Small businesses need a disaster plan

NEW YORK - It might be hard for small business owners to focus on disaster preparation when the azaleas are in bloom, but preparing for the possibly catastrophic effects of hurricanes and tornadoes is indeed something that needs to be done now.

It's not just a matter of stocking up on plywood before there's a run on the Home Depot. Savvy business owners anticipate running their companies even if their offices are badly damaged, and they have contingency plans if the disaster happens to someone else - for example, a key supplier located hundreds of miles away.

Basically, disaster preparation should aim at keeping a business running and limiting any interruption as much as possible.

But even owners who do prepare for disasters - which can include fires and terrorism as well as natural phenomena - often miss key elements of a comprehensive plan, said Wendy Rose, a spokeswoman for the Institute for Business and Home Safety, a non-profit organization that aims to educate businesses and consumers about disaster readiness.

"They know where they'll evacuate to and they have all their employees' numbers down, but they don't always think about all the issues," she said.

For example, arranging in advance for an alternative operating site. Rose said owners should be networking with other business owners, even competitors, and agree to help each other out if the worst happens. She recalled the case of a local beauty salon destroyed by fire; a competitor accommodated the displaced stylists until the damaged business could reopen.

There's also the very real possibility that a vendor could be sidelined. Rose suggests keeping a relationship going with an alternative supplier - "place one or two orders a year with them, just to have credit established with them," she said.

"It gives you options," Rose said.

The IBHS has udpated its Web site, www.disastersafety.org, with a kit that can help companies prepare. On the home page, click on the "OPEN for business" link; on the next page you'll see the "Open for Business Toolkit" section that includes checklists that help small business owners collect vital information and formulate plans to keep their companies running if disaster strikes.

Be sure that as many employees as possible have copies of the plan, and that there is more than one worker trained to perform each of your company's operations.

The institute's Web site also includes a more comprehensive version of "Open for Business" accessible through the insurance companies that are IBHS members. If your insurance company is listed on the IBHS member roster found on the Web site, you can ask your agent to help you gain access to this service, Rose said.

The Small Business Administration has an online disaster preparation checklist at www.sba.gov/DISASTER/getready.html that includes link to other disaster preparation sites, including the IBHS.

While the government can help businesses after the fact with SBA disaster loans, they only go so far in helping a company recover, and they're only available in places that have been declared disaster areas. You're better off in mitigating the damage before it happens.

Here are some of the other major aspects of disaster preparation you need to consider:

- Insurance. You need to be sure you have adequate coverage for disasters that are likely to occur in your area. Your standard comprehensive business insurance package might not reimburse you to the extent you expect, so it's a good idea to look at your policy and talk to your insurance agent so you know just what your coverage is. If you're in an area where floods are common, you should know that you might have to purchase a separate flood insurance policy.

You should also have business interruption insurance, which will reimburse you for profits lost due to a natural disaster. There's more information about disaster insurance at the Insurance Information Institute, www.iii.org.

- Preserving your data. This means having all your data, including customer lists, order history, financial books - any information you need to run your business - available in case your offices are damaged or destroyed. There are a variety of ways to do this, ranging from the relatively low-tech route of backing up your information on CD-ROMS or other storage media to the more expensive and higher-tech solutions such as maintaining an off-site server that duplicates every entry you make. If you choose the former method, remember that locking the disks in a drawer in your office is tantamount to no protection at all. If you contract with an off-site data storage company, make sure they're not located nearby.

- Preparing your physical plant. Whether you rent or own an office or other site, you need to think about reducing the likelihood of major damage. The steps you need to take vary according to the type of disaster and building. The Federal Emergency Management Agency has a detailed online disaster preparation guide at www.fema.gov/library/prepandprev.shtm.