Forty percent of businesses that experience a disaster will not recover from it, according to statistics from the New Jersey Small Business Development Center. What can you do to make sure that your business doesn’t become a statistic?
A large part of disaster preparedness is really “just good business practices,” says Nat Bender, communications director for the SBDC in Newark. To help businesses be prepared the SBDC, along with the New Jersey Commerce Commission, Economic Growth and Tourism Commission, and the Small Business Continuity Task Force will hold workshops throughout the state to help businesses prepare for disasters.
“Blueprint for Emergency Preparedness” takes place on Wednesday, March 22 at 9 a.m. at the College of New Jersey in Ewing. The program is also scheduled on Friday, May 17, at Kean University SBDC in Union; and on Thursday, September 28, at the Raritan Valley Community College SBDC in North Branch. Cost: $20. Register by E-mailing to email@example.com or by calling 609-989-5232.
Jeff Perlman, principal of Borden Perlman Insurance, with offices at 2850 Brunswick Pike, is one of the guest speakers at the seminars. Perlman is the third generation in his family at the agency, which has been in the insurance business since 1915.
“Typical risks in New Jersey are flood, fire, and wind,” he says. But a disaster for a business can range from major natural disasters to seemingly minor incidents such as a computer crash. A minor accident can become a major disaster for an unprepared business.”
Since it is impossible to know when a disaster — whether major or minor — will strike, it only makes sense to take precautions ahead of time. Some of the precautions Perlman and Bender suggest include:
Find a back-up location. “The biggest factor in whether a business recovers from a disaster is how quickly they can get back in business,” says Perlman. Having a secondary location to move to can be the difference between the ultimate success and failure of the business. For a business that needs only a small space, this may be accomplished quickly and easily. But other businesses, an auto body shop for example, have larger and more specific space and equipment issues to deal with.
Large corporations often have back-up facilities, a luxury that few small businesses can afford. But Perlman says that there are ways that even the smallest company can put a contingency plan for back-up space into effect. He suggests, for example, that a company can develop an agreement with “a friendly competitor” in a nearby town. For some businesses, sharing office space for a time may be possible, for others, the agreement might mean that customers are sent to the competitor’s shop until the business is running again.
Have the proper insurance. When people think about insurance, they think property damage, says Perlman. “They want to be insured in case the roof blows off the building.” Property insurance will cover the new roof, but what about the business that is lost while it is being repaired? A second type of insurance, business interruption insurance, will cover the loss of income from a disaster. Business interruption insurance can save the day after a fire or a tornado, but, Perlman warns, “this type of insurance is not readily available in the case of flood damage.”
Flood insurance is the third type of insurance a business should consider. Who needs flood insurance? “After that last few years, I’m beginning to think everyone in New Jersey should have it,” he says.
If you are in a flood zone, your bank will require that you obtain flood insurance when you purchase your property. Flood insurance is written by private companies, and is guaranteed by the federal government. Costs for flood insurance decrease as a property’s elevation from sea level increases.
Take care of your data. Whether your records are on computer or are in hard copies, keep all of the back-up copies you need to run your business in a safe location, preferably somewhere other than your office, says Bender. “It is unbelievable how many business owners don’t have the foresight to back-up their records,” he adds.
Many companies are totally dependent on computers. For these companies, a “disaster” doesn’t have to be a fire or flood. Instead, it can be a server or hard drive crash.
For a small business, with fewer than ten computers, protection from crucial data loss can be as simple as backing up to a read/write DVD once a week, then storing that DVD at home, or in some location far away from the computers themselves. Larger companies, with more computers, may need to take greater measures, such as a backing up to a different server that is in another location.
If a company has not kept back-ups, it is still possible that all has not been lost. There are companies that specialize in data recovery. They can often find the data on a damaged hard drive and restore it. However, says Bender, this method takes time and costs money — and does not always work. It is cheaper, by far, to make those back-up copies.
Document your physical assets. Just as many prudent homeowners do, it’s a good idea for a business owner to make a list of all of his business equipment and of any inventory. Even better than a list is a videotape, which provides a visual record of hard assets.
Keep insurance records safe. In case of a disaster, you will want to get in touch with your insurance companies quickly. Keep copies of contracts — and of agents contact information — at an offsite location.
Pinpoint employees. In a disaster, it is possible that employees will have to scatter. Make sure to keep a list of emergency contacts, including the home and cell phone numbers of all employees and of their back-up contacts.
After you have completed your disaster preparation plans, call around and make sure that the people you do business with are also prepared for disaster. If your key vendor has a disaster, will you be able to get the supplies you need? “After 9/11 I dealt with a lot of small companies that were in trouble because they had vendors in New York that could no longer supply them,” says Bender. “If it is something need, make sure you have another source for it.”
One of hundreds of 9/11 supply disruption stories involved Carvel. It turns out that the company imports the signature chocolate crunchies that separate the layers of its ice cream cakes from Canada. With border traffic halted, its crunchie supply was cut off.
“Most of the things a business should do for disaster preparedness are just good principles,” Bender says. “It makes sense to take them into consideration. The problem is that most people think, `It’s not going to happen to me.’”