Would you know what to do if a disaster struck your small business? Tony Williams is familiar with disaster knocking on his door. First came the 1989 San Francisco earthquake which left his graphic design firm, Design Vectors Inc., undamaged but his 12 employees badly shaken. A few months later, burglars made off with some video equipment.
Two weeks after moving into new quarters, Williams received an anxious call from an employee. "The building next door had caught on fire, and he was afraid we were going to go up in flames," recalls Williams. "The whole side of our building was scorched and smelled of smoke. It was a close call."
After three brushes with catastrophe, Williams and his staff became serious about developing a plan to protect the firm and themselves. "At that point we told ourselves, `OK, this can happen to us.' We've had our wake up call."
Ron McCloud didn't get any wake up calls. On a comfortable September afternoon in 1994, McCloud smelled smoke as he chatted with a customer inside his store, Dunsmuir True Value Hardware, in Dunsmuir, California. Roofers working on the building next door had accidentally ignited the common wall, shooting fire into McCloud's attic.
"The fire department told us we were within minutes of a total loss," recalls McCloud, who spent the next six and a half months restoring his 5,000-square-foot building and replacing his merchandise, telephones and computers so he could reopen. "We weren't prepared for what happened," he admits. "It's one of those things you believe won't happen to you. Suddenly, you've got to think hard and fast. Who are you going to call first?"
Many small businesses aren't prepared to handle a fire, flood, earthquake, civil riot, chemical explosion or other disaster, no matter how small. They're left to deal with the consequences: damaged equipment and inventory, displaced employees, disruption of business and loss of revenue. Worse yet, many small businesses never reopen or regain the market position they once enjoyed.
Before disaster strikes your business, take time to develop an emergency disaster plan that will enable you to protect assets, safeguard employees, keep customers and minimize interruption to your business. Here are six key steps to putting your plan into place:
1. Protect Your Employees. Employee safety should be a top priority of your emergency disaster plan. Williams maintains an emergency personnel file on each employee with important medical data, names of emergency contacts and the location at which an employee is expected to meet family members in case of a major disaster. Williams also posts evacuation maps showing the fastest and safest ways to exit the firm's fourth-floor office suite.
2. Assess Your Risks. "Look at your work location and figure out where you're vulnerable," advises Gail Hutchens, director of Pacific Bell's Business Contingency Planning in San Ramon, California. Identify potential risks that could destroy or close down your business. Are you near a toxic dump, adjacent to a river or on a hillside? Are you in an area heavily taxed on power, where blackouts are likely to occur? Are you next to a freeway, where a hazardous materials spill might force you to evacuate?
"Many business owners think of big natural disasters, like wild fires and floods. But it's the day-to-day disasters that will take out a small business faster than anything else," notes Hutchens.
There are several excellent resources available to help you assess your risk potential. Hutchens and her staff cover the subject in the disaster preparedness workshops they conduct for California residents. Other telephone companies have similar programs. Your local or state Emergency Services Office can provide information or you can retain the services of a disaster planning consultant.
Hutchens encourages business owners to make certain their suppliers have also assessed their risks and have an emergency disaster plan in place. "If a lumber company burns down and you can't get wood to make your boxes, what are you going to do?" she asks. "You'll be out of business, too, unless you have an alternate supplier."
3. Take Inventory. When Design Vectors was burglarized, Williams could easily report to the police and insurance company what items were missing. How? He had a four-tiered inventory, consisting of a written inventory, including the serial and file numbers of all hardware and software; a computer disk copy of the inventory; a complete photo documentation of the firm's equipment; and a video narrative of the contents of each room. "We were pretty well covered with these four different methods," he says.
Williams also keeps copies of invoices for all major purchases, particularly computers and software. "It's hard to recall whether your computer had four megabytes of RAM or 80. We're talking about a few thousand dollars difference in cost if you have to replace the computer."
4. Develop a Communications Plan. The inability to communicate quickly and effectively, notes Hutchens, is a big reason many businesses fail after they're hit by a disaster. "If you make the 11 o'clock news, you want to make sure your customers know you're still in business," she says. "Otherwise, you've lost a good portion of your market share. It's very difficult to get that kind of momentum back."
Hutchens encourages business owners to be quick in getting the word out about their situation, by providing the local radio and television stations with updated information or placing an announcement in the local newspaper with your temporary business location or the date you'll reopen for business.
Your plan should also include a list of the telephone and fax numbers of the police and fire departments, a hospital, the Red Cross, your insurance company, banker, attorney, clients and vendors. Keep your list in a secure place outside your business.
Voice mail and call forwarding are also important. "If you can't get into your place of business, how will you continue to answer the phone?" Hutchens asks. "If you can forward your calls to another location or have your messages held in voice mail, you can call your customers back."
5. Protect Your Files. "We have a liability to our clients to maintain their files," says Williams, whose customers include the Federal Emergency Management Agency (FEMA) and Pacific Bell. Several times a week, Design Vectors employees make copies of all the firm's files, which are kept in a safety deposit box at a nearby bank. "The burglary alerted us to the need to back up our files and maintain them off-site. Many people make duplicate copies and set them beside the computer. That's fine if your computer crashes, but if someone steals everything, it's all gone," he says.
Taking necessary precautions is your best defense against loss of your computer files in case of a disaster. If your computers are damaged, consider employing a data rescue company. These services, found in the classified section of major personal computing magazines, can restore data lost by computer shutdown, power surges or even fire damage.
Protect other important files: accounting records, marketing plans, insurance forms and other data needed to run your business. Store duplicates in a safety deposit box or other secure place away from your business.
6. Be Insured. When smoke damage closed McCloud's business, he got one spark of good news: he was well-insured. His policy covered damage to the building and loss of his inventory, computers, phones, antique cash register, tools and light fixtures. It also included business interruption protection, so McCloud was reimbursed for the banners and television and newspaper advertising announcing the store's reopening and for loss of net income during his business's closure.
"When 20 years of your life lies in rubble before you, it's stressful," says McCloud. "When I think of how much worse it could have been without our good insurance coverage, I'm thankful we had it."
Carla Goodman is a freelance business writer in Sacramento, California.