Small businesses suffer great losses whenever there is a natural catastrophe. In addition to damaging property, hurricanes and floods can lead to lost financial and customer records. Your business operations may be shut down for days on end, resulting in a fall in revenue and earnings.While natural disasters and the havoc they cause cannot be predicted, it is definitely possible to prepare for them. Some of the critical areas that small businesses should look at are:
Power needs - According to the U.S. Department of Energy, between 2003 and 2012, there were 679 power outages, each of which affected over 50,000 people. With global warming and the increasing incidence of extreme weather events, disruptions in the electricity supply are expected to rise.
Every company should make arrangements for back-up power so that they can continue with essential activities even if the grid is down.
Insurance - At least once a year and preferably twice, spend some time on going over your existing insurance policies. Are they adequate to pay for the damage that could occur if there are floods or some other natural calamity?
Ask your insurance agent to inform you of the steps that you are required to take after a disaster occurs. Familiarize yourself with the insurance policies that you have and their stipulations so that your business derives the maximum possible benefit when it makes a claim. It is advisable to prepare a checklist for the tasks required to be done when there is a disaster.
Back up your data - If there is a fire in your office building, you could lose years of data. Make it a practice to regularly create a back-up of all your financial records, employee details, and customer particulars. Remember to include computer records as well as physical files and papers. It is a good idea to store these at a location away from your office.
Communications - How will you get in touch with your employees if the normal channels are down? Do you have alternate phone numbers for each of them? If your place of work cannot be used, can they operate from home? Create a plan and test it out periodically. Ensure that you regularly update contact details of employees.
Key suppliers to your business - What if one of your important suppliers closes down? Do you have a plan to source materials from an alternate source? Or will you start trying to find a replacement after disaster strikes?
A well-prepared business will have various contingency plans in place that are regularly updated.
Don't under-estimate the potential for damage
Hurricane Katrina, one of the worst storms to hit the U.S., caused $21.1 billion in business-related losses. The Federal Emergency Management Agency, which is part of the Department of Homeland Security, says, "Almost 40% of small businesses never reopen their doors following a disaster because just a few inches of water can cause tens of thousands of dollars in damage."
In addition to natural disasters, small businesses need to prepare themselves for the disruption that may take place due to terrorist activities. Most people do not like to even think about these events, let alone prepare for them.
Each business is different and should address the issues that will help prepare it to effectively tackle a man-made or a natural disaster. A little effort and planning can yield great benefits when calamity strikes.