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Get Ready - Be Prepared

Disaster Preparedness Considerations

The best time to respond to a disaster is before it happens. A relatively small investment of time and money now may prevent severe damage and disruption of life and business in the future. Every area in the country is subject to some kind of disaster ? flood, hurricane, earthquake, ice storm, and landslide, to name a few. Even man-made disasters ? oil spill, civil unrest, fire, etc. ? can devastate the surrounding neighborhood and economy. Even though an area has never been damaged before, there is no guarantee that it will not happen tomorrow.

Ask yourself: what if the worst happened? How would it affect my business and my family? Would we survive if the business were closed down for weeks, months, or perhaps my entire revenue season? What can I do to make sure we survive?

Be a little pessimistic now, and assume it CAN happen to you. Develop a Disaster Plan for your home or business now so you can rest a little more easily in the future. You should think about:

• Open for Business: A Disaster Planning Toolkit
• Facilities (Buildings & Equipment)
• Operations
• Critical Information & Communications
• Insurance

A DISASTER PLANNING TOOLKIT

• Identify the hazards you may face
• Plan for and reduce the impact of disasters
• Keep your doors open after a disaster hits
• Advise you on insurance, disaster supplies and the things you can do to make your business more disaster resistant

FACILITIES-BUILDINGS & EQUIPMENT

• What would we do if our facility were closed for several days, damaged or even totally destroyed?
• What could we absolutely not survive without? Production machinery? Computers? Custom-made parts? The buildings? What can I do to assure I never have to live without them?

OPERATIONS

• What if there was a prolonged power outage?
• What if my key suppliers or shippers were shut down even though I am not?
• What if my customer base suffered a disaster and no longer needed or could not afford our product?

CRITICAL INFORMATION AND COMMUNICATIONS

• What if my payroll, tax, accounting, or production records were destroyed?
• What if my computer or computerized machinery was destroyed?
• What if the local phone service were disabled?
• Forewarned is forearmed, they say. How can I be forewarned?

INSURANCE

• Is my insurance adequate to get us back in operation?
• Do I understand what is covered and what is not?
• Can I pay creditors, employees, and my own needs during a prolonged shutdown?
• How long can I survive if we are shut down?

INSTITUTE FOR BUSINESS & HOME SAFETY (IBHS)

A community relies on its businesses to generate jobs and tax revenue and to nurture a built environment that is healthy and sustainable. When a business protects itself from natural disasters, it is also protecting one of its community’s most valuable assets. There is no way to avoid a natural disaster from occurring. You can, however, take action to avoid the most devastating damage that your business may face.

A new guide from IBHS and the United States Small Business Administration that introduces disaster planning and recovery for the small business owner. Suggestions on steps you can take to protect your building, contents, employees and customers from earthquake damage is included in this guide.

Please visit: IBHS Institute for Business & Home Safety

FACILITIES TIPS

Develop contingency plans to remain in operation if your office, plant, or store is unusable. Could you operate out of your home or a nearby storefront? Could you quickly transport critical items such as computers, inventory, and equipment? Could you save replaced equipment and reactivate it in an emergency? Could you store inventory, equipment, and supplies off-site? Examine the possibilities, make a plan, and assure that you and your employees know what to do.

Keep an extra of any hard-to-replace parts or supplies on hand. Store them off-site. If this cannot be done, work with suppliers in advance to assure a secure and adequate supply. Store several days? supply in a place that is not vulnerable to the same disaster as your facility. Be sure to keep this auxiliary supply up-to-date.

Make upgrades now that would prevent possible future damage. Strengthening exterior walls, adding a retaining wall, or shoring up a creek bank are relatively minor projects in comparison to losing the building to flood waters.

Please visit: FEMA’s Protecting Your Property From Flooding Tips

OPERATIONS TIPS

Purchase a backup generator to maintain full operations or critical functions such as refrigeration, lighting, security systems, and computer control in the event of a power failure.

