Consider this: According to the 1999 Working Disasters Report, 1998 was the worst year on record for disasters, wreaking more havoc than ever before. And the future does not look too promising. In fact, claims the International Federation of Red Cross and Red Crescent Societies, there appears to be a dangerous trend toward more "super disasters." We have already had a taste of what these super disasters entail. In the wake of El Nino and La Nina, anything seems possible. From hurricanes, tornadoes and floods to fires, drought and earthquakes, businesses must be prepared to face these unfortunate but very real circumstances. Continuing to operate in the midst of natural or technical disasters can be the ultimate test of a company's strength and success. This, along with the current trend toward increasingly more serious disasters, should be a red flag for businesses to not only have a contingency and recovery plan, but also to test this plan before the onset of any calamitous interruptions.
The "Everyday" Disaster
The first question to ask when preparing a disaster plan is: what kind of disaster is my business most likely to encounter? On the surface, this may appear to be a simple exercise. For example, if located in Kansas, you'll be preparing for tornadoes; in California, earthquakes and fires. However, as Lee Keller, director of Disaster Prevention & Recovery Alliance, explains, "We should also be concerned with the everyday risks businesses face as well as the large-scale natural disasters."
Keller elaborates on those everyday disruptions. For example, are your 20-amp electrical outlets overloaded with extension cords? If the sprinkler systems malfunction, do you have a supply of easily accessible plastic coverings? If employees are unable to access the building, is there a designated meeting place? Has your business considered the dangers of employee espionage or workplace terrorism? And the list goes on.
The bottom line is to be prepared for a variety of disasters, not solely ones related to nature. In fact, Lori Usher of the Wichita State University Small Business Development Center believes that even the bankruptcy of a client can be a disaster for some small business owners. She warns: "It is likely that, at least once, entrepreneurs will be impacted by a disaster."
Crucial Elements of a Disaster Plan
After establishing those dangers in closest proximity to your business, the next determination is what critical elements are needed to keep your operation running should disaster strike. This is especially important for small business owners because they cannot afford to shut down for an extended period of time. Depending on the size of your firm and the industry you're in, these critical business resumption elements will differ. However, several rules of the thumb should be considered by all business owners.
First of all, back up your files. Kent Burnes, president of California-based Burnes Consulting, says, "Most likely, all communications are locked up in a computer system, and it is crucial to have an alternate storage site for all critical information, ranging from accounts receivables to contacts." Ask yourself, "If this computer were destroyed, could I reconstruct my business?"
Usher also claims that assigning responsibility to one or two individuals who can think quickly on their feet is essential. These "disaster leaders" can provide guidance and give direction amidst the chaos of an unexpected business interruption.
Another key step is establishing an alternate work site where people can meet in the event the office becomes inaccessible.
Lastly, Burnes suggests a thorough evaluation of your business recovery insurance. Ask yourself, "In the event of a total loss of business, what will the situation be?" For entrepreneurs, this can be the deciding factor between having the means to recover and going out of business.
Testing Your Disaster Plan
Imagine this: You have placed comprehensive, fully categorized disaster plans on every employee's desk that, however, have remained unopened. Then a fire breaks out. People are frantic; some are tearing the plan apart trying to find the section on fire, and others are simply unaware of their roles. As Frank Lucier, director of North American Emergency Management advises, "It is tough to fly by the seat of your pants in an emergency situation." No matter how thorough your plan may be, unfamiliarity can overshadow its effectiveness.
The solution? According to Keller, it can be summed up in one word: "training." In fact, for small businesses especially, because of the few number of individuals involved, simply having employees know their roles can be more important than having an actual written plan. Going hand in hand with this training process is introducing and testing the plan and identifying any overlaps and bottlenecks that may exist.
"The testing process usually results in some surprises," says Usher. "Don't wait for an actual disaster to occur to discover what these surprises are." Delta Dental Plan of California took this advice to heart when implementing a flood scenario and discovering that its current facilities would not be able to withstand the deluge from El Nino. While the risk of loss due to flooding at the company's original location totaled more than $25 million, this risk was significantly trimmed down to $367,551 upon completion of Delta Dental's relocation process.
Testing can be done in various ways. For example, a simple checklist test entails making sure critical supplies are in place and easily accessible. A walk-through test includes the verbalization of certain disaster scenarios and an observation of how employees respond. Lucier refers to this as holding a "tabletop discussion."
