The best time to respond to a disaster is before it happens. A relatively small investment of time and money now may prevent severe damage and disruption of life and business in the future. Every area in the country is subject to some kind of disaster -- flood, tornado, hurricane, earthquake, ice storm, landslides. Even manmade disasters such as oil spills, gas explosions and civil unrest can devastate surrounding neighborhoods and the economy. Even though an area has not suffered damage before, there is no guarantee it won’t happen in the future.
Be a little pessimistic now. Develop a disaster plan now so you can rest a little more easily in the future. It can happen to you, so you must have a plan.
Facilities and equipment
What would you do if your facility was closed for several days because it was damaged or destroyed? What could your company not survive without? What can you do to ensure you never have to live without them?
Develop contingency plans to remain in operation if your office or greenhouse is unusable. Put someone in charge of various steps of recovery as you probably can’t do it alone. Could you operate out of your home, a nearby storefront or leased greenhouse facility? Could you quickly transport critical items such as computers, inventory and equipment? Could you save replaced equipment and reactivate it in an emergency? Could you store inventory, equipment and supplies off-site? Examine the possibilities, draw up a plan and be sure that you and your employees know what to do.
Store extra hard-to-replace parts or supplies off-site. If this cannot be done, work with suppliers in advance to ensure a secure and adequate supply. Store several days’ supply in a place that is not vulnerable to the same disaster as your facility. Keep this auxiliary supply up-to-date.
Make upgrades now that would prevent possible future damage. Strengthening exterior walls, adding a retaining wall or re-enforcing a creek bank are relatively minor projects in comparison to losing buildings to flood waters.
Maintaining operations
Purchase a backup generator to maintain full operations or critical functions such as refrigeration, ventilation, heating, lighting, security systems and computer control in the event of a power failure.
Have backup vendors and shippers in case your primary ones are disabled or shut down. Set up relationships with backup vendors in advance and maintain them. Place occasional orders so that they regard you as an active customer.
Guard against loss of your customer base by diversifying your product lines, sales locations and target customers. Make it part of your annual plan to develop new customers, even if your current customer base seems fine.
Critical information and communications
Make backup copies on a regularly scheduled basis of all critical records such as accounting and employee data, customer lists, production schedules and formulas and inventory. Keep a backup copy of your computer’s basic operating system, boot files and critical software. Store a copy of all vital information on-site and a second in a safe off-site location. Make it a critical part of your routine to regularly back up files.
Make arrangements with computer vendors to quickly replace damaged vital hardware. Keep invoices, shipping lists and other documentation of your system configuration off-site so you can quickly order the correct replacements. Take care of credit checks, purchase accounts and other vendor requirements in advance so that vendors can ship replacements immediately.
Surge-protect all computer and phone equipment through power and phone lines. A power surge through a telephone line can destroy an entire computer through a connected modem. Invest in a surge protector with a battery backup.
Maintain an up-to-date copy of phone numbers, computer and Internet logon codes and passwords, employee phone numbers and other critical information in an accessible location. Develop an employee telephone tree to rapidly contact employees in an emergency. Identify a phone number outside of your area where everyone can check in.
Buy adequate insurance
Is your current insurance enough to get your business back in operation? Will it cover the replacement cost of vital facilities? Make it a regular annual procedure to review and update insurance. Also, remember that insurance on mortgaged property probably only covers the lender with nothing left over for you.
Be aware of your contents insurance. Does it cover the replacement cost of critical equipment?
Know what your insurance doesn’t cover. Most general casualty policies don’t cover flood damage. Many require additional riders for windstorm, sewer backup or earth movement. Consider adding coverage for likely perils, especially flood insurance.
Consider business interruption insurance that assists you with operating needs during a shutdown. It may help you meet payrolls, pay vendors and purchase inventory until you are in full operation. Also, be prepared for the extraordinary costs of a disaster such as leasing temporary equipment, restoring lost data and hiring temporary workers.
- Gary Hudson
Gary Hudson is founder and president, Hudson & Associates, (916) 375-6540; gary@garyhudson.com; www.garyhudson.com. Hudson & Associates can provide additional information and help in establishing a disaster plan.
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This article is based on a seminar presented at the 2006 OFA Short Course. For information on the 2008 OFA Short Course, July 12-15 in
June 2008