Businesses Reminded to Take a Disaster-Ready Approach

January 18, 2006

The small business that prepares in advance of a disaster like Hurricane Katrina has a greater chance of returning to pre-disaster operating levels if it suffers damage from the event. There is no better reason for a business owner to look seriously at being prepared for a disaster, according the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA).

“When a business is disaster-ready it is in a position to recover from any disaster–big or small,” said Michael Bolch, federal coordinating officer for FEMA. “Small business owners can suffer water or wind damage even if the event does not warrant a federal disaster declaration.”

“Develop a comprehensive plan,” said Frank Skaggs of the U.S. Small Business Administration (SBA) Office of Disaster Assistance. “Take a good look at your business and assess the impact a disaster would have on you, your employees, your customers and your community.”

Skaggs pointed out that while the SBA offers low-interest disaster loans to help businesses recover, by having a plan, “Companies can protect themselves from the need to take on additional debt. If a company is struggling, even the low-interest SBA loan may be difficult to handle.”

There are four critical parts to disaster preparation: making your company’s physical plant less vulnerable, ensuring that your business data (sales records, customer lists, tax information, etc.) backed up offsite, purchasing adequate insurance coverage and formulating a contingency plan to help you keep operating even if your company’s location is heavily damaged or destroyed.

The internet is full of information about how to protect your business. The Web site, Institute for Business & Home Safety ( ), includes a section on protecting against hurricanes, hail, tornadoes, earthquakes, floods, wildfires and freezing weather.

Government sites also offer advice. The FEMA site ( includes practical information on topics such as installing an emergency generator, protecting wells against contamination from flooding and securing different kinds of roofs.

The SBA’s site ( ) contains disaster preparation tips and also a list of things business owners should consider. The section includes some hard questions owners need to ask themselves, such as “What would we do if our facility were closed for several days, damaged or even totally destroyed?” and “What if my payroll, tax, accounting or production records were destroyed?”

That last question probably occurred to many owners after Hurricane Katrina, as many companies are trying to reconstruct their operations following the floods. Those whose data was intact because it was duplicated at offsite storage locations were in a stronger position when it came to serving customers again.

There are a variety of methods of storing data, the most expensive being offsite duplication. The cheapest is to back it up yourself on disks–but keep in mind that if those disks are stored at your place of business, you really haven’t protected your data at all.

When it comes to insuring your company, it’s imperative to know exactly what the policy you buy covers and doesn’t cover. Don’t assume, for example, that a standard business policy will cover flooding or earthquakes. The chances are high that it won’t, and that insurance for these kinds of disasters will have to be purchased separately.

The internet is again a good source of information. The Insurance Information Institute, an industry group, offers an explanation of the basics of business insurance ( ). If you need to know more about flood insurance, the FEMA website has an entire section devoted to the National Flood Insurance Program (

It’s a good idea to consider business interruption insurance that would cover your lost profits should you–or under some policies, your suppliers or customers–be unable to operate.

And if you can’t operate? It’s something you need to think about now. Is there a way you can carry on the business even if your location is damaged and destroyed? Obviously, if you’re a manufacturer or a retailer, a business dependent on a particular locale, the answer might well be no. If you’re a service provider, say, a medical billing company, you might be able to get back to work right away.

But you need to have two of the critical elements of disaster preparation: offsite backup of your company’s data and a contingency plan. Knowing in advance what your options are can help you restart with as little delay as possible.

“A crucial part of your plan is communicating it to your employees,” said Skaggs. “Be sure everyone knows what they’ll need to do should disaster strike.”

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