A violent windstorm blows the roof off your building.
An explosion in your building knocks out the electricity for five weeks.
An employee drops a lighted cigarette into the trash can before he leaves at night. Tornadoes, riots, fires, sabotage…
Could your business survive a major emergency?
Businesses that recover quickly are those that have planned in advance. They know what they need to do as soon as a disaster strikes and, most importantly, they have purchased the right insurance to finance their recovery.
It's also important to develop and maintain an adequate recovery plan to protect yourself against legal liability for the losses that might result from a disaster.
If you're dependent on computers, contact your computer hardware vendor. The vendor may know of a service that provides equipment in the event of a disaster. Some will allow you to test out the emergency plan. If you need other specialized equipment or a special environment, consider a reciprocity agreement — making arrangements to share facilities with someone in the same business in a different community. Sometimes two businesses can make arrangements to help each other get back into operation in the event of a loss by lending space and equipment or selling part of their merchandise. You should also look into the possibility of leasing equipment and machinery or buying used items.
If your business can be operated from almost any empty office or store, you may not need to make advance arrangements for alternative facilities.
Make lists of firms that can supply equipment, tools and raw materials, and, if you own a store, the merchandise you'll need. The more specialized the item or service, the more important it is to locate a dependable source in advance.
Contractors are in great demand after a widespread disaster. Even if the damage is on a small scale, you'll get back into business faster if you've identified the kinds of services you'll need to renovate your damaged premises and the reliable firms that can provide these services. Don't forget that the site has to be cleaned up — water and debris removed, for example — before renovations can begin. Try to get an advance commitment from at least one contractor to respond to your needs.
Set up an emergency response plan and train employees how to carry it out: The first steps that must be taken after a disaster are emergency measures. Knowing what to do when a disaster strikes reduces panic reactions.
Make sure employees know whom to notify about the disaster and what measures to take to preserve life and limit property losses. These should include whom to contact for medical assistance, how to call the fire department and evacuate the building and any special precautions that should be taken before leaving the premises. Different types of disasters may call for different kinds of measures.
Consider the things you may need initially during the emergency. Do you need a back-up source of power? If you're dependent on computers, find out whether a generator can be used to run your computer system. Do you have a back-up communications system? When the electric power is knocked out, telephone lines may still function but electronic phones will not. If you're likely to have cash-flow problems, check into the availability of loans and extensions of credit.
Keep on hand a first-aid kit, a supply of flashlights, batteries, candles and candleholders and matches. Are you likely to need food and water? Businesses in hurricane-prone areas of the country should plan to get cash from the bank if there's a storm warning in case damage to local banks shuts down automatic teller machines. Decide how to secure the premises after the disaster and the building supplies you might need to cover holes in the roof and windows to prevent rain damage.
Write out each step of the plan and assign responsibilities to employees in clear and simple language. If you employ workers whose native language is not English, assign someone to make sure these workers understand what they're required to do. Distribute copies of the plan to each employee.
Practice the procedures set out in the emergency response plan with regular, scheduled drills.
Compile a list of important phone numbers and addresses: Make sure you can get in touch with key people after the disaster. The list should include local and state emergency management agencies (they may also provide help in planning for natural disasters), major clients, contractors, suppliers, realtors, financial institutions, insurance agents and insurance company claim representatives. The list should also include your own employees and company officials. Keep copies off the premises -- at home and at a more remote location in case the disaster is widespread.
Decide on a communications strategy to prevent loss of clients/customers: Whether you decide to wait out the reconstruction period or relocate to temporary premises, current clients and those who use your services or products regularly should know how to get in touch with you, and when and where you expect to reopen for business. Otherwise many will assume that you'll be out of action for a long time.
Among the possibilities to explore, depending on the circumstances, are posting notices outside your premises or elsewhere, contacting clients by phone or by mail, placing a notice in local newspapers and asking your friends and acquaintances in the local business community to help you disseminate the information.
Consider also the role the media may play in a crisis. If your company is likely to be interviewed, have a written plan for dealing with reporters. To improve your media skills in a crisis, watch talk shows and news programs to see how other people handle such situations.
Extra Expense Insurance: For some businesses, the cost of relocating can be greater than the revenue loss. Extra expense insurance reimburses you for what you spend, over and above your normal operating expenses, to avoid having to shut down during the restoration period. As with business interruption insurance, the price of extra expense insurance varies with the industry and the likelihood of disaster-related damage.