Small businesses should have disaster plan - Business

Small businesses should have disaster plan - Business

default avatar
Welcome to the site! Login or Signup below.
Logout|My Dashboard

Small businesses should have disaster plan

Font Size:
Default font size
Larger font size

Posted: Sunday, February 24, 2013 12:00 am


DURHAM, N.C. — Jennings Brody started shaking uncontrollably as she watched smoke pour out of Parker and Otis.

On the evening of Dec. 26, Brody and Jonathan Kea, her husband and business partner, received a call from their alarm company. They arrived at Parker and Otis to find their gourmet gift shop and restaurant ablaze and firetrucks surrounding the building.

“I did think, ‘We have lost everything,’” Brody said.

At the time of the fire, the business on Durham’s Duke Street had been closed so its owners and employees could recover from the holiday shopping season.

On Feb. 7, about six weeks after the fire, Parker and Otis reopened with a new layout and owners who have gained a better understanding of the importance of disaster planning.

Disasters, which include fires, weather events, earthquakes and floods, can strike at any time.

“Know what you are going to do,” Brody said.

Gail Moraton, business resiliency manager for the Insurance Institute for Business & Home Safety, a Tampa, Fla.-based nonprofit initiative of the insurance industry, said many small-business owners believe they don’t have the time or budget to establish a disaster recovery plan.

Many business owners think that they have the plan in their heads, Moraton said.

“The thing is, when the disaster or destruction hits their business, they’ve got so much more on their mind that they don’t remember,” Moraton said.

Business owners should plan how they will communicate with employees, and back up digital business information and contact information for vendors, customers, employees and other essential people.

“Have a copy at home. Put a copy on a thumb drive. Put a hard copy in the trunk of your car,” Moraton said. “Have these other copies available to you in the event you can’t get to your office.”

Business owners should identify what crucial business functions need to be addressed immediately after a disaster, and know which employees, equipment and software are needed to make that happen.

“So they are not going to have to sit there and say, ‘What am I going to do first?’” Moraton said.

Also, think about where vital business functions could be executed away from the standard location.

Business owners need to examine and understand their insurance policies, Moraton said.

“The best thing (small business owners) can do is to sit down with their insurance people and make sure they are covered one end to the other,” said Nancy Earp Salmon, whose parents, Herbert and Mary Earp, founded Earp’s Seafood Market in Raleigh, N.C.

Earp’s Seafood, which opened in 1968, was closed for nine months after it was hit by a tornado in April 2011. Salmon said the business survived and was able to retain most of its employees because owner Mary Earp had comprehensive insurance coverage.

After Hurricane Sandy, some owners thought they had business interruption coverage for power outages, but the fine print excluded power outages that didn’t occur on the property, Moraton said.

“So they really need to look at their policies and understand what is covered or not covered,” she said.

Once a disaster plan is established, business owners need to maintain it and share it with their employees at least once per year.

In 2009, Agility Recovery Solutions, a Charlotte, N.C.-based disaster recovery firm, hired a marketing group to survey 700 small and midsized U.S. businesses about their disaster recovery and continuity plans.

The survey found that in the previous two years, 52 percent of businesses experienced an unforeseen interruption that halted productivity.

About 82 percent of respondents indicated that they have disaster plans in place. But the survey pointed out that most businesses lack concrete actions that keep a business open. Only 28 percent of businesses had access to alternative office space, 41 percent had access to mobile office space, 54 percent could acquire temporary office equipment, and 57 percent had access to power generators.

Parker and Otis didn’t have a formal disaster plan, Brody said, but the business did have insurance and a hands-on agent who encouraged Brody to frequently meet to discuss her policy, keep the business’ information backed up and take steps to prepare for a disaster.

Brody had her annual policy reviewed about three months before the fire, and had gone over figures such as how much coverage Parker and Otis would need if it burned to the ground.

Brody ballparked the numbers, she said, thinking the figures she came up with would cover a six-month loss of business. But she realized post-fire that she was covered for only two and a half months.

Understanding how insurance coverage will support a business’s disaster recovery plan is key to survival, said Jim Sorgi, president of The Sorgi Insurance Agency in Durham and Brody’s insurance agent.

The fire at Parker and Otis was caused by a faulty overhead light fixture. The area in the store near the fire was charred black, and everything else was covered in ash and water from the sprinklers. Initially, Brody thought they could rebound quickly.

“We are closed for a week anyway, and we will just clean up this and move on,” Brody said.

The morning after the fire, the recovery challenges became clear.

Floors had to be replaced due to standing water. Most of the items in the store were removed or thrown away.

“It was like putting Parker and Otis together, but doing it in three-and-a-half weeks,” Brody said.

The business’ computer data had been backed up and was accessible, but Brody had to come up with a plan to rebuild under the stress of the moment, she said.

Brody targeted the Friday before Valentine’s Day as the reopening date, and worked backwards from there.

Brody made a list of improvements she wanted to make while the store was closed, including renovations to the layout. Employees, who continued to get paid, worked out of Brody’s living room, testing new recipes and making new shelf signs.

Brody said they made it through with help and support from many different people.

Suppliers rushed orders for inventory and fixtures, and hundreds posted encouraging messages on the store’s Facebook page.

“I really feel like Durham was cheering us on to get back open,” she said.

© 2014 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Reader poll

Previous Polls »

Want to share your opinion? Post your comments here »