Have back-up vendors and shippers in place in case your primary ones are disabled. Set up relationships in advance and maintain them. Place occasional orders so that they regard you as an active customer when you need them.

Guard against loss of your customer base by diversifying your product lines, sales locations, or target customers. Make it part of your annual plan to develop new customers, even if your current customer base seems fine. Make the time to do so.

INFORMATION & COMMUNICATION TIPS

Make backup copies of all critical records such as accounting and employee data, as well as customer lists, production formulas, and inventory. Keep a backup copy of your computer’s basic operating system, boot files, and critical software. Store a copy of all vital information on-site and a second in a safe off-site location. Make it a critical part of your routine to regularly back up files.

Make pre-arrangements with computer vendors to quickly replace damaged vital hardware. Keep invoices, shipping lists, and other documentation of your system configuration off-site so you can quickly order the correct replacement components. Take care of credit checks, purchase accounts and other vendor requirements in advance so that the vendor can ship replacements immediately.

Surge-protect all computer and phone equipment through power and phone lines. A power surge through a telephone line can destroy an entire computer through a connected modem. Invest in a surge protector that has a battery backup to assure that systems keep working through blackouts.

Maintain an up-to-date copy of phone numbers, computer and Internet logon codes and passwords, employee phone numbers and other critical information in an accessible location. Develop an employee “telephone tree” to rapidly contact employees in an emergency.

INSURANCE TIPS

Review your current insurance coverage. Is it enough to get your business back in operation? Will it cover the replacement cost of vital facilities? Make it a regular annual procedure to review and update insurance. Also remember that insurance on mortgaged property probably only covers the lender with nothing left over for you.

Be aware of your contents insurance. Does it cover the replacement cost of critical equipment?

Know what your insurance does not cover. Most general casualty policies do not cover flood damage. Many require additional riders for windstorm, sewer backup, or earth movement. Consider adding coverage for likely perils, especially flood insurance.

Consider business interruption insurance that assists you with operating needs during a period of shutdown. It may help you meet payrolls, pay vendors, and purchase inventory until you are in full operation again. Also be prepared for the extraordinary costs of a disaster such as leasing temporary equipment, restoring lost data, and hiring temporary workers.

Don’t assume that, just because it never happened before, it never will. Flooding patterns are changed by development: water, which runs off new streets and parking lots, may overwhelm nearby streams and surrounding land. Landslides and sinkholes may develop because of distant earth movement, natural or man-made. The creek by your building may be a tiny, placid stream that has never flooded, but a downpour may change it into a destructive torrent that destroys your building foundation. Plan for the worst.

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Communicating With Employees During a Disaster

By Noelle Bates, Director of Corporate Communications, LogoWorks
In the last year, and particularly in the last few months, the world has faced numerous natural disasters, from the hurricanes in the southern U.S. to the devastating earthquake in Pakistan. Disaster preparation and recovery has once again become an unpleasant topic of conversation for business owners as these reminders have come in that no one is safe or wholly protected from such an event.

While it’s critical to have a disaster preparation and recovery plan in place, one thing that is often overlooked is the communication with your most valuable asset and the backbone of your business ? your employees ? during a time of crisis. Having your data backed up, insurance papers in order, and a secondary operating location is important, but it all becomes meaningless if the people that make your business work don’t know what to do, where to go, or what to expect during or after a disaster.

By following the guidelines below, you can tighten up your disaster plan and feel confident that your company’s communication will continue to operate as smoothly as possible during a crisis:

