It’s a nightmare and worst-case scenario. A natural disaster like a fire or flood can be catastrophic for a small business. While it’s something every business owner would rather not think about, it’s far better to make sure your business is prepared than one day be out of options.
Columbus-based businesses have been victim to devastating natural disasters. A 2009 fire demolished a building housing over 20 Grandview establishments including Accent on Nature and the Candle Lab, while an April 2014 fire affected Gay Street shops Sugardaddy’s and Robert Mason.
Steve Weaver of the Candle Lab and Robert Grimmett of Robert Mason share their first-hand experience of recovering after a fire, and lend advice on how your business can be better prepared.
Understand Your Insurance Policy
The first step in both preparedness and aftermath – have an in-depth understanding of your insurance policy. This means finding an agent and a company you trust, preferably one with other small business clients, and spending face-time with your agent to make sure you have the coverage you need and an understanding what your policy covers.
“This should happen in the beginning and should be revisited at least once per year as your business changes,” Weaver says. “Insurance can be expensive and you feel like you’re paying for something you’re never going to use, but when you need it and its not sufficient to overcome the disaster at hand, it’s usually a fatal blow to a business.”
Business income insurance and business continuation insurance are the two most common types. Grimmett outlines the very important differences between the two types.
Business income insurance takes the money you would have been profiting and pays you up to a certain amount over time. Business continuation insurance is more expansive, and covers more of the expenses side – rent, employee pay, etc.
“Business continuation insurance is critical,” Grimmett says.
Weaver watched other businesses discover the difference when it was too late.
“They made the mistake of insuring just the cost of the fixtures and items in their store, but that amount doesn’t include the cost of building out their store,” he says.
Grimmett points out that insuring the cost of items in your store often varies by season, especially for retailers. Always make sure your inventory is up to date and update your insurance plan accordingly. He says even a monthly check-in and update to your policy isn’t unreasonable.
And as Weaver says, any other advice won’t matter if you don’t have the right kind of insurance.
How else can you prepare?
Insurance is obviously the biggest factor in preparing for and rebuilding from a disaster, but a few additional steps can also smooth the recovery process.
Disaster and other mishaps will likely occur at some point – have a a basic plan for your business should you face an emergency.
“Having even a rough sketch of an emergency plan can help you avoid panic mode,” Weaver says. “This should include flood and fires, loss of a key employee, disability or illness of an owner or partner, major construction to roads or buildings that dramatically impacts your business, etc.”
Grimmett also recommends making sure there are provisions in your lease in case something happens. “If you are not able to operate out of that building any longer, how do you relieve yourself of the burden of that lease?” he asks.
And finally, fire, smoke and water will wreak havoc on any computer or technology equipment. Back everything up. Back up all of your financial data, connect your point of sale system to the cloud, etc. The same can be said of important documents. Safeguard them and know where they are kept.
What happens now?
You’ve done all you can to prepare, but disaster strikes. What happens now?
The initial inclination will likely be panic.
“Its hard to know how you will handle something like this, but I find the owners and managers that can roll with the punches and keep moving usually last much longer,” Weaver says.
Grimmett says there are two calls you are going to want to make right away – one to your lawyer and one to your insurance agent.
“They immediately become your best friend,” he says.
It will be pertinent to start documenting everything that is going on. What are people saying? You will have to go back in to your space, and it will likely be overwhelming to see the damage. Take photos of everything (and insurance likely will as well).
As soon as safely possible, remove all valuables like cash and any insurance documents. Grimmettt reminds business owners to secure their space and check on it afterwards to make sure everything is still secure.
The insurance process will vary by carrier and type of businesses. An adjuster will view the space and there may be meetings between insurance agents if multiple businesses are involved in the disaster. Speak with your lawyer and understand the protocol that you are required to follow.
Once insurance is sorted out, it’s time to start working as fast and as hard as possible to rebuild.
“My main advice will sound harsh, but it still rings true – don’t spend time feeling sorry for yourself or whining about it on social media,” Weaver says. “Get to work on what comes next, keep your customers, suppliers and your staff informed, and keep a close watch on the budget. There is no substitute for hard work and a sense of urgency.”
Both also recommend having a PR plan to help tell the story of your recovery.
While it’s something neither would ever wish for, both Grimmett and Weaver have found silver linings from their experiences.
It was a speedy recovery for Candle Lab.
“Given the size and scope of the fire, we knew they would have to demolish and rebuild the building, and it would take more than a year under the best circumstances,” Weaver says. “We didn’t feel like we could be out of business for that long in that community, so we went looking for a new space in the same neighborhood the same afternoon as the fire. We found a new spot and were open a little over a month later just one block south of our former store.”
He says the experience showed him what the company of capable of when it came to stressful situations, and involving customers and staff in the rebuild process built even stronger bonds.
Community support has been one of the most surprising and rewarding aspects for Grimmett.
“You’re going to get a million phone calls and a million emails and a million text messages,” he says, calling it an emotional experience to be prepared for.
A larger Robert Mason store was always in the plans. With the rebuild, Grimmett will be taking a big step forward, expanding into something even bigger. He’s learned a lot about insurance and legal on the way – knowledge that will prove valuable in any future ventures.
The SBA also provides valuable resources to help prepare small businesses in case of disasters. Visit their website for interactive courses and webinars about how to plan your business continuity and disaster recovery strategy.
Photos via Sugardaddy’s.