Experts say small businesses that do not carry disaster insurance are courting fate in the most dangerous way, as evidenced by a string of unexpected weather phenomena over the past year. Hurricane Sandy and the tornado that ripped through Moore, Oklahoma, are just two examples of how tragedy can strike at unexpected times in unexpected places, quickly and without warning. Now, as the country moves into hurricane season, it is incumbent upon businesses to prepare for every eventuality. Even so, a recent survey of small businesses revealed that 84% do not have natural disaster insurance and more than 74% lack a disaster preparedness plan. For more on this continue reading the following article from TheStreet.
Whether it's a tornado, a hurricane or the toilet exploding, small businesses should always have disaster recovery plans in place.
Natural disasters are here to stay and last week's devastating tornado that ripped through Moore, Okla. killing two dozen people and injuring hundreds, is a prime example that U.S. weather patterns are becoming increasingly chaotic. Small business owners should be prepared for events they can't control.
June 1 marks the start of hurricane season, and while many parts of the New York and New Jersey coastal communities are still rebuilding from Superstorm Sandy, one of the worst hurricane's in U.S. history, The National Oceanic and Atmospheric Administration (NOAA) forecasts a higher than average 2013 Atlantic hurricane season.
The forecast calls for 13 to 20 named storms, seven to 11 of which are expected to become hurricanes, of which three to six are expected to become major hurricanes (which have Category 3 or higher winds). For the 17-year period through 2012, hurricane season averaged 15 named storms, eight hurricanes and four major hurricanes.
The Federal Emergency Management Agency (FEMA) estimates 40% of businesses do not reopen after a disaster, and of those that do reopen, 25% fail within one year.
A December 2012 survey by Alibaba, Vendio and Auctiva polled 600 small-business owners to gauge how prepared they were to run their business if a natural disaster struck. The findings were alarming: 74% of American small businesses do not have adisaster preparedness plan; 84% of them are without natural disaster insurance.
Bob Boyd, President and CEO of Agility Recovery, a former division of General Electric (GE) and a provider of business continuity and disaster recovery solutions to small and mid-sized businesses, spoke with TheStreet to offer small-business owners advice on preparing for uncontrollable events.
How important is it to have a disaster recovery plan at a small business?
Boyd: I can't stress enough how critical it is for an organization. Big companies they have to have these plans. Most small businesses don't they don't know what the options are, they don't know how to get started. I think a lot of businesses think it's going to be expensive or difficult or time consuming to put a plan together [that can be relevant for] something bad, like a tornado hitting or a toilet rupturing. [A plan gives you] a strategy about what you're going to do about it.
What is the most important thing to remember when creating a disaster recovery plan?
Boyd: My first piece of advice is to try and keep it simple. Try and tackle this in bite-sized blocks. A lot of people get stalled. They don't know where to begin and just never begin. They can do very simple tasks.
About 65% of recovery we make include the need for us to bring power generator because they've lost power. If you know that there's the likelihood that you're going to need power, today find out what kind of generator you need. Do you need a small one that you can get from Home Depot (HD) or Lowe's (LOW) or a big one [closer in size] to a tractor trailer?
Any electrician can tell you how big of a generator you need. Do you need permission from you landlord? Those aren't hard things to figure out, but if you don't know them, all of those things are going to delay your recovery.
Communication is another huge thing that people forget about. A lot of those alternative communication tools are free. Set up a Facebook (FB) page; have a system to send out text messages. Set them up and practice them. The first time to get info to your employees shouldn't be the day after the disaster.
Of course disaster planning differs by geography, but what other factors can go into a plan?
Boyd: The damage caused from an ice storm can be very different from water damage when the Mississippi river floods. A tornado in Oklahoma as bad as it was, it only hit one city. A hurricane like Sandy impacted 15 different states. The response times are different [and so] you're communication tools and planning are different.
Most businesses think they have to get a disaster recovery plan because of a big disaster. They're worried about an earthquakes, tornadoes, hurricanes. The reality of it is, 70% of the recoveries that we make are due to something that just happens to that individual business. It was because there was a fire or that guy's computer failed.
[For businesses in Oklahoma] every one of their customers are going to cut them a little slack because they know what happened. But if you happen to be in Minnesota and don't answer the phone or maybe you're Web site goes down and they don't know why, they're going to call somebody else.
The disaster that happens to an individual business is many times more disruptive than the natural disaster.
Boyd recommend several resources for business owners to help them get started.
- PrepareMyBusiness.org: The SBA and Agility Recovery are working together to encourage all small businesses to have a recovery plan in place. SBA's programs and services are targeted specifically to small businesses. Agility Recovery Solutions offers testable, turn-key disaster recovery solutions and business continuity services for small and mid-size businesses.
- FEMA's Ready.gov: Agility does a lot of work with FEMA to help create preparedness awareness including tips and webinars.
This article was republished with permission from TheStreet.