The Best (and Necessary) Motto: Be Prepared

Disaster can strike! In recent months, I have been reminded a couple of times how disaster can strike our businesses. Over the holidays one of our franchise members had a break-in that caused a fire, burning the center to the ground. Disaster struck, but fortunately, the owner had good insurance coverage, a second location that allowed for minimal business interruption and a franchise network for support.

I also heard about a West Coast firm that recently had a devastating fire that destroyed the building and damaged neighboring buildings. The news article quoted a fire chief: "There’s chemicals, a lot of equipment, a lot of the back area was used for storage. Quite honestly, it was pretty cluttered.” This sounds like he was implying conditions existed that could have caused the fire. I wonder if that created any problems with the insurance company or with the neighbors. Some people love to sue, and insurance companies are notorious for trying to deny claims. I don’t know the outcome of this one.

Why should you care? “It will never happen to me” is a common thought. Well, these two examples prove that it can. And even though the odds may be low that it could happen to you, it can happen. Is it worth betting your business and the security of your family and employees on it? I am sure you will agree, it is not.

What should you do? First you should do a complete audit of your insurance coverage. Are you covered for business interruption? Do you have full coverage on the replacement value of your equipment, software, art files and furnishings? What about floods, earthquakes, tornados or “acts of God?”

If you rent or lease, is it clear what you are responsible for and what your landlord requires you to have? Does he/she cover your tenant finish or do you? What do your equipment leases say about insurance coverage? Most likely, it’s your responsibility.

If you own your own building, do you have replacement coverage indexed for inflation? Are you protected if your neighbors are affected or for liability if they come after you? You should also be sure all of your computer files are being backed up and stored offsite or in the Cloud. Have you tested your backups by doing a “restore” to see if you are really backing up appropriately? You don’t know for sure unless you check.

Do you have a written disaster recovery plan? What would you do if the worst happened? How could you get back in business within a few days? Who would service your customers or produce jobs for you in the meantime? From where could you operate? How will your employees be paid? Think of all the questions that would come up, find the answers and put it in writing. Then, KEEP IT IN A SECURE PLACE EITHER OFFSITE OR IN A LOCKED, FIREPROOF SAFE.

You get run over by a truck! What would happen to the business? What would be the recovery plan for your survivors? Most of us have not given this enough thought. Why not address this with your family and key employees...and put a plan in writing. We just got the sad news of one of our franchise members having a fatal heart attack, and he was only in his 50s. Yes, it could happen to you.

It should be common business sense to have a disaster recovery plan and an annual review of all the items mentioned above. If you don’t, it’s just sensible to do it now.