Part of having a business plan should be having an emergency business plan.Here's what you can do with business insurance to prepare for...
The numbers are staggering: Up to 40% of businesses affected by a natural or human-caused disaster never reopen, according to the Insurance Information Institute (III). Why? According to an Ad Council survey, 62% of respondents said their businesses do not have an emergency plan in place (Tweet These Stats).
But part of having a business plan should be having an emergency business plan. Here's what you can do to prepare for any situation:
The first step toward preparation: Shore up your business insurance(Tweet This!). You likely have a policy, but check your protection to make sure it's enough. Examine your limits for all machinery, equipment, and facilities. If your coverage doesn't match the replacement value for everything your business needs, consider bolstering your protection.
Evaluate your risk
Think your business is safe from all natural disasters? Think again. Every location in the U.S. experiences at least some risk of fire and flooding; add to that localized risks of winter storms, power outages, tornadoes, hurricanes, and earthquakes and you have plenty to prepare for and protect from.
Identify disaster risks
Based on the weather history in your area, determine the disasters to which your business is most vulnerable. Take specific precautions for each potential disaster. For example, flood preparations would include moving machinery and expensive equipment to upper levels and off the floor. For winter storms, keep extra fuel and backup electricity
Create a Business Impact Analysis
This analysis predicts the consequences of a potential business disruption. It also develops recovery strategies. Ready.gov, a website launched by the Federal Emergency Management Agency and the Department of Homeland Security, suggests that the analysis of your business consider the following impacts:
- Lost or delayed sales or income
- Increased expenses (outsourcing, overtime)
- Regulatory fines
- Contractual penalties
- Customer dissatisfaction or defection
- Delay of new business plans
Learn about local regulations: Each state has varying safety regulations. Follow all legal safety precautions to keep your employees and inventory secure.
A comprehensive disaster plan encompasses several factors. Each business is different and will require its own emergency strategies. Ready.gov provides a general guide for the types of plans you'll need to create (Tweet This). How you do so is up to you:
- Resource management plan: To manage your resources you need a strategy for internal resources such as employees, facilities, security systems (i.e. alarms, pollution containment, and fire protection), building utilities and disaster preparedness kits. You'll also need to map external resources such as public emergency services. Your plan should outline how to access and use these resources.
- Emergency response plan: An emergency response plan dictates procedures for evacuations, sheltering, or lockdowns. It also will provide for property conservation measures to protect equipment, machinery, and important building features.
- Crisis communications plan: In a natural disaster, communication with employees, customers, media, and vendors is key. Your strategy should include an employee evacuation plan, a media strategy, and a dialogue with clients, customers, and vendors so you can resume business operations as quickly and smoothly as possible.
- Business continuity plan: To keep your business going during and after a disaster, you need to set up temporary office space with equipment, technology, records, production and machinery, inventory, utilities, and third party services.
- Employee assistance and support plan: This strategy will encourage employees and their families to prepare for an impending weather event, and support the needs of affected employees.
- Training initiative: Once you have detailed strategies that cover the areas above, educate your employees about their individual responsibilities and proscribed actions during a crisis.
When disaster strikes
If your business experiences damage, you need to file a claim as soon as possible. Follow these steps:
- Contact your insurer as soon as possible following an event. Photograph all debris and destroyed items for your adjuster.
- Make temporary repairs to secure property and to avoid further damage. Your carrier could help pay for these temporary fixes, within reason.
- Collect business records, including documents providing proof of value for damaged equipment and proof of income for business interruption. Additionally, keep detailed records of repair expenses, the cost of conducting business from temporary location, business expenses, and losses to company vehicles.
- Stay organized. Safeguard your insurance claims information, the name of your adjuster, and other important insurance information.
Creating a comprehensive emergency plan for your business may seem complicated and consuming, but doing so is extremely important for the health of your company. Your strategy could mean the difference between recovering and losing everything in a natural disaster or other event. Cover your bases by planning ahead, so one event doesn't wash away your livelihood.