SEMA News—March 2011
Preparing Your Business to Survive
This series of SEMA News stories is based on the idea of using reliable and repeatable methods to ensure business success. In coming issues, we will delve into a range of topics aimed at developing Best Practices through knowledge, motivation and skills.
The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether the business location is in danger from wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. Photo Courtesy Greg Henshall/FEMA
While most business people enjoy planning for success, preparing for disaster is equally crucial. Whether bracing to endure earthquakes, floods, hurricanes and tornadoes or man-made events, such as terrorism or other crimes, including physical and cyber attacks, every company should take steps to survive, recover and resume operations in the event of catastrophe. Basic preventative measures apply to any type of disaster or business interruption, but specific measures tailored to geographic or regional conditions should also be considered.
It goes without saying that the better you prepare and organize, the less down time your company will have to endure, reducing the time it takes to spring back into profitable operation.
Recognize the Greatest Threats
The first step in a preparedness plan is to recognize the most obvious threats. Company owners or managers probably already know whether their business location is in the path of wind events, wildfires, earthquakes or flooding, but it’s also advisable to check with local, state and federal agencies to learn about other possible threats that may not be well known. In addition to local civil authorities, company officers may consult FEMA hazard maps for the area in which the business is located. The various resources listed at the end of this article also provide information about specific events and how to prepare for and survive them.
Protect People First
People are every business’ most important asset, and protecting employees should be the top priority. Emergency management experts suggest you establish a chain of command as the first step in developing the company’s crisis-management procedures. Fix responsibility for who will handle specific duties early in an emergency, but also train backups in the event that the top tier is not available. Encourage employees to learn first aid and CPR.
Set up redundant communications systems so that employees have more than one way to reach management and vice versa following an off-hours incident. Establish a calling tree, for instance, in which one person calls three others, those three call three more and so on until the entire company is covered. Base the tree on a priority calling order so that those most critical to the company’s operation are notified earliest about what has occurred and what recovery plans to implement.
The secondary communication system might consist of a group e-mail notification or a call-in voice recording that notifies employees of company status. Another option is an out-of-state contact where employees can transfer information in the event that local phone lines are tied up but long-distance lines are available. Provide employees with all of the numbers or e-mail addresses in a form that they can keep with them in a wallet or a purse.
Be sure to consider any special needs required by people with disabilities, both in providing for communications and, should it become necessary, in evacuation or other plans that require mobility. Ensure, too, that employees know the emergency plans for their childrens’ schools or after-school care facilities, and review all plans with employees at least once per year.
Evacuation or Shelter in Place
If a catastrophic event occurs during business hours, it may be necessary to either evacuate the company’s facilities or remain in place because of dangerous conditions outside. In either event, keep a log-in system for employees and visitors so that you know who is in the building at all times. Map out and post at least two exit paths from various locations in the building, and tell employees where they should congregate if they are told to exit or an alarm sounds.
Establish responsibilities for evacuation procedures with a chain of command for who calls authorities, such as police or the fire department, who shuts down and locks up the building and who performs a head count using the log-in sheet. Once outside, account for all employees and guests. Also establish who determines whether it is safe to re-enter a facility or if employees and guests should seek shelter elsewhere or go home.
If the facility is intact but dangerous conditions exist outside, it may be necessary to take shelter in place. Plan ahead for this contingency by stockpiling emergency supplies and assigning duties to those who will be charged with directing employees and conducting a head count using the log-in sheet. Plan and practice both evacuation and seeking shelter within the facility.
Sufficient food and water are the most obvious needs for people forced to take refuge at some place other than their homes. Stockpile a water supply that consists of at least one gallon per person per day for drinking and sanitation, and store it in transportable containers. The food stocks should include a three-day-per-person nonperishable supply that may include canned or dried goods. Be sure to include a manual can opener if canned goods are included.
Communications devices should be included with the emergency rations. If electric power is lost, phones that plug into a power outlet will be useless. Phone companies generally maintain their own emergency power sources, though, so keep an old-fashioned telephone on hand—the type that uses a handset wired directly to the base station and connects to the phone lines through a wall jack. Also keep a battery-powered AM/FM radio and extra batteries as well as a National Oceanic and Atmospheric Administration (NOAA) weather radio if a station broadcasts in the area. NOAA stations transmit National Weather Service hazard information 24 hours a day in addition to non-weather emergency alerts, including those for national security and public safety.
