Small Business Taxes & Management^TM--Copyright 2013, A/N Group, Inc.

Your business doesn't have to be in Florida to be affected by a hurricane or in California to be hit by an earthquake. No area of the country is safe from all disasters. And the government is saying you should be able to survive at least 3 days on your own. You could wait much longer for power or phone service to be restored. A widespread storm, or a series of storms, can quickly overtax the system. Talk to those people from New York, New Jersey and Long Island. Many were without power for 10 days; some much longer. Here are some thoughts.

UPS. Get a UPS (uninterruptable power supply) for all your critical computers. A UPS won't let you keep operating for long (between 5 and 40 minutes, depending on computer drain and battery capacity in the UPS), but it will let you back up your files and shut down correctly. Units are inexpensive (serviceable units can be had for less than $150) and you don't need a big one for a laptop. Got one but's its 5 years old? Replace the battery to be on the safe side.

External hard drive. Make a second backup of your files onto a portable hard drive. Again, they're cheap today and easy to use. Take the portable unit with you. You can use it to restore files to a laptop or another machine anywhere.

Get laptops. You don't need a top of the line machine. Slow is OK and, should you need additional capacity, you can get an external hard drive. Get one with enough memory and a substantial hard drive. You don't need one for every employee who has a computer, just those with critical applications. With the proper charger or inverter you can recharge them in your car.

Store archive backups in a safe place--not in the office. If you can't think of any local safe place (safe from flood, hurricane, etc.) make CDs or DVDs of your most critical files and send them to your grandmother in Montana or Vermont.

E-mail. Know how to get your e-mail from a second source in case you can't access your regular ISP.

What's the most critical part of your operation that you'd lose in a disaster? More than likely it's your electric. Consider getting a backup generator. While not cheap, it may earn its keep in a few days. Talk to an electrician about sizing the unit. Remember, you don't have to run all your equipment, and you may be able to run it in shifts. For example, you perform special chemical tests for industry. You've got 10 people in the lab. You don't have to keep all ten of them working at the same time. They may be able to work in 3 shifts. And you may be able to delay processing some samples. You may need only 30% of your usual requirements and still run efficiently. If you own a deli or restaurant, you want to be able to run the refrigerator and freezer; you may not need to run your air conditioning. You may also be able to rent a unit--but contract to do so well ahead of time. Don't think that's obvious. We know of a repair/rental shop that had one person spend half his time during Sandy telling callers no units were available and there was a backlog for service. And don't forget the fuel. Find out how much the unit takes per hour and plan accordingly. You may not be able to get gas in a disaster. Gas and diesel was very tough to come by for those people hit by Hurricane Sandy.

Don't depend on phone service. In the past phone service has been more reliable than electric for some technical reasons. First, the phone company doesn't shut off the lines when they're down--they're not dangerous like the electric lines. Second, most phone companies have backup batteries and generators at the central office. Third, they're often easier to repair. But times have changed. If your phone company is the local cable provider they may not have the ability to repair service. Cell phones are dependent on towers and the local electric lines (they usually have a limited amount of backup power). Cell phones may be out for some time and/or the system may be overburdened as a result of service outages in the landlines.

Employee telephone chain. You know how it works. Sue calls Fred and Harry, Fred calls Denise and Mike, etc. Works great in normal situations. But disasters are hardly normal. If Sue's phone is out and she can't get to Fred and Harry, the whole chain breaks down. Come up with a different approach. Make sure people have each other's home address. If you think that's too intrusive, make sure a number of trusted individuals have lists. You not only want to be able to inform people of the status of the business and get them back to work, you also want to be able to help them with personal problems if you can. An employee won't be able to concentrate on work if he's got no roof on his house or he can't find his kids.

Backup your website. If you have your own servers, you should have a backup approach. If you use a service provider, make sure they have a backup system. If you update your site regularly, make sure it contains a message warning users you may be down because of an impending disaster. Most users will understand if they know there could be a problem. Have a way of updating the site from another location. If you have the IP addresses, you can switch to a backup site quickly. Get good advice.

Make a list of critical areas. You can't plan for everything, but you can make a short list of the most critical things for your business. If you're a contractor, get your equipment to a safe location. You can't move a deli, bookstore, car dealership, etc., but you may be able to keep your inventory to a minimum, get some of your inventory off the lowest shelves, move some to a safe location, etc. Some items may survive some water damage; corn flakes not so much. Every business should make sure their records are safe. Reconstructing them can be very expensive and may not be covered or fully covered by insurance. If you're audited, the IRS may give you some sympathy, but you're still expected to have the records. Service businesses might do well to take care of their employees' needs. An employee won't be too productive if he's worried about his family or home.

Check your insurance coverage. Make sure you're covered (i.e., the policy hasn't lapsed; don't laugh) and that the coverage is adequate. More businesses (and individuals) need flood insurance than have it. Business interruption insurance will compensate you for lost profits, but full coverage can be pricey. You don't want to overinsure yourself. Check your policy. There have been changes. (That's especially true for homeowners' policies.)

Mitigate damages. There may be steps you can take to reduce the damages. Cut down the dead tree that's next to the shop. Or clear away brush from buildings in fire prone areas. Worried about flooding? One or more pumps may be worth the investment.

Make a plan. Virtually no plan will cover every possibility. That's fine. You've got to balance coverage and cost. But being without a plan is foolhardy. You can't designate one individual to make the plan. It's got to be done with a representative from each area of the business. Start out with the most critical areas and refine and expand the plan as you go. Decide on how far you should go (e.g., how many hours of staff time to spend) in trading planning, staffing, equipment costs, etc. against the potential costs of the disaster. Don't forget, the initial plan may cost more than you want to spend, but it can be updated cheaply and used for a number of years. And the cost of not having a plan may put you out of business. Chances are your employees will be critical. Know who has special skills (Fred knows his way around generators) and who may be unavailable (Sue can't get day care).

Outside advice. Talk to your insurance agent, the SBA, local fire department, etc. Commercial insurers may be able to help with written advice or you may be able to talk to an expert. But you've got to take action well in advance of a storm.

--Last Update 07/26/13