Calculating the true cost of preparing disaster
Small business owners who think disaster preparedness is expensive should think again. Being unprepared – and losing everything – can mean paying a much higher price.
For example, in July 1996, the president and owner of the Brookville Mining Corporation, Dalph McNeil, faced every business owner’s nightmare when the nearby creek jumped eight feet after a 24-hour flood.
Expensive new machinery was covered in mud, and a strong stream of water had wiped out inventory and collapsed a 30-meter wall. The flood caused nearly $ 1.6 million in damage and loss.
After receiving a Small Business Administration (SBA) disaster loan, McNeil moved his plant away from the marsh and asked one of his employees to take on the additional responsibility of “security coordinator.”
In addition to doing quality assurance and control, the safety coordinator, according to McNeil, “conducts monthly meetings with company representatives, ensuring that all employees understand early warning and evacuation plans, and emergency procedures.”
“You can never be too prepared, as a small business owner, for disaster,” observed McNeil. “Somethings is something you don’t want to think about. How do you go about business as usual, as soon as possible, after a disaster? You have to be a bit fatalistic, thinking about the worst case scenario. for your business. “and while he hopes never to use the contingency plans it has in place, McNeil says it is now ready for anything.
Experts say that the willingness begins with the development of such an emergency action plan that is tailored to company needs and addresses several disaster scenarios.The plan should include a schedule, budget, responsibilities assignment, prevention and mitigation steps to complete, and a list of risks and risks for the business.It is also a good idea to encouraging employee involvement in the process
A communication strategy is a key strategy for disaster recovery. t and email addresses for your insurance carrier, suppliers, creditors, employees and clients, local media, service companies, and appropriate response and recovery agencies should be updated regularly.
This list must be maintained by a key employee and a backup person. Designate a spokesperson to get the word out that your business is still open to spreading business failure rumors.
Ensuring your insurance coverage is adequate is another matter. According to the Insurance Information Institute, a recently released study conducted for the National Hurricane Survival Initiative (done by Mason-Dixon Polling & Research) reports that one in three residents in states affected by the hurricane said they had spent three years or more since they reviewed their insurance coverage.
When making insurance purchases, think about property damage and loss of income and the extra costs that occur when the business is stopped by a disaster. Business interruption insurance covers the necessary expenses incurred while the business is closed. Many business owners do not realize that basic risk insurance does not cover flood damage. Extra flood insurance purchased is essential; most of the over $ 10 billion in SBA-made disaster loans after last year’s Gulf Coast hurricanes were for flood damage.
The National Flood Insurance Program provides coverage for property owners.