billion-dollar natural disasters, costing insurance companies more than $1 billion to overcome and beating the previous record of nine set in 2008. No small business can be completely disaster-proof, but having key preparations in place will ensure your business recovery is as fast and seamless as possible if disaster strikes.
Humans can't prevent natural disasters. But how you deal with their effects is at least as important as your everyday operation when your livelihood is on the line. Keep in mind these five simple steps to protect and prepare your small business.
Step 1: Identify Financial and Insurance Needs
Everyone needs insurance. Whether you have home, life, health, or automobile insurance, it is a necessary aspect of modern life. Small businesses are no different. You need to protect your property from damage and theft. You also have to have liability insurance for when accidents happen. Getting disaster insurance should also be one of your primary concerns when you first start a business.
The reasons are simple. Without an insurance provider for disasters already in place, it may take much longer to wade through FEMA regulations and government red tape before you can rebuild. When you've lost everything and you have no money to restart your business on your own, an insurance agent for disaster coverage will be very valuable. It's an investment you never hope to have to use, but when you have nothing, then getting disaster insurance will become a lifesaver for your business.
Shop around. Perhaps a company that already sells you some business insurance can cover your disaster needs at a discount. Make sure your agent explains to you exactly what your disaster insurance covers. The easiest place to find helpful information is your state's department of insurance; it will likely have the most practical tips for finding insurance that meets requirements for your locality.
Inventory insurance is a very important aspect of disasters. You want to be sure to cover any products that get damaged if you have a storefront or keep any products at your business location. Any inventory you purchased will be covered when a natural calamity strikes so you won't have to buy stuff again out of your own pocket.
Some small business lenders may even require you to have an insurance plan picked out before they offer you a loan. If lenders don't have such a requirement, laying out plans for having disaster insurance in your business plan may give you an extra edge for securing a loan for more credit.
Step 2: Have a Backup Plan
There are several things you can do to have a backup plan, no matter what kind of business you have. When you have a storefront business with regular customers, it is important to have alternate methods of getting in touch with you. Telephones are one good example. If your physical building is destroyed, make sure your customers know how to get in touch with you. Should your business be from home or online, have alternate ways to get in touch with clients through a cell phone or email address that you check regularly.
Diversify your buyers and sellers so that when you have an interruption in your business, someone can step up at a moment's notice. There may be differences in costs from one supplier to the next. However, keeping more than one company in mind should you need a quicker shipment of materials can be vital to getting your cash flow started again.
Having in mind quick alternatives in case of an emergency is always prudent. Should your physical business be destroyed, have you seen other properties in town that could serve as a backup? If your computer system gets destroyed, is there someone who can hook you up with an alternative in a hurry?
Backing up also means keeping records of everything on the premises. The easiest way to do that is to have computer inventory. The reason for a computer inventory is also to have a simple format for recording and saving data. Definitely back up your data on a regular basis whenever feasible. If you have a large shipment that just came in, input that into your computer and back up the hard drive. Sometimes it takes just a few minutes and can be stored on a compact disc or flash drive. Save the information in a secure location, such as a fireproof safe or the like.
The same can be said of your documents. Scan all important documents onto the computer, including receipts, bills, and important files, so you can see exactly where your business left off just before the disaster struck.
Step 3: Be Proactive
When disaster strikes, it can be a very harrowing time. Being proactive in the middle of dealing with the problem can help alleviate some of the stress associated with the hurricane, tornado, flood, or fire. Pay your employees to help you clean up, but be realistic with them. You and your staff both were put out of a job when the disaster hit. Promise to pay them when you can in the future.
Let your employees and family know what should happen in a disaster. If the building is gone, what's the plan for the day after? When the inventory is flooded, which employees will have the task of helping you put your business back together? Get your co-workers and associates thinking about disasters, and they will help you when something goes wrong. It also gives your employees a sense of entitlement - they want to help you because they feel a part of the place they helped create with your small business.
Step 4: Be Prepared
Being prepared for a disaster is just like practicing your golf swing. The more you go over in your mind what to do, the better you'll be able to handle a disaster when it strikes. Having daily routines for disaster preparedness is essential for your small business survival after something bad happens. Back up your data before you go home. Have the next day's schedule in mind as you turn off the lights. Make sure your insurance is up to date.
If a disaster happens while you are at your business, know what to do. If a tornado hits, have emergency plans in place. When severe flooding happens, know where to go. If you become stranded in a blizzard, keep in mind procedures to help you and your employees.
Step 5: Relax
It sounds crazy, but once you've done everything you can do regarding disaster preparation, it's time to relax; the reason being you can't prevent natural disasters. Earthquakes, hurricanes, lightning strikes, and tornadoes are just a fact of life on earth. You can't stop them, but you can prepare. As a small business owner, there are valid steps to keep in place to make your business better able to recover. It's almost as if you are keeping your body in shape in case of some sickness or injury. The healthier you are, the easier your recovery time will be. The same can be said of your small business, whether you keep an inventory of product or simply have clients online.
One adage to keep in mind is "Blessed are the flexible, for they shall bend and not break." That certainly rings true when it comes to having a natural disaster at work. The more flexible your small business can be, the more quickly it recovers and gets back to work after disaster strikes.
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