Estimates of business failures following a natural or man-made disaster range as high as 75 percent, according to Federal Emergency Management Agency. A common denominator: There was no plan in place to address the crisis.
To develop a preparedness plan for your business, you should identify the scenarios that may be possible based on geography. While we don't necessarily think of tornadoes or extreme weather here in the Northwest, an earthquake seems a real possibility. Then there's risk of fire, power failures or other utility outages. Even a snowstorm or toppled tree could wreak havoc on a business.
It's dangerous to simply rely on an insurance policy for business recovery. These policies are good for replacing lost inventory and rebuilding structures that may have been destroyed. But insurance doesn't replace customers who require your product or services and who may find a new source while you're out of commission.
Also consider how a disaster will affect your employees. As loyal as some may be to the enterprise, they can rarely wait around any length of time for the shop to reopen.
Why not negotiate reciprocal contingency plans and cooperative agreements with local competitors in the unlikely event of a disaster? The plan can provide security for both parties and also provide a safe haven of operations during a crisis. It's best to have these conversations in advance of a disaster when all parties share a common interest.
Look to establish alternative sourcing for your raw materials or supplies. While you may be spared from the initial disaster, you can easily fall victim to a failure by a key partner in your supply chain.
Creating redundancies is an important element to emergency preparedness. These exercises help to develop critical strategic ties that will take out some of the shock when hit with disaster.
Data backup and off-site storage is critical. Several businesses learned this hard lesson following the Sept. 11, 2001, terrorist attacks. Electronic data is the lifeblood of efficiency for business; choke off or disrupt the data flow and a business will find itself on life-support.
Cindy and Ernie Frederickson, owners of Everett Floral and Gift in south Everett, have first-hand experience. They carried a robust insurance policy that covers everything, including employees' lost wages. Their business was extensively damaged by arson Aug. 6. The shop reopened seven weeks ago.
"We didn't really know how well prepared we were until it happened," Ernie Frederickson said.
The road to recovery was far from easy. Complications with building permits and construction needed resolution as the new structure was being built.
"We feel very blessed to have tremendous support from friends and family in this community. We have been in business in our location for 23 years; it's not something you just walk away from. I have to admit though that the thought did cross our minds when we initially saw the building in ruins," Cindy Frederickson said.
Everett Floral has a great working relationship with other area florists, which was crucial to the business' survival.
"We were able to take care of all our customers by strategically partnering with shops in Bothell and Everett," Cindy Frederickson said. "We all approach our business with the idea that the pie is big enough for all to share."
The old phone system has been replaced with a new one. Old cash registers are gone, too. So are the computers and the software that had been used in the old shop. All this translates to a learning curve that requires patience and repetition.
"Everyone is learning the new systems and we're all trying to get up to speed," Cindy Frederickson said.
Clearly none of us would wish for this to happen. But everyone should make plans in case of emergency, disaster or catastrophe. There are terrific resources available online to use as a guide. There are checklists, training guides and helpful tips to make the planning process less painful. Make the plan; then hope never to use it.
Juergen Kneifel is a senior associate faculty member in the Everett Community College business program. Please send your comments to email@example.com.
Small Business Administration: www.sba.gov/DISASTER/getready.html
Disaster Recovery Journal: www.drj.com
Federal Emergency Management Agency Guide: www.fema.gov/areyouready
Contingency Planning: www.contingencyplanning.com
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