Small businesses make up 99% of all companies with employees, about 45% of the American payroll and employ 50% of private workers, according to FEMA. When these smaller businesses are faced with disasters, it’s important for them to have a plan to deal with the after-effects.
Almost a quarter of businesses do not reopen after a disaster, according to the Institute for Business and Home Safety. Without a proper plan in place to address disaster-related issues and damage, significant loss to the economy can occur.
It’s important for small businesses to have an action plan in the event of a natural or man-made disaster. Here are some tips to make sure your business is covered when disaster strikes.
Perform a Risk Assessment
By knowing what types of disasters your area is vulnerable to, you can better prepare yourself for all possibilities. A business in Florida is obviously going to be more concerned about a hurricane than a business in Kansas, but the Kansas business might be vulnerable to the summer tornadoes so prevalent in the American Midwest.
Risk assessments can be simple self-assessments or long engineering studies – consider the company size and industry your organization is in before deciding which type of risk assessment to undertake. Make sure you’re prepared on all fronts by installing monitoring systems and putting up smoke alarms and detectors.
Assess Security Needs
If your organization handles any kind of sensitive information – for example, customer data like Social Security numbers or home addresses – you need to be prepared for attack, whether it’s physical or cyber.
The average small business cyberattack saw small businesses spending around $880,000 because of damage caused or IT asset theft, and after the attack, experiencing losses around $955,000 due to disruption of everyday operations, according to the Ponemon Institute, whose 2016 study also found that 55% of respondents experienced a cyberattack within the last year.
Physical attacks and security breaches can cause loss as well. If your physical business isn’t secure, you become an easy target for criminals who can not only come in and take assets, but also break into your digital storage and take any data they want. Prepare for these by installing a quality security system, including cameras, and consider doors that will only open with ID badges issued to employees.
Get the Right Insurance
Review your insurance policies to see what is and isn’t covered. Property insurance will cover damage to buildings and equipment, but it typically won’t cover lost income. In that case, consider business interruption insurance as it will help with income lost to disaster effects. Additionally, many policies do not provide assistance in the event of a flood or earthquake, so you might need extra policies for those.
Take a good look at your policy deductibles and limits as well, and make sure to keep your insurance company apprised of any additions to your property.
Many businesses faced coverage issues after the 2017 hurricane season, which saw several named storms come through the U.S. In an interview with Reuters, a Texas optometrist explained how his insurance company denied his post-Hurricane Harvey claim – he lost business for five days due to flooding, but because his business did not receive any physical damage, he couldn’t recoup any losses.
Have a Back-Up Plan
Businesses rely heavily on data and technology these days, but what happens if your computer and servers are destroyed in a storm or fire? According to the Wall Street Journal, it’s best to keep copies of all records in another location that’s at least 50 miles away from your business. Using an online backup provider is important as well.
Other vital documents should be stored in a fireproof safe, and one that is burglar-proof.
What to Do When Disaster Does Strike
You can prepare all you want, but what are the first steps to take after a disaster hits?
Apply for financial assistance with FEMA, according to the Small Business Administration. FEMA can provide funds to help with food, clothing and medicine. Additionally, the SBA and the U.S. Department of Agriculture can give out low-interest loans to help replace and/or fix property and other assets.
Cleanup after a disaster can be dangerous, so make sure the proper precautions are taken. There could be downed power lines, or hazardous material that has spilled. The Occupational Safety & Health Administration (OSHA) lists procedures on its site to help you ensure you focus on safety while cleaning up from a disaster, including to always wear water-tight, steel-toe boots that will protect you from potential bites or crush injuries.
If your power is out and you are using a generator, make sure the generator is stored outdoors to avoid potential carbon monoxide poisoning.
Stick to the plans you made, and make sure your employees know what to do as well after a disaster hits.
“An MBA from Jacksonville University’s Davis College of Business can help prepare you for all things business-related.