Tracy Allen’s latest Cashbox column, as published in the Feb/Mar 2013 issue of Barista Magazine:
Don’t lose your business to power outage, fire, earthquake or other disaster.
In the months following Hurricane Sandy, an entire region struggled to get back on its feet. The lost lives and razed neighborhoods are the most tragic result of the storm’s wake, but its continued toll includes an estimated $25 billion in lost business activity, according to financial analysis firm IHS Global Insight.
As anyone in New Jersey would now tell you, there’s no better time than the present to prepare for disaster—be it a hurricane, flood, fire, tornado, etc. If you wait until the last minute, there’s no way you’ll get it done. Time magazine reported that in the days before Sandy hit, the Value Hardware in Hackensack, New Jersey received 10,000 calls from people hoping to buy generators, according to the store’s assistant manager. Needless to say, the store sold out of its stock of 20, as well as all batteries, flashlights and extensions cords.
Another sobering fact: Roughly 40 to 60 percent of small businesses never reopen their doors after a disaster. They were likely unprepared, having had no plan or backup systems.
If you’re thinking, “Why bother? Disasters don’t happen here,” think again. A chemical spill, flood or wind storm could shutter your business for days, weeks or months, cutting off access to your suppliers and customers.
Your Basic Plan
- – Keep phone lists of your key employees and customers with you, and provide copies to key staff members. If cell phone towers go down, you’ll need one remote number on which you and employees can record messages for each other. Make sure they all have it.
- – Your shift manager is also your safety coordinator. This person should be trained to make all decisions relating to employee and customer safety, and the safety of the business itself. They should also be able to contact you at all times.
- – If you think you may not be able to get to your shop quickly after an emergency, leave keys and alarm code(s) with a trusted employee or friend who is closer.
- – Install emergency lights that turn on when the power goes out. They are cheap and widely available.
- – Use UL-listed surge protectors and battery backup systems. They add protection for sensitive equipment and help prevent a computer crash if the power goes out.
Create employee awareness.
Post emergency numbers and procedures where employees can get to them quickly. And train them on the plan. They should know where your disaster supply kit is located (see sidebar for what to put in it), where your “internal shelter” is, in the event that authorities tell you to “shelter in place,” as well as primary and secondary evacuation routes. Make sure routes and exits are well lit, uncluttered, clearly marked and easily accessible. Designate an outside meeting place where everyone can gather and be accounted for as they evacuate.
Your local experts: The Red Cross.
In addition to being your local source for CPR and first-aid training, your Red Cross chapter can provide specific information about how to stay safe in a tornado (you’ll need a weather radio, for starters), earthquake (make sure your building is up to code), fire (keep brush and other flammables 30 feet from your building), flood (plan for getting expensive equipment to higher ground), hurricane or other hazard. Get informed!
Reduce Potential Damage
For starters, know where utility shutoffs are located and how to operate them. You don’t need a gas leak or electrical fire to add to the chaos. You can prevent or reduce disaster damage by taking further precautions, such as bolting tall bookcases or display cases to wall studs, securing breakable objects to a stand or shelf with hook-and-loop fasteners, and keeping large objects on lower shelves so they can’t fall and break or injure someone. Also, use plumber’s tape or strap iron to wrap around a hot water heater to secure it to wall studs. Have a professional install automatic fire sprinklers, as well as flexible connectors for appliances and equipment fueled by natural gas. (These may even be required by your municipality, since you’re a food-service operator.)
Keep an updated list of emergency contact numbers.
In addition to emergency personnel (fire, hospital, ambulance, police) and disaster relief agencies, keep information for suppliers and distributors, as well as alternate suppliers in case your regular ones are out of commission. Keep a copy on site where employees can easily get to it, and an extra copy off site.
Protect your vital records. Keep your important documents (insurance information, vendor contact list, inventory of equipment, financial records) offsite and/or in a safe that is resistant to fire, heat, burglary tools and torches. Back up data and software daily and keep it in a safe place, to speed recovery from data loss or hardware failure. Financial records are necessary to verify the value of claims made, especially if you have business-interruption insurance—which you should (more on this below).
You probably already have property insurance, but that will only cover damage repairs. A business interruption insurance policy will cover lost income if you have to close down for a few days, a few weeks or even longer, and additional expenses incurred from trying to stay open, which can include:
- – Relocation to a temporary building.
- – Quick replacement of materials from vendors, who may charge higher prices and rush-delivery charges. If you’re roasting, you may even need to get products and/or services from competitors to help keep up with orders.
- – Overtime to keep up with production demands.
- – Advertising to let people know you’re still up and running.
- – Re-compiling business records, financial and legal documents lost as a result of the disaster.
- – Paychecks for key salaried employees that you don’t want to lose while you’re shut down.
Unless you want to pay through the nose, you will want to shoulder some of the post-disaster costs. An 80/20 business interruption policy is typical, providing for lower premiums while paying for 80 percent of the loss. You pick up the tab on the other 20 percent.
These policies are generally bought as a package with property insurance. There are two types of business income coverage policies:
- – All-Risk Policy: covers damages caused by all types of perils except those specifically excluded. Typical exclusions are flood and earthquake, but even these can be added for an additional fee.
- – Named Perils: A less popular option that provides coverage only for specified perils, such as fire, windstorm or vandalism. If damage occurs due to any unnamed peril, you won’t be covered.
With all this talk of disaster, perils and loss, it’s easy to start feeling anxious or overwhelmed. But you don’t need to live your life fearing the worst—you just need to be prepared for it. Disaster can strike anywhere at any time, and a lack of preparedness almost guarantees that your business will not survive. You’ve built your dream, your coffee business. Now make sure it’s protected in the wake of an accident, or even a super storm.
Your Disaster Supply Kit
A well-planned supply kit is invaluable during a disaster. Make sure you account for the number of people who will be using it, including and water for employees and customers to use during a period of unexpected confinement, such as if a tanker truck over-turned nearby and authorities told everyone in the area to stay put for an extended period. Some items to include:
- – Bottled water
- – Nonperishable food and can opener
- – Basic tool kit and duct tape
- – First aid kit
- – Flashlights, candles and matches
- – Radio
- – Batteries
- – Tarps
- – Cleaning supplies
- – Gloves (rubber and leather)
- – Plastic bags
- – Camera (to document damage)
- – Blankets