Business Continuity Plan: How to Stay Open During a Natural Disaster

Every business owner should have a business continuity plan, which is a document that states how to keep the business running in the face of unforeseen events. Don’t let your business be part of the 25% statistic of businesses that must shut their doors forever in the wake of a natural disaster. Prepare by creating a business continuity plan.

This article is focused on how to keep your business running in the event of a natural disaster, such as a hurricane, flood, or earthquake. We are going to examine some things you need to consider, from how to secure both short-term and long-term funding and the practical steps you can take to keep the doors open.

Why and How to Keep Your Business Open During a Disaster

While it might not seem like it would matter whether you keep your business running in the days following a disaster, statistics show it’s important to take every step you can to keep your business functioning.

When it comes to mom-and-pop businesses in the United States, the average transaction amount per day is $400, and most of these businesses only have 26 days of cash reserves on hand. This means a disruption in business caused by a natural disaster can quickly put you in the negative.

Experts recommend the following natural disaster preparations be added to a business continuity plan for small business owners:

• Short-hand radio or walkie-talkie when cell phone carriers are down so you can communicate with employees
• A stash of potable water
• A line of credit because if ATMs shut down, even if you have cash, you can’t get to it
• Spend a few thousand dollars to invest in a generator in case of a loss of electricity
• Keep gas on hand for the generator in case gas stations are closed

In the first 90 days after a storm or other natural disaster occurs, when critical infrastructures or services are interrupted, it’s an especially important period to keep the doors open. Once the doors close, the chances you’ll reopen and restart business operations become slimmer. The precautions listed can mean the difference between keeping your business running and having to close it down permanently.

Create a Short-Term Financial Plan

Insurance and FEMA are available to help businesses in the wake of a disaster, but it’s important business owners take into account how long it takes to access relief funds. The window of when you should reopen your business can come and go while you wait for the money. Typically, small businesses don’t have much in the way of emergency cash funds, which is why timing of gaining relief funds is key. Accion Opportunity Fund helps inject capital—a precious amount of money at the right time—to save small businesses.

Since insurance money, FEMA, or other disaster recovery resources can take time to come through, it might be necessary to apply for financial resources made available through Accion Opportunity Fund that will enable your business to stay open in the near term. Accion Opportunity Fund loans are a “financial first-responder” when it comes to disasters that effect small businesses.

Of course, the scope of disasters varies. If your clientele and employees have been displaced because they can’t live there anymore, like in the case of flooding, obviously staying open in your current location isn’t necessarily advised. It’s important your employees and clients are kept safe, and financial resources can help provide shelter and basic necessities.

How to Get Funds in Case of Disaster

Accion Opportunity Fund is designed to meet the needs of people who are credit challenged. AOF’s underwriters look at the holistic business and personal picture to make sure you’ll be able to repay the loan and that it will help you build positive credit rather than winding up in debt.

How to Prepare Financially for a Disaster

It’s important to prepare your business for the unexpected by building your own financial reserve and establishing a line of credit well before disaster strikes. Understanding how you will survive financially in the wake of a disaster is an important part of your business continuity plan.

Saving up enough cash to cover your business’s operational expenses for a period of three months is essential. If it’s not possible to save that amount of cash, then get a line of credit, because you don’t want to look for capital after a storm. Get the three months of operations expenses as a line of credit so you can continue paying rent or other needs. That way you’ll have the liquidity when everyone else is scrambling to apply for credit. You need a line of credit or savings so you can bridge the 90 days when the insurance proceeds come in so you can mitigate and minimize the interruption.

How Insurance Can Help Keep Your Business Open Following a Disaster

Small business owners should invest in some form of insurance to enable you to help your business recover after a disaster. Insurance can help with the really expensive downsides. Talk to a broker at a company such as The Hartford about all the right insurance coverages so you can cover the loss of business as well as physical assets.

With some smart strategic disaster planning, cash savings, insurance, and access to capital, your business can keep going in the face of a natural disaster. Start creating your business continuity plan today.