Take six steps to make the best of the worst situations

Matt Varilek
Matt Varilek

One of the most costly disasters in the region unfolded the night of Sept. 9, 2013, when more than 10 inches of rain fell in a 24-hour period, devastating Boulder and other Colorado communities with flash flooding that damaged nearly 20,000 homes and hundreds of small businesses.

Unfortunately, our region is prone to a variety of natural disasters, including flooding in North Dakota, tornadoes in South Dakota and wildfires in Montana than in 2012 scorched more than 1.1 million acres.

Statistics show 25 percent of businesses that close because of disaster never reopen. Small business owners are especially at risk because few have the resources to assess their risks or develop recovery plans.

As part of its mission to help small businesses start, grow and succeed, the U.S. Small Business Administration offers help with disaster preparedness and recovery.

Start with these six simple tips:

Evaluate your exposure. Know your region and the types of disasters most likely to affect your business. Consider your proximity to flood plains, rivers and streams as well as dams, nuclear power plants and other hazards.

Review your insurance coverage. Now’s the time to consult your insurance agent to determine whether your coverage is sufficient. Make sure you understand what’s covered by your policy and determine if you need flood insurance. Remember, many general policies don’t cover flood damage. Check into business interruption insurance, which helps you cover operating expenses if you’re forced to temporarily close. Calculate the cost of business interruptions for a day, week, month or more. To the extent possible, set aside a cash reserve that will allow your company to function during disaster recovery.

Review and prepare your supply chain. Develop professional relationships with alternate vendors in case your primary suppliers aren’t available. Place occasional orders with alternate vendors so they’ll consider you an active customer. Create a contact list for important business contractors and vendors you plan to use in an emergency. Keep this list with other documents in an easily accessible place and also at a protected off-site location.

Create a crisis communications plan. Make sure your staff and customers as well as contractors and vendors —everyone you do business with — know what’s going on in the aftermath of a disaster. Establish an e-mail alert system, keeping primary and secondary e-mail addresses for your employees, customers and vendors. Provide real-time updates to your customers, clients and the community so they know you’re still in business and in the process of rebuilding after a disaster. Don’t forget to test your plan beforehand.

Who will run your business after a disaster strikes?  Let your employees know the emergency chain of command. Maintain clear leave- and sick-day policies during disasters. Arrange for a backup payroll service in case your office is destroyed.

Create and implement a business continuity plan. This plan will help keep your business operating as it responds and recovers from a disaster or emergency situation. This plan should indicate when it will be activated and identify essential business functions and the staff to carry out these functions. A business continuity plan also determine which employees will be considered essential and non-essential to continued operations following a disaster as well as  identify records and documents that must be safe and readily accessible to perform key functions.

The SBA offers assistance to small businesses in assessing risk and developing recovery plans as well as providing other forms of disaster relief.

Additional information is available online from the SBA website at www.sba.gov/disaster.

Additional online resources, including disaster planning tip sheets and archived webinars on preparing businesses for disasters, is available from the website located at www.preparemybusiness.org.