Is your business prepared for a natural disaster?
Running a small business is already a big challenge. With all the day-to-day tasks you have to juggle, you might place disaster preparedness low on your list of priorities.
The reality is, a disaster could devastate your small business. A severe wind storm could rip the roof off your shop. An earthquake could destroy your entire plant. A hurricane could leave your small business in ruins.
If you don't have a disaster preparedness plan to protect your business and employees, not to mention one to help you rebuild after a disaster, then you're putting your business at risk. Fortunately, preparing for a disaster, big or small, isn't as difficult as you might think. A few key steps can help ensure that you, your employees and your business can survive.
1. Put your people first
When planning for a disaster, focus on your people first. This means coming up with a written disaster plan that lists exactly what your employees are to do should a hurricane, earthquake, flood or other emergency hit. This plan should spell out an evacuation route for your workers and set up a meeting place where everyone should gather following a disaster.
An emergency plan should also identify which employees will have specific jobs during a disaster. Who is responsible for guiding workers out of the building? Who runs evacuation training sessions throughout the year? And who will grab a list of workers so that you can check that all your employees are accounted for at the agreed-upon meeting place?
Put together a first-aid kit that is located conveniently in your business. Depending on the damage done in a disaster, you might need this kit to treat minor injuries, cuts or burns. Make sure your kit also includes items such as flashlights, blankets and batteries.
Finally, make sure that you have maps of your business that identify stairwells, fire escapes and exit doors. You might need access to alternative exists should your building’s main doors be blocked.
Keep this information together in an area that is easy to reach. You don’t want to be scrambling for your written disaster plan during the chaos of a disaster.
2. Protect your records
A disaster could damage or destroy your business' records and important financial forms. Fortunately, you can take steps to safeguard these documents.
The IRS recommends that you receive as many of your important business documents by email today. This way, you can easily retrieve them after a disaster. The IRS also recommends that business owners back up their records and copy key files onto a CD or DVD. The Insurance Information Institute recommends that business owners keep up-to-date copies of important records and documents in a safe deposit box with an area bank.
Then there's electronic data. You might store most of this in the cloud already, but if you don't, make sure to back up your locally stored records on a regular basis, saving them on an external hard drive or CD. If you don't, a disaster that destroys your computers could also wipe out your company's most important data.
3. Chart your valuables
A disaster can also damage or destroy your business' most important, and expensive, equipment, furniture and electronics. That's why the IRS recommends that you make a record of your priciest valuables and store it in a safe place away from your business. This way, if your business is damaged or destroyed, you'll be able to retrieve this record.
This is important. You’ll need your record of valuables when working with your insurance company after a disaster. Any information you can provide will speed the process of getting the correct payout from your insurer. A written and visual record of your valuables is the evidence you need to prove just how much you lost in a disaster.
Making a record is a simple task. The IRS recommends going from room to room of your business and jotting down the equipment, furniture and electronics that fill these spaces, along with your estimate of their value. The IRS also advises that you take photos of your most expensive items or videotape your walk from room to room. Save these photos or videos in a safe space, one that isn't in or near your business.
4. Review your insurance coverage
If your business is destroyed, will you have enough insurance coverage to rebuild? If you don’t know, it’s time to meet with your insurance agent.
Don’t wait until after disaster strikes to review your insurance coverage. In fact, the Insurance Information Institute recommends that you review your business insurance coverage on a regular basis.
When reviewing, look at the property insurance portion of your business policy. Make sure your building and its contents are insured for current replacement prices. That computer you bought five years ago might not be worth much today. But if it is destroyed, you’ll have to buy a new one at today’s prices. That can be expensive. You want an insurance policy that reimburses you for what replacing that computer will cost today.
Business interruption insurance is another key coverage. Your business might be shut down for several weeks or months following a disaster. Can your company survive the loss of business from this? Business interruption insurance will pay out to cover the income your company loses when it is working to reopen.
5. Know your resources for post-disaster financial assistance
Your business might be eligible for financial help after a disaster from several sources. The Small Business Administration and the U.S. Department of Agriculture provide loans with low interest rates to businesses that need to replace damaged or destroyed equipment and other assets after a disaster.
These loans can help you replace everything from machinery and equipment to personal property and real estate. Learn more about the Small Business Administration’s loans here and the loans offered by the U.S. Department of Agriculture here. You can also contact the Federal Emergency Management Agency, or FEMA, for financial help here.