• Continually update all of your employee records, and include multiple levels of telephone numbers (i.e. home, cell, and in case of emergency) and personal email addresses for each employee. You never know when a disaster may strike and where your employees might be when it does. Make sure all supervisors have access to these documents, 24×7.
• Create a restricted access link from your website or intranet or blog where employees can go to find up-to-the minute communication from the company when disaster strikes.
• Create an Emergency Card that employees can put in their wallet that lists the steps that will be taken during a disaster. The Emergency Card should include URLs that employees can check, a phone number where recorded messages are left, all of the phone number for their direct supervisor, and the health insurance company’s 800 numbers and URLs in case they need medical treatment and can’t find their insurance information.
• Create a reporting list so that all employees can be quickly accounted for. Designate a point person and let each supervisor know what steps to take before a disaster happens so there is a top down structure for communication and reporting.
• Keep in mind that all communications might go down during a disaster, particularly in the case of a massive earthquake, flooding or terrorist attack. In those cases, make sure to add contingencies to your plan. Determine point places for employees to meet at certain times (i.e., 10 a.m. the morning after a disaster) where they can check in and get information. By mapping out your employee’s homes, you can determine cluster locations that will make walking to a designated spot easy in case other transportation is not possible.
• It’s critical to call a company-wide meeting where disaster plans are discussed and where the Emergency Cards can be distributed. In this meeting, let employees know what steps are being taken to shore up the company in the case of a disaster, as well as what steps each employee should take during a disaster.

Once your plan has been put together, you should test it to make sure it will operate effectively. Call all of the numbers and test all email addresses to make sure they are working, and then distribute the disaster plan during an employee meeting for discussion and clarification.

By preparing and your business and your employees for a disaster, you show your concern for their welfare and bring structure and order to what can be a very confusing, stressful and upsetting situation. It’s an important step that will not only be immeasurably valuable in during bad times, but will make your employees feel more secure and confident in good times as well.

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Small Business Disaster Recovery Loans

BY Allbusiness.com

Natural disasters can devastate a small business — especially for those without adequate insurance coverage. But the Small Business Association (SBA) grants loans to businesses that have suffered tangible losses due to a natural disaster. The maximum limit on real estate damage is $200,000, and the amount you can borrow depends on the actual cost of repairing or replacing your property, less any money received from insurance companies, other reimbursements, or grants.

To apply, you must complete an application and furnish an itemized list of property losses and costs to repair or replace each item. You will also need to submit your last two federal income tax returns. Once you have submitted the application, an SBA loss verifier will come inspect the extent of the damage and determine the reasonableness of your loan request.

If you require a loan of more than $10,000, you must provide collateral to the extent it is available. Typically the collateral would consist of a first or second mortgage on the damaged property. Personal guarantees from business owners also are required for loans over $10,000. If you cannot provide collateral, that doesn’t mean your loan will automatically be declined; these decisions are made on a case-by-case basis. You must pledge any available collateral, however.

While the SBA processes disaster recovery loans as quickly as possible, they are not a disaster relief organization like the Red Cross. Common sense dictates that the faster you return your application, the faster the SBA can process it and disburse funds.

Another benefit of an SBA disaster-recovery loan is that the loan terms are flexible. There is no set minimum payment, and payment amounts vary upon income, expenses, and other circumstances that may affect your repayment ability. The SBA understands that it will take your business some time to regain its footing; for this reason, they don’t require you to begin making payments until five months or so after the loan is issued.

If repaying the disaster-recovery loan while also making mortgage payments is a hardship, you may be able to refinance though the SBA. To qualify, you must have sought credit elsewhere and been declined. Also, your property must have sustained damage of 40 percent or more of its value and you must intend to repair the damage.

There are, however, limitations on these types of loans. Disaster recovery loans are made to help you restore your business to its former condition. You may not use them to cover personal pleasure boats, planes, recreational vehicles, antiques, or collections.

When a natural disaster occurs, many businesses and homes in your area may have been damaged, so it may take a while for insurance companies and contractors to calculate settlements and provide estimates. Fortunately the SBA does not require applicants to include contractor estimates for repairing or replacing property; an inspector will verify the extent of the damage when your claim is reviewed.

As noted above, disaster recovery loans may be used only for the amount of damage you incur. Therefore, if you receive an insurance settlement after your loan is issued, you must turn over those funds to the SBA to reduce the amount of the loan.

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