Surviving the Big One

The past few years have brought devastating destruction to this country from hurricanes, floods, tornadoes and earthquakes. Now, the reality of terrorism looms over us. In 1993, after being spared Hurricane Andrew's wrath by only a scant breath, my eyes were opened to a fact that most business owners don't even want to think about. I watched helplessly as some of my colleagues tried to rebuild from the rubble. Huge revenues were lost. Some never recovered from their losses.

In retrospect, the precautions I took then would have done nothing to protect my business. Hurricane Andrew gave me the wisdom and knowledge to know what I need to do to ensure my family and business can survive and function after most disasters.

Have a Disaster Plan

Unfortunately, when the wolf is at the door, many owners realize then that it's too late to do much to protect their businesses. Pulling computer, fax and modem plugs aren't going to do much. Having a well-thought-out plan will make all the difference in the world to your business' survival. Obviously, you can't have a plan for every disaster that Mother Nature can dish out, but if you live in a geographic area that is prone to flooding, earthquakes, tornadoes or hurricanes, you can plan for those. Much of the planning you do will ensure protection for other unforeseen situations. Any plan is better than none at all.

A good start is to have written records of clients, vendors and suppliers as well as each employee's address, social security number, payroll information, and phone number. We rely heavily on computers these days. But you can't access records if you don't have electrical power to turn on a computer. Make a written list of all community emergency services. It's a good idea to keep a copy of these lists in a bank's safety deposit box as well as off-site of your business premises. Storing important records or documents on-site will be of no use if your business location is destroyed. Imagine trying to dig through rubble and debris for your insurance papers!

Back up all valuable computer data and store them at another location as well. Make hard copies of the information and store these in a separate location from the backed-up tapes and zip drive floppies. The faster your business can get into your databases, accounting systems, etc., the faster you can recover.

The first thing to go, after a disaster, will be your communication equipment. You'll need to contact other employees to determine their safety and assess your company's situation. Make sure that you have cell phones for the most valuable people in your organization. Invest in top-of-the-line computer and fax surge protectors as well. Find a supplier in another city or county that can lease equipment to your company. Be sure to do the preliminary paperwork for leasing in advance. Your local suppliers may be destroyed or their equipment may be depleted by other businesses that were able to get to them first.

As part of your disaster plan, you'll need to set up an emergency operating site. This can be a rented warehouse, or simply the chief executive's home. You'll need some location to work from, and it should have adequate phone lines. You'll need to contact your customers who have pending repairs or part orders, and let them know the situation. You will also need to reassure them that you will be able to fulfill their orders and repairs as soon as you possibly can. Remember, if they are trying to reach you by phone they probably won't be getting an answer.

Plan to set up a system for obtaining emergency funds. A line of credit, set up in advance, will do miracles for accomplishing everything that needs to be done, and it will relieve the added pressure of lack of cash flow at a crucial time. It's a good idea to have cash on hand for necessities you will need immediately. Remember, your bank may be out of commission too.

What about loss of revenue and profits? Business interruption insurance will protect you for a halt in business activity over a long period of time. It goes into effect when the halt was caused by direct physical damage to property or equipment as a result of fire, flood, earthquake, etc. It will cover loss of net income, and continuing expenses such as payroll, rent and utilities while you rebuild, repair or replace damaged property. The insurance company will demand proof of expenses such as employee salaries and rent of a temporary location and equipment; which is another reason to keep records in a safe, off-site location.

Emergency Management Team

An emergency management team needs to be created in order to implement a disaster plan. This team should consist of top management and/or the chief executive officer. There should also be an alternate person appointed in the event the top person is hurt, incapacitated or dies. A team leader should be designated, and the plan should be written out and given to everyone on the team. The plan should spell out each staff member's responsibilities. A location where every employee can meet within 24 hours of the occurrence should be established and made known to everyone. The designated temporary operation site would be a natural meeting location.

Employees need to know that they must check in with the company as soon as it is safely possible. There may be something your company can do to help them if they are affected by a disaster as well. After hurricane Andrew, many companies in Miami did not hear from their employees for several weeks, especially with the phone outages.

Staff members, or if they can't be reached, the emergency management team, must contact your employees and customers as soon as possible. Employees need to know that they still have a job, and how they can pitch in and help to get the business going again. Any way that you can assist your people will help in bringing your company to life again. This is when team effort and team spirit really come into play. If you already have implemented a team approach in your business, you'll be way ahead when disaster comes calling.

After your company has created a disaster plan, do a mock simulation and see how it goes. It's better to discover the weak areas or overlooked problems beforehand; after all, you don't want any surprises at a crucial time. It's also a good idea to do a mock simulation annually. Be sure to update any changes such as employees, their addresses and phone numbers, insurance and bank information, suppliers, clients, parts and repairs pending, etc.

I was blessed in escaping hurricane Andrew. By having that close call, I now have my business protected the right way. Many business owners get so caught up in the day-to-day operations that they feel they don't have time to even think about disaster planning. Having a plan before disaster strikes is a luxury many businesses never take, but wish they had - only too late.