DIGGING OUT FROM WINTER STORM JONAS: Getting your Business Ready for the Next Disaster
By: Roman Basi & Marcus S. Renwick
Businesses in this country and all over the world face many business interruptions in their day-to-day operations. From changing fuel prices to commodity prices to clients not paying their bills or declaring bankruptcy, keeping a business as a going concern is a challenge for any industry. Business people deal with these issues every day. However, there are threats beyond the day-to-day and year-to-year challenges.
Just last week, Winter Storm Jonas dumped nearly 2 feet of snow on the east coast. Three weeks before that, the Mississippi was flooding the Midwest. Spring is coming and with spring comes the beginning of tornado season. Statistically, this country experiences 1000 tornados per year. On average, there are 10 named storms in the Atlantic with over half of those becoming hurricanes. Mississippi has an average of 875,000 lightning strikes per year or 18.4 per square mile, and Louisiana has over 900,000 lightning strikes, an average of 19.7 per square mile. And watch out Florida! Florida has 1.4 million lightning strikes per year. That is 24.7 lightning strikes per square mile. Combine that with an average of 35 earthquakes worldwide per week with the ever-present forest fires in the Northwest, and anyone can conclude that we live in a shooting gallery!
With earthquakes, volcanic eruptions, tidal waves, tsunamis, tornados, and such, at some point, nearly everyone and every business will be touched by a natural disaster. The events can range from minimal impact events such as snow and ice to severe impact events (wildfires and hurricanes). Depending on the scale of the event and a business’s level of planning for disasters, the business will either move on or close forever. Natural disasters frequently result in property loss, termination of certain employees, injury to employees, loss of revenue, or catastrophes up to and including loss of the business or lives as well. Every company can and should plan to continue in at least some capacity after a natural disaster.
PLANNING FOR THE WORST
The absolute worst thing to do in preparation for a natural disaster is to do nothing at all. Waiting until it is broadcast on the radio or seeing a major storm system develop on the news is not the time to begin your preparation for a disaster. At that point, communications and electrical systems may already be failing area-wide. Critical supplies (oil, gasoline, diesel fuel) and emergency supplies such as AAA cell batteries, D cell batteries, battery power back-ups for computer and electronic systems, generators, and even flashlights, needed for business and human continuation may have already been sold out of stores by a panicked population. If you don’t believe it, Google the terms: eggs bread milk toilet paper. Then click Images. Therefore, secondary protocol in people, location, and supply is necessary at all times. Out-of-state suppliers and friendly competitors should be reviewed for viability in these potential circumstances.
The best thing a business owner can do to continue business during and after a disaster is to begin preparation immediately. Talk to the people who are going to be players in the disaster plan. Talk to secondary suppliers. Think about where the business will be conducted in the event the primary location is not available. The basics are presented in the short form below:
1) Written Instruments and Communication
Along with any disaster plan, written instruments are a necessity. Reducing a plan to writing is a sure sign that the plan is being developed in an achievable manner. ready.gov provides a written form that your business can use to prepare and commit a plan to paper. Check signing authority in an alternative person is a must as well. If the key person is not available, there must be a backup person.
If you provide consumer goods such as groceries and other necessary supplies, security is a must. Over the past decades, whenever there is a natural disaster or riot, the first thing looted tends to be consumer goods and grocery stores. While it is illegal for the population to loot, police cannot always protect those businesses and prosecute the individuals responsible for the chaos. Reasonable measures must be taken to, if not defend the store; provide footage for law enforcement to catch the individuals responsible for the crimes there committed.
Without the proper finances in place, your business could be shut down. Modern-day financing relies heavily on electronic mediums such as credit card readers and telecommunications. The bottom line, if there is no power, there is essentially no money. The solutions to the situation may not be easy. Two scenarios come to mind 1) either a backup generator or 2) A remote business location wherein company business can be conducted. A backup generator can be in the form of a portable generator or if you have the money and infrastructure to invest, you may be able to purchase and utilize a whole building backup.
Your employees will also need financial assistance during this period as well. Two weeks of pay can ensure that employees 1) can pay their bills and endure, and 2) come back as they will be obligated to work for the pay advance you provided them with. This assurance is a good thing to have especially when key employees may be having second thoughts about returning after a large natural disaster.
HOPING FOR THE BEST
Additionally, a whole wealth of information is provided at ready.gov for individuals and businesses. Just remember that alongside the business, individuals must be taken care of as well. If the individual employees cannot endure their situation, they will be unwilling to stay. Ready.gov provides insight for personal readiness as well and should be followed in any situation.
Every business should have a disaster plan in place to survive a natural disaster ranging from the smallest to devastating. People face challenges and businesses do as well. It is important that a natural disaster does not become a personal or business bankruptcy, where a continuation would have been entirely possible and necessary for the surrounding community. Roman Basi and his firm frequently devise similar (albeit much more involved) plans involving business succession, business operational manuals (including disaster planning), and business valuations. You can view the ready.gov Preparedness Planning for Your Business site at http://www.ready.gov/business, or you can go to www.taxplanning.com, and follow our link.