No matter what line of work you're in, business disasters happen. Here's what to do when they happen to you.
It's 4:30 in the morning. You're sleeping comfortably, it's your day off, and you've made it a point to not even think about your business. Nope. Whenever you wake up, the day is all about relaxation and enjoying some well-deserved time watching the playoff game. Then the phone rings.
It's never good when your phone rings at that inhumane hour, but when you own a business, disasters warrant a call. It turns out that this particular disaster is no big deal; the smoke from a nearby brush fire triggered your alarm, but your business is fine.
Nonetheless, you make it a point to get together with your team on Monday morning and discuss your strategy for dealing with any future business disasters that could do critical damage to your company.
Steps to Surviving Business Disasters
There is one thing all business disasters have in common: you need a recovery plan in place before you have a crisis. From a computer hack to a loss of physical property or the death of an owner, if you prepare your business ahead of time, that business has a much greater chance of surviving.
If you do face a disaster, follow these steps to take care of the situation as quickly as possible:
1. Contact invested parties
Get in touch with owners, board members, managers, employees, and customers and clients as soon as you can. Contact suppliers and your utility companies to arrange a hold on any deliveries and see if you can postpone monies due to them. If necessary, call any emergency contacts in the case of injuries or casualties.
2. Contact your insurance company
The sooner you get in touch with your insurance company, the sooner you can get the ball rolling to get your business back in action.
3. Secure the property
Once the disaster is under control, secure any property. This could range from boarding up the property to moving undamaged goods into storage or cleaning out items susceptible to theft or further damage.
The Federal Emergency Management Agency and the Small Business Association both have worksheets and templates to aid business owners is preparing for calamities.
Common Physical Property Business Disasters
Whether you run a small boutique shop, a busy restaurant, or a multi-national company, your business is susceptible to property damage that can prevent continued operations. Both natural disasters (floods, hurricanes, tornadoes) and individual disasters (arson, theft, computer hacks) impact your business in a similar way. How you handle those situations could mean the difference between persevering or closing your doors.
From inventory to data, a fire can destroy your products. Prevention is ideal, of course, but a fire is always a risk your business should prepare for. Hidden among the obvious losses is the fact that your team may be out of work for an extended period while you rebuild. Clearly, that's problematic for them, but it's bad for you, too.
When you do reopen, you need a team that knows what to do. You don't have the time and resources to start over with training and working out all the kinks that you've smoothed out over the years. One restaurant owner in Platteville, Wisconsin, kept his staff on salary under the condition that they use the time to perform community service work. While a fire may shut you down for a time, it doesn't have to ruin your future.
2. Water damage
Water damage comes in myriad forms. Floods, burst pipes, leaking air conditioners, sewer backups, and less obvious issues like mold growth are just a few types of water damage. Again, preventative maintenance is ideal, but even the most aggressive maintenance can't prevent every problem.
The first step in taking care of water damage is assessing the problem. In the case of a burst pipe or other active leak, turn the water off as soon as you can to prevent further damage. Next, figure out who's responsible for taking care of the damage: you or your landlord.
Chances are, if this is disaster-level damage, you'll need to call a professional service to handle the cleanup.
3. Data loss
For data loss, prevention is the real key here. Writing for Forbes, Adam Steele shares how he lost years of valuable data and what he and his company do to prevent future problems. What's first on his list? Multiple backups of all your vital information.
The Ready Campaign offers help with data loss planning and recovery. If your business survival is dependent on proper IT functions, the information there is worth looking through. Again, though, prevention is the first step, followed closely by putting an action plan into place if you do suffer significant data loss.
Common PR and Personnel Business Disasters
1. Data theft
Skipping right to the other side of the data loss coin, data theft is another serious issue. Backups and data loss prevention won't help you prevent data theft. In fact, some of the biggest (and ostensibly most secure) companies like Yahoo, Chase Bank, and eBay have all dealt with data theft in recent years.
Your first step in surviving data theft is to stop any further leaks. Contain the damage, then work to correct the problem. Call law enforcement and your legal team to find the source of the theft and to help determine next steps. State laws vary, but it's a good idea to contact your customers if hackers access any personal information.
The Federal Trade Commission has further resources for businesses dealing with data theft.
2. Financial disasters
Financial business disasters can come in many forms, but one of the most common is losing a big client. Surviving a monetary hit is challenging, but preparation will help you get through (notice a theme here?). Despite your best customer service, quality product, and flawless delivery, at some point, you will lose a major client. It hurts; there's no arguing that.
Writing in Inc., Andrew Griffiths recommends keeping yourself out of that predicament in the first place by continually working to generate new business.
3. PR disasters
There are two ways to handle a PR disaster: the BP way and the Volkswagen way.
On April 20, 2010, an oil rig explosion in the Gulf of Mexico killed 11 people, spilled over 130 million gallons of oil, and altered the ecosystem for years to come. BP's response was "a textbook example of how not to handle PR."
BP refused to take responsibility and made insultingly low offers to settle legal claims, and CEO Tony Hayward infamously and insensitively stated, "There's no one who wants this thing over more than I do. You know, I'd like my life back." Even five years after the spill, the U.S. National Oceanic and Atmospheric Administration said "BP 'misinterprets and misapplies' data to obscure the truth." As a result, BP continues to deal with a tarnished reputation.
In late 2015, it came to light that Volkswagen cheated on emissions tests. Their initial response was a PR disaster, blaming the problem on a few misguided engineers. Eventually, however, VW took full responsibility and spent significant amounts on cleaning up their image online and through offering buybacks and repairs for all affected customers.
And the results of their efforts? VW was the number one automaker in 2016, selling over 10 million vehicles.
Business disasters don't have to mean the end of your company. Get in touch with your local Pekin Insurance agent to discuss your business insurance needs.
Have you dealt with a disaster in your business? Share your story in the comments.