Sound the Alarms: How Small-Business Owners Can Prepare for Hurricane Season

Disaster readiness is a cost of doing business in hurricane territory.

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By Ted Devine

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With hurricane season underway, at-risk small businesses need to make sure they have a response plan in place that helps mitigate potential damages. Unfortunately, many small companies don't come close to checking the boxes for hurricane readiness. And this lack of preparedness can come at a significant cost.

As a Weather Company report pointed out, this year's hurricane season -- which officially began on June 1 and continues through November -- is projected to be "busier than usual," with 14 named storms expected. Of these projected storms, two have the potential to become major hurricanes. With rises in global temperatures prompting higher sea levels, there's a greater likelihood that these storms will reach further inland than usual. That means more small businesses will be in the path of storms and vulnerable to this hurricane season's potentially damaging impact as a result.

Historically, small businesses have a notably poor track record when it comes to coping with and recovering from natural disasters. According to FEMA data, nearly four out of 10 small organizations are forced to permanently close in the wake of a natural disaster. Despite that grim statistic, three out of four small businesses lack a disaster recovery plan. For very small businesses – those with 50 or fewer employees – that number jumps to four out of five.

For small businesses, dealing with hurricane season begins by firming up your internal preparedness. Here are some key steps business owners must take to proactively plan for a natural disaster such as a hurricane:

Related: 5 Ways to Prepare for Disaster in a Startup

Devise a disaster recovery plan.

Frequently, disaster recovery is relegated to the bottom of a small business' priority list – especially among businesses that aren't in traditionally high-risk weather areas. But the reality is that no organization is immune to a disaster, regardless of its location. For all businesses, the path to preparedness begins with a plan – one that's formalized across the company with the comprehensive steps required to quickly restore business functionality in the wake of a disaster.

Communicate your plan to all employees.

A disaster recovery plan can only be effective if everyone is on the same page about what it involves. Once small business leaders establish a plan, they must make sure their employees know what's in it and what responsibilities each staff member has. That means posting or distributing a print version of the plan as well as discussing it at companywide meetings.

Create and store data backups.

By ensuring all your business' proprietary data is securely backed up – either virtually or on a physical backup drive stored at a safe location – you can prevent a natural disaster turning into a data loss incident.

Related: 4 Ways to Ensure Your Startup Will Survive Disaster

Only good nsurance hurricane-proofs your business.

The steps outlined above can significantly help small businesses bolster their hurricane readiness. But no business can be hurricane-proof without being properly insured. Yet there tends to be confusion about what proper hurricane insurance looks like. When it comes to protecting against hurricanes and similar events, small businesses should consider the regulations and expectations of their specific industry. However, there are certain insurance policies that are important for all businesses in the fight against hurricanes. For businesses across sectors, a hurricane insurance package isn't complete without:

Commercial property insurance.

Whether you rent or own your business property, commercial property insurance can help ensure you have funds to pay for repairs or replacements needed after a storm. But read your paperwork carefully: while many property policies cover damage from hurricane winds, they exclude flood damage from rising water. If you're in a hurricane-prone area, ask your agent about riders (officially called "endorsements") to add to your policy for more complete coverage.

Related: What Businesses Need to Know About Preparing, Coping and Recovering From Natural Disasters

Business interruption insurance.

Businesses hit by a hurricane don't only face the repercussions of replacing lost or damaged equipment – they also have to deal with lost time. And often, it's the extended downtime following a storm that forces some small businesses to permanently close, as they continue to rack up costs without producing the revenue to cover them. Business interruption insurance helps alleviate this problem by providing organizations facing extended downtime with money to cover necessary expenditures like rent, taxes, loan payments, and salaries. But again, ask your agent what's covered: business interruption insurance only offers protection if the incident that forced you to close is covered by your property policy.

As this year's hurricane season intensifies, small businesses can protect themselves through a combination of internal preparedness and investing in comprehensive insurance. On this latter front, it's vital for organizations to research and identify the specific insurance types that will ensure they're optimally prepared. While this kind of preparation takes work, the cost of not preparing is too steep to risk.

Ted Devine

CEO of Insureon

Ted Devine is CEO of Chicago-based Insureon, an online insurance agency for small and micro businesses. Previously, Devine held senior leadership positions at Aon Corp. and spent 12 years as a director of McKinsey & Co.

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