Managing your business to minimize disruption : a guide for small businesses in North Carolina.

              Managing
Your Business
to Minimize
Disruption
A Guide for Small Businesses
in North Carolina
Managing Your Business
to Minimize Disruption:
A Guide for Small Businesses in North Carolina
As a small business owner, you have invested considerable time and resources into making your business
work. Through careful planning and hard work, you have an established customer base for your prod-ucts
and services. Revenues are steadily increasing. You are optimistic about your future.
Yet, as the experience of Hurricane Floyd on September 15-16, 1999 reminds us, small businesses are vul-nerable
to natural disasters. Following Floyd, an estimated 20,000 small businesses – manufacturers, retail-ers,
finance and insurance companies, tourism-dependent businesses, farmers, and others – sustained dam-age.
A survey undertaken by East Carolina University following Floyd found that nearly 75 percent of the
small businesses in the 44 counties most impacted by the hurricane were forced to temporarily close their
doors, due either to direct damages to their facilities, or because of road closures,
power outages, and other indirect impacts.
The Good News – A Small Investment of Your Time Can Minimize Business
Disruption Following a Disaster
While small businesses continue to suffer a disproportionate share of losses from
disasters, there is good news. As experience clearly shows – small businesses can
reduce their exposure to the effects of natural disasters by taking basic planning
and preparedness steps before the disaster. Losses can be reduced, disruption can
be shortened, and recovery time can be accelerated.
Managing Your Business to Minimize Disruption: A Guide for Small Businesses in
North Carolina is written for small business owners, the sector of North Carolina’s
economy that is most vulnerable to disasters, yet with the least time and fewest
resources to devote to disaster preparedness and risk management.
The underlying premise of this Guide is that the consequences of natural hazards
– and the problems faced by small business owners – can be anticipated. By
preparing your business for “unplanned disruptions,“ you can significantly
reduce your “downtime” following a major disaster. These preparations may
mean the difference in staying in business or closing down.
The Guide outlines a series of ten practical, cost-effective steps that small business owners can take to mini-mize
disruption to their livelihoods following a disaster. By reviewing each step, you will have a much better
idea of what your risk is, what parts of your business need to be protected, and practical steps that can be taken
to ensure that you stay in business when the next disaster occurs. Detailed guidance on business prepared-ness
measures can be found on the website of the North Carolina Emergency Management Division
(NCEMD) at www.ncem.org.
Hurricane Storm Surge Inundation
Map for New Hanover County
(source:NOAA)
FPO - need map in high
resoultion
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1What is Your Risk?
The first step in managing your business to min-imize
disruption is to assess your risk from nat-ural
and technological hazards. What are the haz-ards
that your community and business face –
including tornadoes, hurricanes, floods, wildfires,
severe winter storms, earthquakes, landslides,
fires and hazardous materials accidents? What
are the probabilities of each of these hazards
occurring in your community over the next five
years and beyond, and what are the likely conse-quences?
This information, which is available from the
NCEMD and your local emergency management
agency, can provide a snapshot of your potential
risk from natural hazards. When combined with
the business impact analysis (step 2), the risk
analysis enables you to anticipate potential prob-lems,
their impact, and the likelihood that they
may occur. Armed with this information, you can
examine a number of options for protecting your
company and its employees from natural disas-ters.
Information about your risk – including the prob-abilities
and consequences of potential hazards –
is also important in making decisions on whether
to: 1) absorb the risk, 2) attempt to reduce the risk,
or 3) transfer the risk (through insurance).
Undertake a Business Impact
Analysis
As a small business owner, you know what makes
your business operate smoothly and profitably. If
you are a retailer, or the owner of a business in the
ever-expanding service sector (e.g., finance, insur-ance,
real estate, restaurant, hotel) then the pro-tection
of your inventory and business records
may be most critical. As a farmer or owner of a
small manufacturing plant, you may have equip-ment
or machinery that is critical to the success of
your business.
The purpose of a business impact analysis is to
identify the parts of your business that need to be
up and running as soon as possible in the after-math
of a disaster. There are many considera-tions
that should be addressed in analyzing your
company’s vital functions and resources: electri-cal
systems, computers, voice and data communi-cations,
customer information, billing operations,
inventory, and equipment.
