As a small business owner, you have responsibility for every part of your business - including preparing for an emergency. Hopefully, the biggest emergency you’ll face will be running out of coffee, but natural disasters do happen. Earthquakes, hurricanes, tropical storms, and floods can all hit various parts of the US. Tornadoes caused $320 million of economic damage in 2015.
A large company might be able to absorb the losses and carry on, but a small business could be wiped out by the cost of a natural disaster. That’s why disaster preparedness is so critical for small businesses.
How can small business owners prepare for unforeseen situations?
The best way for small business owners to prepare for unforeseen situations is to think ahead about which natural disasters could affect your business, what damage they could cause, and what you can do to reduce it.
It’s important to be realistic. If your business is in Indiana, you’re more likely to be affected by a tornado than a tsunami. If you live in Los Angeles, you might need to deal with wildfires, but not a snowstorm. The SBA has a disaster preparedness checklist for every type of natural disaster. As showcased during National Small Business Week, there are many resources the SBA has to offer which can help you prepare and repair before and after difficult events.
Once you’ve thought about the emergencies which could affect your business, you can start making a plan to deal with them.
Whether it's a natural disaster or a financial one, how can entrepreneurs prepare for the worst?
No matter what happens, you can take steps to reduce the damage that any type of disaster has on your business. These 5 disaster preparedness tips are good advice for entrepreneurs to be ready for the worst:
- Back up everything. You should always save your important business files, like your contacts list, or tax information, or inventory data, to the cloud and back them up frequently. If your office computer is destroyed or a virus wipes out all your files, your business will be able to carry on.
- Register with the Small Business Administration, and stay current on all the resources they offer.
- Make a plan. Every business needs a disaster preparedness plan. You’ve already thought about everything that could go wrong. Now write down what will happen in each case. For example, if there’s a hurricane warning, should your employees go home, or stay in the office until the storm has passed?
- Share your plan. The best emergency preparedness plan in the world is no use if no one knows about it. Make sure that every one of your employees knows the emergency plan, and review it regularly.
- Set up a communication system. If disaster strikes, you need some way to check up on each of your employees. If the emergency continues for a while, you might also need some people to do their work from home, or from their evacuation point. Set up some way to enable remote working.
- Check your insurance. There are many different types of business insurance. It’s good to check what type of insurance you have, and whether you have enough to cover your costs if the worst does happen.
What do I do in an emergency situation?
If you find yourself in an emergency situation, it’s time to carry out your disaster preparedness plan. Make sure to listen to municipal, state, and federal advice about evacuations or relocations, and check that your employees obey them, too.
As a small business owner, you’re responsible for your workers. Find out where everybody is, make sure that they are safe or have somewhere safe to go, and tell them any official safety guidelines.
How to file a claim
If your business was affected by a natural or financial disaster, don’t panic. This is why you paid your insurance premiums. Here is a brief guide to how to file a claim on your business insurance.
- Check that your insurance policy covers this damage. For example, if your business property insurance has an exclusion for earthquakes, you won’t be able to claim for earthquake damage. You’ll need to look elsewhere for financial assistance (see below).
- File a claim as soon as possible, so that you don’t miss the deadline on your insurance policy. The sooner you file your claim, the sooner your funding will come through.
- Document all the damage that’s been done to your business. Take photos of your ruined office premises, van, equipment and machinery, and any other damaged business property.
- Make a list of everything that needs to be repaired or replaced. Include your office equipment, like a desk and chair; your tools and supplies; and even software and apps.
- Keep a record of how much it costs to fix your business. Note down all the costs, like renting new equipment, paying rent on a temporary office space, etc.
- Log all the interactions you have with the insurance company. Keep track of the date and time of every conversation, make a note of who you spoke to and roughly what was said in your conversation. Save every email and text message, too.
Funding for Rebuilding a Business After a Natural Disaster
After the emergency has passed and you can get back to work, it’ll be time to get your business back to normal. That could be easier said than done. It could cost your business a lot of money to repair your office space or replace inventory and equipment. What’s more, your insurance policy might not cover this type of natural disaster, or your policy might not be large enough for the damage you have to fix.
- Repair damage to your office premises after an earthquake
- Replace inventory that was destroyed in a fire or flood
- Buy or rent new tools, machinery, or equipment after a tornado or a hurricane
- Use as working capital for the next few months while you put your business back together
- Cover day to day costs until business picks up again. If all your clients evacuated, or they’re living in temporary accommodation, they might not need your business for a few weeks or months, until their lives get back to normal too.
One of the benefits of National Small Business Week is the chance to find out more about the ways that the SBA helps small businesses to prepare for and deal with disasters and emergencies. Read more disaster preparedness and everything else that National Small Business Week has to offer.