When Distaster Strikes

Nobody wants to think of or look forward to a disaster. Nobody likes to think about death but we cant avoid it either. I recently prepared an amended tax return for a client in Houston, TX that was affected by Hurricane Ike. The worst part of the damage to their property was a beach house that was uninsured. Hurricane Ike and Katrina did a lot of damage, took lives and displaced a lot people. All of this caused me to think about how a business copes with a disaster. To a business, a disaster doesn't have to be a catastrophic event like a hurricane or a an earthquake. A disaster could be a smaller event like a broken pipe. The real disaster is the damage the water does to your work area, inventory and computers. So, you arrive at the shop, office or workplace ready for a productive and profitable day only be shocked by your business literally floating away. It's great if you manufacture boats; not so good if you're a dry cleaner. What do you do? What's your plan? Who should you call? Can you recover?

Here's my point: It's a great idea to have insurance. Insurance will replace your stuff. It wont rebuild your business. I'm talking about a real plan. The kind of plan that you actually commit to paper. The kind of plan that you discuss with your employees (they'll have some great ideas, by the way).

Here's my list of stuff for your plan:

Off site Data Storage - the hardest asset to replace is your business data. It doesn't have to be that way. Off site data storage is easily obtained from hundreds of companies on the Internet. These companies offer simple server applications you can install to direct your computers to copy data at any frequency or time you wish to secured servers. When a disaster, like a broken pipe, puts you computers under water you'll have comfort knowing that your data can be retrieved quickly.

Insurance - If you don't have insurance, get some. If you do have insurance, ask your agent to review the policy to be certain that the policy is adequate to cover possible losses. While you're at it, reconsider your choice of deductibles too.

Call List - Keep a list of contact information and data for people and services that are critical for your recovery. The list should include:

• your insurance agent's phone number/policy numbers
• your banker's phone number/account numbers
• your credit card/merchant service phone number/account numbers
• user names and passwords for off site data storage, email and other websites.
  
• phone numbers for tradesmen like plumbers, electricians and carpenters.
• your real estate agent's phone number. You may need to move to a new location permanently or temporarily.
• contact information for your local unemployment office. Your state may have a team of specialists that deal with employees that have been affected by a disaster.

Shelter - identify possible locations that will accommodate your business if a disaster strikes.

Replacement - what vendors and resources will you contact to replace your equipment and inventory?

Contact - use your local phone company to keep the lines of communications open for your customers. Phone calls can be forwarded to a cell phone or voice mail where they receive a comforting voice that says "your call is important".

Billboard - use your website as a billboard to communicate with customers to keep them informed about your progress toward recovery. If you have a good service or product, your customers will come back to you. In some cases, your customers will even help you in the recovery process.

Experiencing a disaster is a terrible thing from which you can recover more quickly because you have a plan. Let's hope that it never happens and you never need the plan.

Thomas Hicks is a Certified Public Accountant working in Brewer, Maine. For more information or to contact Tom, click here.

Photo Credit: Dan The Webmaster, Adria Richards