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Action Stations! Can Your Business Survive a Natural or Manmade Disaster?

by Dan on October 10, 2011

Chances are you’ve read some pretty nasty stories lately: earthquakes, hurricanes, typhoons, tornados, tsunamis, terrorism, excessive snowfall. The list is almost endless, but everyone of the aforementioned emergencies sends hundreds of businesses into a downward spiral from which some may never recover.

The art of minimizing the impact of an emergency is an easy one to master. This leaves no excuses, then, for failing to have a contingency plan. Regardless of where you are in the world, a minor or major disaster could easily affect you. I recently attended a seminar where it was claimed that 40% of businesses will not re-open after a large scale disaster. The scale of the disaster that resulted in this worryingly high percentage was not disclosed, but it’s a near certainty that any disaster big enough to force closure will have some repercussions. The key thing to remember here is that ‘closure’ doesn’t necessarily mean the disaster forced the closure of your business, it could mean that it forced the closure of a business that you rely upon to operate: support networks, suppliers, couriers, etc.

So, with this in mind, how do you make sure you’re well-prepared and resilient when disaster strikes?

Simple, here’s a fortunate check list of things you need to have done!

Rule 1:

Where possible (and it’s usually always possible) establish relations with alternative suppliers. Even if they’re far more expensive than your current suppliers, keep them as a back-up. Remember, even if you have to cut your margins for a few weeks, using a different supplier allows you to maintain your customer base and will distinguish from the competition as reliable. Once your original supplier resumes operations, return to them and let your margins return to normal.

Rule 2:

Such a simple one, but make sure that all essential information is backed-up in more than one place. If that means keeping information at home (on a hard drive or on paper) then so be it. At least that way if your offices burn down you’ll have something to fall back on.

Rule 3:

Make sure you have insurance (so painfully obvious I almost don’t think I should write this, but there are too many stories of businesses going under because they’re not properly covered.)

Rule 4:

Develop an ‘Emergency Strategy’ plan: have a list of all local employees that should be make it in whatever the weather, make sure you have emergency contact numbers for technicians, plumbers, electricians, suppliers, etc.; have spare equipment (even if it’s only the bare necessary to run minor operations) and have a policy of communication towards customers/clients (know what you’ll tell them and how you’ll tell them).

Rule 5:

Keep on top of developments around the world, particularly if you rely on suppliers that are foreign or use foreign parts. It’s wise to remember the old adage that a butterfly flapping its wings can cause a hurricane half-way around the world. If you notice there has been a disaster somewhere, make sure you know it won’t affect you. Remember, the disaster need only affect your supplier’s supplier and you’ll be in trouble.

Rule 6: Keep enough cash in the bank to see a disaster through. The best piece of advice I was ever given was to reinvest in the business before I invested in myself. The Ferrari can wait until you’ve got enough money in the bank to get yourself clear of a few tiny obstacles, or one really big one. Obstacles will come, you can be sure of that.

Rule 7:

Don’t burn any bridges: regardless of how successful you are, always aim to please. You never know when a relationship can come in handy.

Rule 8:

The above statement also applies to your employees. Accommodate for them and they will (probably) do the same for you. But don’t expect someone to come in on their day off if you’ve denied every request they’ve ever made to you.

That’s a strategy in a nutshell. Obviously it’s a bit more complex than that, but I thought I’d keep it short and sweet!

Hopefully you never have to face a disaster, but it’s an unfortunate fact that many of us will at some point. Still, I thought I could do something to mitigate the threat of disaster!

Sincerely,

Dan Little.

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