How does a business recover after a disaster?
There’s no single formula for a small business to recover from a hurricane or other natural disaster. Many variables determine how well a company can rebound, including the severity of the disaster, the extent of the damage, the type of business it is and how well-prepared it was.
Perhaps the most important factor is money: Does a small business have adequate insurance and/or cash reserves to pay for cleanup and rebuilding, and, if it’s unable to operate, to pay its expenses? The Federal Emergency Management Agency estimates that 40 percent of companies fail after a disaster. Businesses are particularly at risk during hurricanes because many can’t afford expensive flood insurance, which is sold separately from standard commercial insurance coverage. Many owners don’t buy it because they believe they’re in an area unlikely to flood.
If a company’s premises were destroyed or heavily damaged to the point where it couldn’t be used, its recovery will be delayed until it can rebuild. If the surrounding area is heavily damaged, it can be hard to hire contractors. Building materials may be scarce because of the soaring demand from homeowners and other businesses.
Manufacturers can have a prolonged recovery if equipment has been damaged — water, especially if it is salt water, can destroy machinery or leave it covered in rust. Madelaine Chocolates, located near the ocean in New York City’s Rockaway section, was shut for 10 months after Superstorm Sandy in 2012. When the company reopened, it was able to resume only partial production while more repairs were being done on its equipment.
Another potential issue: Is the disaster area accessible? Floods can damage roads and bridges, and earthquakes like the one that hit the Los Angeles area in 1994 can destroy highways and bridges.
Retailers have more than a cleanup to deal with. If merchandise is ruined, that means lost sales until the place is cleaned up and replacements arrive.
The companies likely to have the easiest transition back are those that made arrangements so they could keep operating. If employees can telecommute and the company uses backup computer systems located miles away, or uses the cloud to store data, they often can keep working. A bank in Vermont operated out of a trailer for seven months while the branch was rebuilt following Tropical Storm Irene in 2011.
The flooding caused by Hurricane Katrina in New Orleans and its suburbs left many small businesses unable to operate for weeks or months because employees who had evacuated had lost their homes and could not return to the area. Stores, restaurants and other businesses that weren’t damaged, including those in the city’s famed French Quarter, nonetheless had a long recovery because the tourism industry was affected for years after Katrina.
There’s plenty of information online to help business owners get their companies ready for a hurricane or other disaster. They can learn how to create a long-term plan, or what they’d need to do in a hurry.
In short, experts on disaster prep say a company’s first priority should be ensuring that employees are safe and can be located when the danger has passed. Business information should be protected — ideally backed up online with a company a long distance away from the disaster area. Any computer equipment that can be removed from the premises should be, and taken to a safe area.