Page 99 - 914INC - Q1 - 2013

disaster, says Thomas Morley, regional director of Westchester’s Small Business Development Center. “Maybe the business was struggling beforehand and that’s sort of the death blow for them, the natural disaster,” he says. “There are folks who simply decide they can’t deal with it any- more, and they just load up and move on.”
But other companies that don’t survive are stable—that is, until a disaster forces them to close down for a few days. “It starts with your customers’ perception
of you,” explains Gregory Tellone, chief executive officer at Continuity Centers,
a disaster-recovery consultancy with a branch in Chappaqua. “If your lights are out, your phones are down, and your computers are down, that reduces their trust in you as their supplier, and if you can’t deliver what they are buying from you, they will call your competitor who
is five miles away who has power.” That explains why a study conducted by the Small Business Administration shows that 80 percent of small firms that are closed for five to 10 days after a natural disaster go out of business within the year. (Larger companies, with much deeper pockets, have the funds to survive these crises and aren’t as vulnerable).
Of course, it doesn’t have to be this way. That’s why there’s business continu- ity planning. That’s what businesses call taking actions that will keep their com- pany functioning in the face of adversity, and the practice first became a hot topic after the September 11th terrorist attacks when “Congress told the financial sector that they have to transact business and keep the economic lifeline of the country pumping,” says Jim Parker, director of the American Red Cross for the greater New York region.
When the financial sector created the most “pristine, comprehensive, detailed, polished plans you ever want to see” to keep their businesses up and running, says Parker, “other industries started apply-
ing their tactics. A large motivating factor for this was the growth of technology.
The more a business used technology, the more money the company could make in a short amount of time. But that also meant that when technology wasn’t available— perhaps because of a power outage—the company lost more money. “As technol- ogy speeds up the way people think and their ability to work, it makes them more vulnerable,” says Tellone. This means that preparing for a disaster is the “difference between winning and losing,” he says.
Now, especially after the recent mega- storms, there is an abundance of informa- tion for companies seeking help with their
business continuity plans. New York has a Contingency Planning Exchange, where business leaders discuss ideas for emer- gency management and planning with one another. The Red Cross and the Small Business Association give free seminars at community centers on the topic. For more individualized advice, firms can hire experts from financial institutions or consultancies such as Continuity Centers in Chappaqua. Other businesses, such as the DoubleTree by Hilton Hotel, ask their
insurance agents for guidance. A flash flood had caught the hotel in Tarrytown off guard in June 2005, when a tiny creek overflowed into the hotel, leaving the establishment with a multi-million-dollar cleanup bill. “No one anticipated it, and it could have been prevented had people been keeping an eye on that little thirty inches of water,” says hotel General Manager Richard Friedman. But he’s found his insurance agents quite helpful. “They’ll do an inspec- tion of the property and tell you what they think should be addressed.”
The general process of preparing for a natural disaster is simple: First, companies decide which functions are critical for their business. Then, they create a Plan B and a Plan C to ensure each function gets done even if a natural disaster gets in the way.
For example, let’s assume a lawyer’s most essential function is to communicate with clients and judges. To do that, he or she needs access to email, a phone, and important documents about individual cases. So what happens when the power goes out and the lawyer no longer has an Internet connection or a working phone line? Or a big flood destroys the hard copy of a client’s casework or the computer sys- tem that houses the electronic copy?
“There are a number of simple steps people can take to be prepared for disas- ters,” says Morley. In this case, prepara- tions could include ensuring that the law- yer has a smartphone (with extra external batteries) that is connected to a work email and updated with all contacts, and a USB flash drive attached to his keychain that holds important client documents. The lawyer can also invest in battery backup
in his or her office that will run computers long enough to shut them down without any loss of data. And if the firm has deep enough pockets, it can also take more com-
plex steps, such as investing in a generator, making arrangements to work in an offsite location in case he or she can’t get into the office, and setting up remote servers so all data is stored in an additional location. If this all seems like common sense, it is. “It’s all about making sure you have what you need,” says Tellone.
For other industries, their equipment or venue, rather than their services or actions, is what needs to be protected. That is why, after the 2005 floods, the
DoubleTree installed a system of flood- gates that can be activated before any storm. “The moment we anticipate any kind of wave, we have an internal alert and everybody knows the areas they have to keep an eye on,” says Friedman. “It’s not rocket science, but we have six flood- gates that basically seal off a hallway or an area of the hotel.” Similarly, the managers of Velocity Sports Performance rent a truck and move all their expensive equipment away from potential flood sites if a hur- ricane is nearing.
There is also the issue of what happens if preparations prove inadequate, and the company needs money to replace its equip- ment, rebuild its venue, or even relocate. Insurance policies and small business loans provide for a lot of these losses, but they require documentation such as tax returns and financial statements, which “can’t be under four feet of water,” says Morley. Companies should take regular photo- graphs of all merchandise and store offsite copies of insurance policies and lists of inventories. If a company carries business interruption insurance, it also needs records to support lost sales figures, continuing fixed costs, and extra expenses related to the storm. Business leaders should also read their policy closely to “know what it
is that you are insuring and what it is that you can reasonably expect,” says Morley.
All the experts, however, agree that the most important preparation is to get staff ready for a disaster. “What the disruptions that people in small companies over-
look sometimes is with personnel,” says Morley. “If you only have three people in a business—if one person has something unfortunate happen to them, that’s thirty percent of your workforce—how are
you going to replace that?” Tellone recommends cross-training staff
A recent study claims 25 percent of companies don’t survive catastrophes.
westchestermagazine.com
➔
97