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Business owners: Be prepared for disasters

Business owners - be prepared for disasters

As a business owner, you wear many hats during the day. You have many responsibilities and are always on the go, keeping your business running and growing. However, what will you do when your business suddenly suffers a fire, flood, tornado, or other property damage disaster? If you do not have a plan and are not prepared for a disaster, it could mean the difference between recovery or possibly not reopening. You have worked hard to get where you are now. Don't let a disaster stop you cold in your tracks.


Do

Do have a written plan for disasters

When disasters strike, you have little-to-no notice, and no time to plan your next move. Know up front what you and your staff will do. Have a plan and assign tasks to each employee. How will you handle phones if you can’t get to the office. You may need to roll the phones over to a cell or other land line. Where will you work from? Can you and your staff work from homes temporarily? You may be able to rent a temporarily location until yours is reopened. How will you get your products out the door? Can you outsource some of the work? Each business has its own unique challenges. Knowing beforehand how to keep your business afloat after a disaster will ensure you are back up and running soon.

Do maintain appropriate and adequate insurance

As a business owner, you must know what it would cost to replace your building, inventory, stock, business property and your loss of income in the event of a disaster. You have to insure your business properly and adequately, or risk losing it all. Have your property and buildings insured to their full “Replacement Cost” and have Business Interruption with Extra Expense coverage as well. If you have unique issues such as mobile equipment or fluctuating inventories, be sure to address these with your insurance agent. Many business policies will actually penalize you on your claim, if you are under-insured. This is known as a coinsurance penalty. Do not let this happen to you. Talk with your agent about any exclusions in your policy so you know what is covered and what may not be. Many times, you can add additional coverages to give you extra coverage that is unique to your business (i.e. seasonal stock fluctuations, inland marine, flood, employee dishonesty, loss of income with extra expense). It is your responsibility to review your policy and not necessarily your insurance agent’s.

Do have your data backed up, twice

We live in a digital era. It seems that we use computers and electronic data more than paper files today. Be sure to have all software, data, and files backed up preferably in two locations. The first should be on a local back up hard drive that is separate from your computer. This way, if your computer crashes, is struck by a virus or has been damaged in a disaster, there is a good chance you can still recover the data from the back up. However, if your business suffers a significant fire or water damage event, chances are you will loose the back up hard drive as well. This is why you must back up all data to a cloud or storage server off site. Be sure your backups are set to execute automatically every day (some will back up every few minutes) to both locations. Regardless of what happens to your business, your data will always be a click away. 

Do have video/photos of the business property

In the event of a total or partial loss to your business, you will have to list all of your inventory, stock, equipment and machinery and business contents from memory. This is very difficult to accomplish without photos or videos. Take photos and/or videos of your contents once a year, and then be sure to store these in a fireproof safe or in your bank’s safe deposit box. There are also many “cloud” or off site storage servers that are available for downloading pictures and videos. You should photograph or video each department’s area in your organization. Everything must be documented if you want to claim it after a loss.

Do have a team prepared in advance to seek help

When your business has suffered a fire, water, storm or any other property damage disaster, it is a good idea to obtain the assistance of a licensed public adjuster. A public adjuster is a licensed professional adjuster who represents business owners--people like you--rather than the insurance company. A public adjuster can review your policy and coverages before a claim occurs, to ensure you are properly protected. After a loss occurs, a public adjuster will handle all aspects of your claim, including assisting with temporary office relocation and business interruption, inventorying business property, and providing estimates to repair the damage to the building. A public adjuster will handle all aspects of your claim, so you can focus on what you do best: taking care of your customers.


Don't

Do not assume a small event won’t be catastrophic

Even a small claim can have long lasting consequences. A small fire can disrupt your business for months. A storm can knock out power for weeks. Can your business survive weeks or months without customers? Many companies can lose customers permanently, if they are forced to go elsewhere for even a small period of time. Do you own or lease your facility? What would happen if something occurred to your leased building and you had to wait for the owner to expedite repairs. Can you survive during this period?

Do not overlook your customers’ sensitive information

In business, our customers trust us with their confidential and private information. Identity theft seems to happen everyday. We must be sure to protect our customers information at all times. Keep computers and laptops password protected and encrypt sensitive information. Shred any paperwork that has private information on it. Destruct files in a similar fashion after you no longer are required to keep them. Never throw this information in the trash without destroying it first. Be sure to clean/delete sensitive files from old computers before disposing or donating them.

Do not overlook an “indirect” disaster

What happens when one of your manufacturers, vendors or suppliers has an event that shuts them down? This could have dire consequences on your end as well. When this occurs, you have no control over the period it will take them to get back in business. They may have to wait for their insurance to pay or their landlord to rebuild their premises. This could take months. You must have a plan in place that will enable you to stay afloat should one of your key business partners suddenly not be able to fulfill your commitments. This includes back up business partners or outsourcing on a temporary basis. They key is to identify all of your key business partners. Next, have at least one or two alternatives that you can quickly and smoothly engage to keep your business running, should one of your business partners suddenly go down.

Do not overlook your staff contact info

Sounds pretty basic doesn’t it? Let’s face it, if your computers crash, or your office is not accessible, do you have all your employees’ emergency contacts readily available? You should keep all employees’ cell, home and an alternative phone number as well as email addresses, in your smart device, and also have a hard copy of this in your office as well as at home. In the event of a crisis, you will easily be able to reach out to all your staff. The same should hold true for important contacts such as customers, vendors and suppliers. You should hold each employee accountable for their business partners or customers’ information. 

Do not assume your plan will work

Remember when we were kids at school and had fire drills. Sure it was great to get out of class for a few minutes, but we were actually practicing a plan that someone had put into place. A plan is only as good as it’s end result. You don't want to find out later that your plan has holes in it or you overlooked a key aspect of it. Try your plan out. Take one day out of the year and pretend you cannot work as normal. See if your plan really stacks up. If you simply cannot take a day out, try it out on a weekend day or a day when you are typically closed. Be sure and track the results. You will always hit a snag or two in your plan and nothing ever goes perfect in a crisis. The key is to find areas that were critical failures and modify these as needed. Having a plan in place and not knowing if it really works, is setting yourself up for a second disaster.


Summary
Jumping cartoon

As business owners we hope we never encounter a natural disaster. The truth is, in any given year, there are fires, tornadoes, hurricanes, floods and earthquakes. It is safe to assume that your area is prone to at least one of these events each year.

Many people are counting on us every day including our customers, vendors, distributors and our employees. While they will be sympathetic to us in the event of a disaster, they cannot afford to wait for you to get back in business. Should you ever suffer a disaster, the above steps will help you to survive and quickly resume operations.

Taking a few hours during the year to prepare for a disaster is a must for every business owner out there. We owe it to our organization as well as everyone we serve. 


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Photo Credits: Happy owner of a cafe © mangostock - Fotolia.com; Check Man, Cross Man and Jump Man © ioannis kounadeas - Fotolia.com

Robert W. FreitagFounder and President, AmeriClaims

Founder and president of AmeriClaims, a public insurance adjusting firm in Charlotte, NC. Worked and trained in London, England with Lloyds of London, after earning a Bachelors Degree in Business Administration at Western Carolina Universit...

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