How Prepared Are You?

If there's one thing small business owners in Louisiana would have done differently last year, it's this: Expect the unexpected.

According to the Federal Emergency Management Agency (FEMA), 40 percent of small-businesses don’t reopen after a major disaster, such as a hurricane. In addition, 58 percent of small business executives don’t know how to develop an emergency plan, according to a poll conducted by the American Red Cross.

If you own a small business, you need to plan ahead for that unexpected emergency or catastrophe that could devastate not only your office facilities, but also your ability to continue to do business.

Donna Childs, founder and CEO of New York-based Childs Capital LLC, and co-author of Contingency Planning and Disaster Recovery: a Small Business Guide, and Brian Drum, president, CEO and owner of Drum Associates, in New York — both affected by September 11 — offer some tips on how to prepare for a major disaster.

Prepare for everyday disasters. Childs says that many prepare for the worst-case scenarios and that consumes everything else. She suggests preparing for “low-severity, high-frequency” problems first, such as power outages, which can often follow a catastrophic event. When her business was affected by the September 11 tragedy, she ran everything off of backup power through a generator. Be sure to use uninterruptible power supply units in conjunction with these because the electricity produced by a generator is “dirty power,” which contains spikes that can damage electronic devices, she says.

Make it a habit to back up everything. Keep copies, preferably electronic copies, of your essential office files. “Put everything on a disc, tape media, or portable drives,” Drum says. Segregate key documents, such as client contracts and accounting files. He recommends keeping a directory of files both on-site and off-site, including contact information for clients, vendors, banks, insurance brokers, and carriers. Include lists of hospitals, police and fire departments, the post office, and employee contact information. Don’t forget to make copies of your insurance policy, the building lease, and prior tax returns for insurance purposes. Also, make sure someone other than yourself can access these files in case you’re not accessible. “Some people rest easy, thinking everything is backed up at the end of the day (at the office). But what if your office isn’t there the next day? You have to prepare for that,” Drum says.

Get proper insurance coverage. Childs recommends ordering insurance “a la carte,” meaning you should go beyond what your general insurance covers, such as obtaining a policy endorsement for any damage caused by a power outage. She also suggests documenting the value of all insured assets. Take digital photos of assets. She did this before the September 11 attacks affected her business. Her cabinets detached from the ceiling, and because she had documented everything, her insurance claim was paid in full.

Set yourself up for prompt claims payment. Give your insurance company your business banking account number. When your payment is set up to be wired to your account, you get it that day, Childs says. Also, find out beforehand where your insurance company’s catastrophe centers are set up. That way, you can call them in the event of a disaster and you’ll know where to go for assistance.

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