Check Your Insurance Coverage
A survey of businesses following Hurricane Floyd
determined that while most businesses carried
liability, property and casualty, and fire insurance,
almost one of every six small businesses reported
having none. As a result, many businesses were
under insured, and in some instances were forced
to close.
A review of your insurance coverage is another
important step that you can take to protect your
business investment. The insurance should be
tailored to the individual business and take into
consideration not only property damage, but loss
of revenues and extra expenses that occur when
business is halted by a disaster.
The first step is to contact your insurance repre-sentative,
and discuss the following:
The need for a physical inventory of your com-pany’s
assets, to insure you can substantiate the
value of your assets.
The adequacy of your coverage, including
liability, property and casualty, fire, and flood
insurance.
The need to
purchase business
income or extra ex-pense
insurance, par-ticularly.
If your com-pany
is located in an
area that has experi-enced
two or more
natural disasters in
the past three years.
Appropriate de-ductibles
given your
level of risk.
For more detailed
guidance on your
insurance needs,
check with your
insurance agent.
Protect Your Building and Contents
Now that you have a better idea of your risk from
natural hazards, and the critical business func-tions
that need to be protected, it is important to
determine how well your particular structure and
its contents (inventory, equipment, etc.) can with-stand
these hazards, including high winds, flood-ing,
and ground shaking. A partial list of useful
tips for business owners are outlined in below.
For a more comprehensive list of protective
actions that business owners can take for floods,
hurricanes, tornadoes, earthquake, and fire, refer
to www.ncem.org
Protect Your Vital Records
One of the most important – and least costly –
steps that you can take as a small business
owner is to protect your business records. These
records – information stored on paper and com-puter
– can be classified as “useful,” “important”
or “vital.” Useful records contain documents
that are easily recreated. Important records can
be recreated with little effort and should be
stored on both the hard drive and on back-up
diskettes in the office, as well as at an off-site
location. Vital records – which include financial
records, strategic plans, personnel information,
building plans, the lease, insurance records,
blueprints, inventory warranties, and research
data – should be stored at an off-site location, at
least 50 miles away.
Flood maps, such as this one for Boone, can be helpful to business
owners and others in identifying flood-prone areas of the community.
As a business owner, ask yourself the
following questions:
What are your most critical and time sensitive
business functions?
What business functions are you most depen-dent
on to stay in business?
What specialized equipment is used in your
business and how is it used?
How long could your business function with-out
this equipment?
What special procedures would be necessary
if computer systems are not available?
What functions can be performed from the
homes of employees who can dial into the
computer system?
What would be the lost revenue for your busi-ness
if you were shut down for one day, a
week, or an entire revenue period? What are
possible contractual fines or penalties?
What are your dependencies on third party
vendors, suppliers, and service providers?
What are your business recovery priorities?
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In protecting your vital business records, keep
your inventory list current and make a photo-graphic
or videotaped record of your inventory.
Also, make sure computer hardware and software
licenses are up to date, and that you have arranged
with vendors to replace or repair your computer
system immediately.
Protect Yourself,Your Employees,
and Your Customers
Every business should have a plan for protecting
employees and customers in the event of a major
flood, earthquake, tornado, hurricane or other dis-aster.
Make sure that your employees know what
to do when there is a “watch” or “warning” for tor-nadoes,
hurricanes, and floods.
At a minimum, keep the following items on hand:
First aid kit
Battery-operated NOAA weather radio that is
portable
List of emergency contact numbers
Flashlights with extra batteries
Tool kit including gloves, wrench and crowbar
Waterproof plastic bags
Small supply of bottled water
Non-electric can opener
Cash and credit cards
Any essential medicines
Three day supply of food and medicine
Taking Care of Employees.
One of the hardest hit communities during Floyd
was the town of Greenville, the home of the Grady-
White Boat Company. When the company was cut
off from the rest of the community after the Tar
River crested at over 20 feet, the company presi-dent
turned his full attention to his employees,
many of whom lost their homes and transporta-tion
during the storm. Acknowledging that pro-duction
would not resume at “full throttle” until
the needs of employees were addressed, priority
was given to a company-wide self-help initiative
that focused on three objectives: providing trans-portation
to employees, arranging for housing of
the displaced, and addressing the immediate
needs of workers (including short-term financial).
As a result of the spontaneous company-driven
relief effort, the Grady-White Boat Company was
able to resume business operations quickly.
