11/ 09/ 2005
4:30 a.m.: A small-business owner drifts back to sleep after being awakened by distant rumbling. He has no idea that miles away an earthquake has smashed windows and overturned furniture at his business.
4:40 a.m.: The first aftershock. While the small-business owner sleeps, tables holding three computer systems topple. The monitors and CPUs shatter, and the drives are damaged beyond repair, leaving irretrievably lost data.
5:05 a.m.: More glass breaks. Law enforcement authorities begin evacuating nearby apartment buildings and asking business owners and the public to stay out of the area. The business owner won’t know about the damage until a trusted employee calls an hour later.
Fiction? Not at all. This scene played out hundreds of times in California on Jan. 17, 1994. In the last few years, severe weather in the Midwest and East and devastating floods in the Midwest have contributed to similar disasters.
Natural and man-made disasters can strike businesses of any size, anyplace, anytime. These disasters aren’t limited to earthquakes, floods and tornadoes. Fire, blizzards, explosions, power outages, even acts of vandalism or terrorism can strike at the health of businesses. Without adequate preparation, many businesses find their operations seriously crippled. Some will shut their doors forever.
While emergency planning precautions vary from business to business, every enterprise can guard against the effects of disasters through a five-step planning process that involves a clear assessment of potential emergencies; prevention; development of clear emergency procedures; development of safety precautions; and steps for continuation of the enterprise.
Assessing emergencies: What can happen?
You can’t identify every possible disaster that might befall your business. But you can identify some. Here’s how:
- Visualize the worst scenarios other area firms have faced. Given your location, are you prone to flooding? Earthquakes? Acts of crime? Make a list of the three, five or 10 of the worst disasters you could face.
- Enlist the help of experts. Ask your local Office of Emergency Planning (the title varies in each community) to help you assess the statistical likelihood of various emergencies. Later, the staff may be able to help you develop your own emergency response plan.
- Check the durability of your building. If you lease your facilities, your landlord or building manager can help answer questions about the building’s structural integrity and mechanical systems. If you own your building, ask a trusted contractor or engineer for assistance.
- Assess the economic consequences of a sudden emergency. What costs would be involved in fixing damage to your building? Disruption of sales? Downed machinery? Identify the costs as closely as possible and decide what risks you can bear––and what risks you can’t afford. Then, consult your insurance carrier about coverage for at least the most serious risks. Don’t hesitate to keep detailed records about the condition of your facilities and equipment and take photos if necessary.
An ounce of prevention
You can’t prevent catastrophes. But you can minimize their impact on your business operations. Some tips:
- Talk to colleagues. Learn about the precautions your peers have taken to prevent natural or man-made catastrophes from becoming business catastrophes.
- Keep equipment out of harm’s way. What commonsense steps can you take to prevent disaster loss? If you’re in heavy wind country, for instance, keep computers and other electronic equipment away from windows. If your facility is prone to flooding, keep inventory out of the basement. Always store combustible materials in a fireproof place.
- Consult with outside agencies. Make a list of agencies that can help treat injuries, disseminate information and protect property. It should include the names and telephone numbers of law enforcement and fire protection contacts, hospitals and clinics, local media, and private companies, such as transportation companies, temporary help agencies and contractors, or anyone else who could help you maintain operations after a disaster.
- Identify and safeguard critical records. These might include accounts receivable data, telephone lists, insurance policies, key contracts and agreements and building and mechanical system plans. Store them in a fireproof vault or a secure off-site location.
- Develop a computer backup system. Back up your system regularly––weekly or daily depending on transaction volume. Transport all backup disks and tapes to a location miles away or contract with a commercial data storage center. Be sure you can run your business with backup “paper procedures” if electronic systems go down.
When disaster strikes
The real test of your ability to respond to an emergency lies in the procedures you develop. Here is what those procedures should help you do:
- React to weather predictions. Information about severe storms is available from the National Weather Service and the National Hurricane Center. These agencies issue “advisories” when potentially harmful weather is possible and upgrade these notices to “watches” and “warnings” as the danger becomes more acute. As official warnings are upgraded, you should increase your emergency preparations: You should send your employees home, secure your property and mobilize your emergency staff.
- Designate emergency leaders. One person should have overall responsibility for crisis management. In a small business, this is usually the owner or CEO. As part of this individual’s team, one person should be responsible for communications and another for building security. Be sure alternate leaders are designated as well; a sudden emergency could leave key personnel absent or even injured.