Emergency stores should also include common-sense items, such as flashlights with extra batteries, a first-aid kit, tissues, paper plates, paper towels, toilet paper and an assortment of tools, including an adjustable wrench for turning off utilities, a hammer, shovel and pry bar. Some items that are less-often considered but may become essential are a whistle with which to signal for help, dust-filter masks in the event of debris in the air, moist towelettes, garbage bags and plastic ties for sanitation and even blankets and pillows.
If there is a chemical emergency, employees may need to seek protection in a sealed room. If this is a potential risk, keep waterproof plastic sheeting and duct tape with the emergency kit, and ensure that employees are told to move to an interior room with as few windows and doors as possible as soon as the danger is discovered. Establish one room per floor in the case of multi-story buildings or one per structure for multi-building facilities. Close the business; lock the doors and windows. Turn off all ventilation systems, move everyone into the room along with the emergency stores (unless they have been contaminated) and then seal the room with the plastic sheeting and duct tape. Listen to the radio or other available sources for news and instructions, and remain inside until given the all clear.
If employees must take shelter in place, a readily available reserve of cash is also recommended in the event that travel is limited for an extended period but nearby stores are open. Credit cards are also handy to have; however, they require electricity for scanning.
Keep two copies of important records, one in a waterproof/fireproof container on the premises and a second off-site. The records should include building plans, insurance policies, employee contact lists, bank records, supplier and shipping contact lists and emergency and law-enforcement contact lists.
Almost all disaster recovery plans maintain a computer backup system in case hardware is destroyed, and most recommend a portable generator in the facility to power emergency systems.
Fire is the most common type of disaster and may accompany other types, so develop and post procedures on how to alert fire services quickly from any location in the facility. Have all structures inspected for safety, and ensure that they are in compliance with codes and regulations. Install smoke detectors and extinguishers and consider more stringent measures, such as a sprinkler system, hoses and fireproof doors where necessary. Test employee warning systems periodically, ensuring that there are provisions for the hearing impaired as well as non-English speakers.
Before a disaster has a chance to wreak havoc, create a plan to follow for after the danger has passed and it’s time to reopen. Determine which employees understand the company best and should, therefore, be involved in putting the plan together. Include all departments, and assess the company’s internal and external systems. Determine which staff, materials, procedures and equipment are necessary for the business to function both fully and on a low-level interim basis. Critical operations to consider include emergency payroll, financial decisions and accounting. Consult your insurance provider to ensure that the business and its employees are fully covered.
Also, decide how you would proceed if essential machinery or even buildings were damaged or destroyed. Could you borrow or rent alternatives? Make initial contact with alternative suppliers, shippers and other emergency resources you might need to call on in order to sustain operations. Develop relationships with them, establishing personal contacts. In addition, ensure that key employees have the tools they will need to run the business, including keys, codes, inventory and personnel, and establish that ever-vital chain of command in case one or more supervisors is unable to perform right away. If your business is housed in a building or complex with others, talk with their managers about their emergency preparations and train with them to develop compatible systems and procedures.
What happens in the event of an emergency is partially determined by its type and severity, but preparation can minimize the damage. Whether to go or stay, what help to seek and how to sustain operations are all dependent on forethought and planning. This article hits the main points to consider, but it is not all-inclusive. Contact the additional resources shown below to develop a thorough plan for the conditions that exist in your area, and do it now. The next disaster you hear about might be the one coming through your front door.
Should You Have Business Interruption Insurance?
Federal Emergency Management Agency (FEMA)
American Red Cross
U.S. Small Business Administration
It’s important to consider that for many of us, even small interruptions in business can be significant. Many companies today are heavily dependant on the phone, the Internet and internal IT systems to do business. Heavy winter storms or summer lightning can knock out these business tools, quite possibly for days at a time. A small fire can cost weeks of productivity while you remodel. These kinds of interruptions can shut down your company’s ability to take orders, run the payroll or communicate with your customers. Data loss can impact your company revenue, reduce productivity and damage your company’s reputation. These days, with so much of our business done through electronic systems, it doesn’t take
a disaster of biblical proportions to impact the bottom line.
Business owners may already have property insurance, but a more specific type of policy, known as business interruption insurance, is needed to protect the profits that an owner would have seen had there been no problem. There are several types of business interruption insurance, but as a rule, the more specific types of perils covered—fire, windstorm, vandalism, earthquake, flood, etc.—the better. This kind of coverage is usually available through the same companies that offer property insurance. Typically, they are written to allow recovery of a percentage, say 80%, of your losses.
Experts say that in order to make a claim to restore your lost profits, you’ll likely need to have financial records and business documents available fairly quickly to establish the value of your claim. For that reason, off-site storage, IT backup plans and/or an electronic archive system hosted by a remote server might be the most important disaster preparations you can make. —JS