Equally important, the disaster has served as the
impetus in a new effort to launch a county-wide
business vulnerability assessment project. The
premise is that with advances in risk assessment
tools, it is possible to anticipate the consequences
of natural disasters, and take necessary measures
to protect employees and customers alike.
Anticipate Interruptions from Your
Suppliers & Other Indirect Impacts
One of the lessons from Floyd and other recent
major natural disasters in North Carolina is that
business disruption can be caused as much by
indirect impacts, such as road closures, loss of
water and power supply, and the inability of sup-pliers
to deliver goods and services to your busi-ness.
Following Floyd, road closures had the
most prolonged impacts on businesses, followed
by loss of water and electric power (FEMA).
During the past decade, small businesses in
North Carolina have been closed – in some
instances for a week or more – due to flash floods,
storm surge, hurricanes, snowstorms, and torna-does.
In 1996, the winds and storm surge
from Hurricane Fran caused extensive
damage to the Masonboro Marina,
which was built in the 1970’s to accom-modate
over 100 boat slips. Following
Fran, the owner of the marina resolved
to rebuild a sus-tainable
marina
that would
withstand the
“worst-case sce-nario”
hurricane
event. With an
SBA loan, the
owner invested
approximately
$75,000 on miti-gation
measures in rebuilding the mari-na.
Cement floating docks were
installed. The new clubhouse was
anchored by pilings that extended from
the roof-top to 20 feet in the ground.
The air conditioner and heat pump
were elevated. Other
structural and non-struc-tural
mitigation measures
were also carried out.
The marina was re-opened
on June 23, 1999.
Three months later,
Hurricane Floyd struck.
Water levels were approxi-mately
2 feet below the
13-foot level experi-enced
in Fran. This
time, the building and
supporting infrastruc-ture
performed as
expected. The concrete
dock and the equip-ment
that was secured
in the marina did not
sustain any damage.
The elevated utilities performed well,
and the hurricane shutters prevented
any interior damage. Most importantly,
there was no business interruption as a
result of a major hurricane event. From
a business standpoint, this is critical.
The bottom line, the investment of
$75,000 in mitigation measures was
recouped in one disaster – Hurricane
Floyd. Losses were avoided, business
continuity was enhanced, and the own-ers
of the marina enjoyed a greater
peace of mind – before, during and
after the event.
Mitigation actions protect small business from major damage
Marina after
hurricane
Elevated air
conditioning
and heat pump
Hurricanes and Windstorms
• Protect windows and doors against wind-borne
debris.
• Determine if roof and edge flashing are watertight
• In the case of a hurricane, prepare for possible water
infiltration by covering computers,
• Make sure your employees know how to safely shut
off your building’s utilities.
• Anchor any loose objects that are outside.
Flooding
• Determine whether you are in a flood zone and
what type it is.Determine the base flood elevation
(BFE) in your area to see if floods will affect your
business.
• If you have below-grade floors which are below the
BFE, install and maintain a sump pump.
• Raise all utilities and equipment, such as the water
heater and electric wiring above the BFE.
• Store inventory in areas above the BFE.
• Use areas that are below the BFE for parking,
storage, and access.
Sample Protective Actions for Your Building & Its Contents
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For these reasons, it is important to anticipate
interruptions, and to develop contingency plans
for these eventualities. There are three important
steps that you should take to minimize business
disruption following a major disaster.
Immediately After a Disaster
Sometime, disasters or major emergencies will
occur with little or no warning. For these rea-sons,
it is important to have a plan of action in
place for the post-disaster phase, when your
building has been stabilized and the damage has
been assessed. At the very least, the action plan
should include the names and phone numbers of
key individuals and organizations that you need
to contact immediately following a disaster,
including your:
insurance carrier
suppliers
creditors
employees and customers
media contacts
utility companies
local emergency management agency
An action plan should also include emergency
steps, including:
• procedures for shutting off water, gas, and elec-tricity
if authorities instruct you to do so
• supplies and materials to take with you should
you be instructed to evacuate your business
and community
The ability of busi-ness
to recover fol-lowing
a disaster is
often dependent on
the condition of
roads, bridges and
other infrastructure
that support day-to-day
operations.
Minimizing Business
Disruption Following a Disaster
– Three Important Steps:
Step One: Maintain a list of your business
partners and major suppliers that you need
to contact in the event a disaster, including
their names, addresses, email, contact name,
account numbers, and materials or services
provided.