- Organize employees. Think ahead: If a disaster strikes, how will employees help you cope? Who will supervise them?
- Prepare an emergency telephone directory. This should contain office and home telephone numbers of all employees as well as key customers and vendors. It should also contain emergency numbers for employees’ spouses, parents or other close relatives. Key people should keep this directory at home, in the car or in some other highly accessible place.
- Develop a plan to secure facilities. If your business location is damaged, you’ll need to know how to secure it quickly against theft or further deterioration. Designate a person to be responsible for inspecting the facility, boarding up doors and windows, turning utilities off and arranging guard service.
- Prepare emergency communication procedures. Identify an off-premises source of communication: a friend’s office across town, a cellular telephone network, even your home telephone. Next, build a “telephone tree” that can systematically bring information to employees and others when an emergency hits. If you’re shutting operations down or need to make a public announcement, rely on this channel to notify the media. Need more emergency procedures ideas? Start with the Federal Emergency Management Agency’s “Disaster Planning Guide.” You can request a copy at PO Box 70274, Washington, DC 20024.
- Write it all down. Develop a simple but thorough, emergency procedure plan. A to-do list is fine as long it spells out the specific steps you must take to deal with the problem. Be sure you––and key people around you––keep the plan handy at home and at the office.
In addition to all of these general procedures, the plan should spell out exactly what happens in response to specific disasters. For example, if your building is prone to flooding, the plan should note where sandbags are stored, and where they should be placed in an emergency. This also goes for emergency construction materials if a hurricane strikes.
Safety first
Though you should be vitally concerned about the health and survival of your business after a disaster, you must also be concerned about the well-being of your employees and their families. Employees may need assistance getting home or, if the emergency is critical, they may need to safely remain at your facility until the danger subsides. Some tips:
- Plan to communicate with families. Use your backup communications plan to provide information and reassurance to families of employees who are either traveling home or remaining at your business.
- Designate an inside “safe zone.” The safest part of your building might be a sturdy rear wing or the basement. Employees should gather in the designated safe zone if they’re present when disaster strikes.
- Provide emergency directions. The first set of directions should be internal and guide employees to your safe zone. The second set should designate emergency fire exits. The third set should spell out the safest escape roads from the area. Keep in mind that natural disasters can wash out roads, damage bridges and block intersections, so be sure you identify several routes out.
- Keep firefighting equipment well-maintained. Fire extinguishers should be conspicuously located throughout your building and inspected and charged annually. Employees, of course, should know how to use them.
- Prepare to provide emergency health care. Your safe zone should contain a fully stocked first aid kit, which you can use to treat minor injuries. Know the procedure to get people to nearby hospitals in case of serious injuries.
- Maintain a well-stocked emergency kit. Besides first aid supplies, your kit should contain battery-operated radios, flashlights, non-perishable foods, water, blankets and small utensils and tools. Keep the kit in your safe zone.
- Provide training. Refresh everyone in the building about emergency safety and evacuation procedures every few months. And don’t hesitate to conduct brief drills or test runs if you’re concerned about imminent danger.
Up and running again
Once the disaster is over, the real work begins: Getting the business up and running as quickly as possible.
- Identify an operations center and begin working from there. This center might be your building’s safe zone, at your home or some other location. Here, you should have access to your communication system, basic supplies and equipment, telephone directories, customer and vendor lists and critical records. Here, you’ll plan for a return to smooth operations.
- Make plans for reopening your building. If your building has been damaged, call on your emergency contractor, utility companies and other suppliers to help you make the building usable as soon as possible.
- Restore your computer systems. Pull out your backup disks or tapes or contact your commercial data center to help you get your computer system up and running again. Replace hardware as needed.
- Obtain emergency supplies and inventory. Your emergency records package should serve as a quick guide to suppliers, ordering and delivery requirements and terms.
- Talk to your insurance agent. Insurance often doesn’t cover all the losses resulting from a disaster. But your records and photographs can help you obtain the best settlement possible. Don’t hesitate to bring in an independent appraiser to help assess your losses.
- Make financial projections. Pull out your financial records and develop a series of projections for the year ahead––a best case and worst case scenario, at least. These financial projections may be helpful if you must apply for loans to replace inventory or repair damage.
Any number of disasters can strike your business anytime. You can’t prevent them. But with careful preparation, you can minimize your losses should you suffer a tragedy and assure yourself the opportunity to get back on your feet as soon as possible.