Lastly, simulation testing involves enacting an actual disaster. Lucier advises, "Do a real-time problem-solving exercise and observe if people can handle it calmly. This is also a good opportunity to flush out problems occurring between groups of people." Most important, however, is making the exercise a worthwhile and enjoyable process in which everyone participates and can provide input.
Lucier recalls a simulation testing exercise he organized for a company. He concluded it with a picnic to which family members were also invited. After this kind of relaxing activity, Lucier recommends a debriefing session to discuss what went right and what went astray. Ultimately, all testing has to come off as a success. This means the participants should feel they are contributing to the company and to their own learning, and that the test was a positive experience.
To aid businesses in disaster response and recovery efforts, the Federal Emergency Management Agency (FEMA) has created an Emergency Management Guide for Business & Industry, which is also accessible online at www.fema.gov/library/bizindex.htm. In addition to providing a step-by-step guide for companies to follow in creating a disaster plan, the guide emphasizes the importance of making emergency management part of a company's day-to-day operations.
The Red Cross warns: "In today's world, both man-made and natural disasters can occur. We must be prepared for anything." And perhaps the easiest and most direct way to test your employees on their disaster preparedness level is simply to ask them to define their role during a disaster interruption. If you have prepared them adequately, employees should be ready with a quick response.
Businesses Don't Have To Be Victims of Disaster
Just as important as preparing for disasters is damage prevention. For small business owners, the effects of a disaster can be devastating, and what better way to avoid this miserable fate than by preventing the disaster from hitting at full force.
In fact, mitigation is the primary goal for FEMA's Project Impact: Building Disaster Resistant Communities. Striving to build community awareness, FEMA believes that even if a business is fully prepared to weather the effects of disaster, any efforts will be fruitless if the community itself is ruined. Thus, FEMA encourages collaborative effort between companies and communities to reduce the damages of disasters that occur year after year.
Project Impact entails four phases:
1. Identifying stakeholders as Project Impact partners in the community.
2. Identifying a community's specific risks for disasters (such as fires, floods, earthquakes or hurricanes).
3. Identifying specific buildings and systems in the community most susceptible to risk.
4. Keeping the community updated on local Project Impact efforts and continuing to recruit more participants.
Roles exist for everyone to play in Project Impact. From business owners to government officials and community members, the benefits of disaster mitigation are not only manifest in the future, but also in the present. For more information on Project Impact initiatives, visit www.fema.gov on the Web or call (800) 480-2520 for a free Project Impact packet.
Keeping a Roof Over Their Heads
Alan Rodger and his wife, Debra, seem to have a gift for beating the odds.
Their 21-year-old company, which Alan started in Dallas with only a truck and a ladder, survived its first major threat in the mid-1980s when a faltering economy forced construction businesses across Texas to close down. The second threat was in May of 1995, when an unrelenting storm hit Dallas and surrounding areas, causing major floods.
The Rodgers had just moved the Zenith Roofing and Sheet Metal's offices to a new building when water destroyed their records, most of their computers and a great deal of their hope for future security.
The irony of the disaster was that it created a huge demand for roofing work. The Rodgers got 200 calls for work during the three days their business was being washed away.
"We couldn't even use our trucks because most of them were under water," Debra recalls. "We told people, 'Sure, we can work on your roof, if you can bring us a truck!'"
After draining all their personal and business savings accounts and getting a higher line of credit from the bank, the Rodgers still could not afford to restore their business to operational condition. Finally, after an investigative visit from city, state and Federal Emergency Management Agency (FEMA) officials, it looked as if Zenith might qualify for an SBA physical disaster loan.
As bookkeeper and controller for the firm, Debra Rodger was responsible for filling out the SBA loan application. She worked painstakingly on retrieving information from clients, accountants and subcontractors to replace the company's lost records. Remembering the struggle, she asserts, "Getting this loan was vital to our survival."
Her thorough work helped SBA process the application quickly, and the agency was able to offer terms that surpassed the couple's hopes. Their loan of $153,000 will be paid back over 23 years at four percent interest.
"To the SBA, this dollar amount was just a figure calculated from all the paperwork we submitted," says Debra. "But to us, it was the greatest news we'd ever received."