Step Two: Request information from your
suppliers on what measures they have taken
to “keep you supplied”in the event of a disas-ter
– as reflected in their contingency plans.
Step Three: Maintain a list of“backup” com-panies
that can provide your business with
materials, supplies, and services in the event
that your primary supplier or vendor is
impacted by a disaster.
This cement factory near Kinston was
temporarily out of business following
Floyd. As a small business owner, it is
important to maintain a list of back-up
suppliers in case your primary supplier –
in this example a cement company – is
impacted by a disaster.
Prepare a Business Relocation Plan
In areas of the state that have experienced repeti-tive
floods and other disasters during the past
decade, it is important to identify alternate sites
for business relocation following a disaster. The
local planning office (or other appropriate organi-zation)
should take the lead role in working with
business organizations – including the chamber
of commerce – to identify potential locations for
temporary office space for businesses that are dis-placed
due to disasters.
For temporary business locations and sites, the
planning office or local chamber of commerce
should:
• Take a pre-disaster inventory of all commercial
buildings in the community, including owner-ship,
value, type of structure, occupancy, and the
nature of the business
• Develop a list of viable alternate business loca-tions/
sites that would be available after a disas-ter
• Develop a temporary facilities plan to house dis-placed
businesses
• Construct a building to house small businesses
displaced by the disaster and serve as a business
development “incubator”
• Consider long-term uses for the building
• Assist in relocating businesses displaced by the
disaster
• Identify square footage needs and sitting
options or other space options, including relo-catables.
Promote Business Preparedness
in Your Community
The underlying themes of this Guide are: 1) the
consequences of natural hazards – and the prob-lems
faced by small business owners – can be
anticipated; 2) by taking preparedness and mitiga-tion
measures now, you can significantly reduce
your exposure and “downtime” following a disas-ter;
and 3) many of steps that are outlined in this
Guide entail relatively little cost, other than your
time.
The final step in Managing Your Business to
Minimize Disruption is in many ways the most
important – to promote business preparedness in
your community. With the ten steps that are out-lined
in the Guide as a starting point, there are
several actions you can take, including:
Prioritize the steps that need to be taken for
your business, and the resources you will need,
including technical assistance.
Approach your Small Business partners – some
of whom are outlined below - to initiate a step-by-
step business preparedness program in your
community.
Join Project Impact, or other community-based
program to promote disaster preparedness.
As A Small Business Owner
Identify Priorities, Assess Costs, and Take Your First Steps…
YOUR BUSINESS PREPAREDNESS MEASURES COST PRIORITY PARTNERS
1 Analyze Your Risk None NCEMD, Local EMA,FEMA
2 Undertake Business Impact Analysis None CPAC,NCEMD
3 Check Your Insurance None Local agent, SBA
4 Protect Your Building & Contents > $500 Blue Sky, Local EMA
5 Protect Your Vital Records < $500 SBTDC, EMA, CPAC
6 Protect Yourself & Employees < $500 Local EMA, Blue Sky
7 Plan for Indirect Impacts None Local EMA,NCDCA
8 Develop Post-Disaster Checklist None Local EMA,NCEMD
9 Prepare a Business Relocation Plan None Local EMA, SBA
10 Promote Business Preparedness None Local EMA,NCEMD
Network of Cooperating Organizations
Blue Sky Foundation of North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .www.BlueSky-Foundation.com
Contingency Planning Association of the Carolinas (CPAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .www.cpaccarolinas.org
Federal Emergency Mangement Agency (FEMA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .www.FEMA.gov
North Carolina Emergency Management Division (NCEMD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .www.ncemd.org
North Carolina Division of Community Assistance (NCDCA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .www.ncdca.org
Small Business Administration (SBA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .www.SmallBusiness.gov
Small Business and Technology Development Center (SBTDC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .www.SBTDC.org
Managing Your Business to Minimize Disruption
was prepared by the North Carolina Emergency
Management Division, in cooperation with the Blue
Sky Foundation, Contingency Planning Association
of the Carolinas, Small Business and Technology
Development Center, and the New Hanover County
Emergency Management Agency.
For additional information, contact:
North Carolina Emergency Management Division
1830-B Tillery Place
Raleigh, North Carolina 27604
(919) 715-8000
www.ncem.org