The Real Disaster: Not Being Prepared

You don't have to live in a hurricane zone to appreciate the wisdom of planning for the worst

By Karen E. Klein

It's a smart bet that, by now, the weight of bitter experience and sheer necessity has taught entrepreneurs in hurricane-lashed Florida how to ride out a storm. But what if, instead of following updates from the National Weather Service over the course of several days, they had only a few hours notice of an impending catastrophe? Worse, what if there was absolutely no warning at all, which is what happened in New York on the morning of September 11?

Small-business owners are notoriously optimistic, but they also need to be prepared for disaster -- be it an earthquake or something as mundane as broken water main. Have you thought about how you would continue to do business if your facility was closed? Have you considered how your operation would fare if local infrastructure was damaged? Or are you simply leaving everything to luck and assuming that insurance will take care of everything?

If so, the Better Business Bureau wants you to think again, recently issuing these tips to help business owners prepare for the unthinkable:

• Communication is vital during an emergency, but cell-phone systems are typically among the first things to break down or be overwhelmed in the event of a disaster. Draw up an emergency communication plan that outlines how your business will communicate with customers and vendors. You might appoint an employee disaster committee to formulate the plan.

• Establish and maintain a cache of emergency supplies at your place of business. Include flashlights with extra batteries, a first aid kit, and nonperishable food and water for employees and customers during periods of unexpected confinement.

• Make a list of the partners and employees who will play key roles in helping to get your business back up and running. Keep a file with all their contact information: home, work, cell-phone numbers, and e-mail addresses). Make sure it is updated regularly, and keep copies at a variety of locations -- at home, in the office, on the Internet.

• Know how to contact organizations that can help during a crisis, such as law enforcement and local offices of the American Red Cross and Federal Emergency Management Agency.

• Come up with a business-interruption plan that details the actions you can take to minimize loss of jobs, customers, and profits. A disaster preparedness consultant can help you devise such a plan, if you need outside advice.

• Contact your key vendors and suppliers to confirm that they have their own emergency-response plans and procedures. Identify alternate vendors for essential supplies and equipment in case your primary vendors are temporarily out of business. Have back-up equipment, know how to use it, and make sure it will be available during periods of crisis.

• Perform regular inventories of your assets. Review your insurance policies and make sure you have adequate coverage for items you cannot afford to lose. Be aware that a standard insurance policy may not cover the losses you suffer while your business is interrupted and you can't fill orders or make new sales.

• Keep duplicates of personnel files, payroll, payables, receivables, and other essential records at an off-site location. Make regular back-ups of important computer files.

Oh, and there's one thing that's worth doing: Keep your fingers crossed and hope that none of these precautions will ever be needed!

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

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