set up direct deposit. Do this so you don't have to wait for the check in the mail — which may or may not come. Instead, your insurance company will be able to deposit any benefits directly into your bank account.
  • Assign a point person for insurance issues. This person should keep all of the pertinent information and contact data at the ready.

4. Consider cash. Even solid insurance coverage will have deductibles. If you can, earmark some cash to pay those and other expenses. (I've talked to a few small business owners who have, literally, $5,000 in a safe that's kept on the premises.) If that's not in the cards, open up a line of credit with your bank for a ready money source. To be extra safe, Brian Drum, chief executive office of Drum Associates, a survivor of the 9/11 tragedy and business preparedness advocate, recommends tapping into the line of credit. "If you wait for the disaster to occur, you might not be able to access it."

5. Buddy up. The most amenable landlord on earth can do little about office space that's been reduced to ruins. Address that potentially-crippling problem by "buddying up" with another business — a non-competitor who's willing to offer a conference room or any available space to help you out. By the same token, if they're the ones taking the hit, make your space available to them.

Finally, here are tips to help you get back on your feet as quickly as possible:

1. Assess the damage realistically. This may seem rather obvious, but many businesses make the mistake of sugar coating whatever damage may have occurred — not only in terms of financial cost but in how quickly things might be able to return to normal. Don't make the same mistake. As soon as you can, look things over and take a hard view at how long it will take for your operation to regain its bearings.

That's precisely what Adam Vodanovich was faced with in the aftermath of Hurricane Katrina in the late summer of 2005. The operator of a number of Wing Zone take-out and delivery restaurants in New Orleans, Vodanovich quickly realized that some of his outlets were far better positioned to recover than others: "We prioritized the stores we could start with based on the neighborhoods we could get to. You have to assess the situation with a realistic eye."

2. Move as quickly as possible. Physical damage is one thing. The emotional trauma of disaster is often just as crippling. The longer it takes a business to recover, the more quickly damage can fester. So, move as quickly as possible to begin clean up efforts. "The faster you move to rebuild, the easier the job is," says Renee Miller of The Miller Group, a Los Angeles ad agency which endured the devastating Northridge earthquake in 1994.

3. Get involved. Nothing may be more alienating to employees than a leader who directs disaster recovery from afar. If there's physical cleanup to be done, don't be hesitant about getting your hands dirty. That can prove a powerful morale booster, no matter how unpleasant the task may be.

4. Stay in touch. One of the most problematic elements of picking up the post-disaster pieces is keeping lines of communication open. Bend your efforts to that end, and be certain you cover as many bases as possible:

  • If you've had to relocate temporarily, make sure the post office knows where to send mail. The same goes for FedEx and any other overnight delivery service.
  • Contact suppliers and vendors to try to keep goods and services flowing as smoothly as possible.
  • Get together with your bank at your first opportunity to arrange any sort of emergency funding.
  • Print up flyers and distribute them throughout the neighborhood to let people know you're back in business (or plan to be so shortly.)
  • Send out a mass e-mail to let people know you're back in business (or plan to be so shortly). Here, products such as Microsoft Office Outlook with Business Contact Manager can help. (Editor's note: Business contact manager is part of Microsoft Office 2003 Small Business Edition.) and Microsoft Office Professional Edition 2003.) You can gather significant points of information about customers, including sales statistics, shopping preferences, contact information and other data. That can make any comprehensive e-mail effort easier to manage and more effective in communicating with customers in the most effective manner possible.

5. Help others. Getting your business back on its feet shouldn't be an every man for himself proposition. Helping others rebuild isn't only the right thing to do, it can be good for your business in the long run.

If you provide another business with good and services, tell them to pay you whatever they can afford. If your business is pretty much cleaned up, man a broom at a neighbor's operation. Says Vodanovich, referring to the devastating Hurricane Katrina of 2005: "Everyone down here in New Orleans is banding together, especially small businesses. We're used to overcoming adversity and adapting."