Despite being a nation that systematizes and plans, we still find ourselves reeling when the unexpected occurs. In the case of Helene and western North Carolina, it’s been a painful and overwhelming situation. Who could have predicted that kind of devastation?
We’re still undone by the images and updates about search and rescue efforts in those areas. Our hearts and thoughts go out to you if you or anyone you know and love has been facing this. It’s truly unimaginable.
The sad thing is though, these things happen. Quite regularly.
So, as the person in your corner who might be the only one asking you these questions — What happens to your Minnesota business if the building next door catches on fire? Are you prepared for the next hurricane, tornado, or shipping strike?
Every business needs to prepare for these eventualities.
Do you have a business disaster plan?
If not, let’s get you one…
Creating a Business Disaster Plan for Your Minneapolis Company
“Remember, today is the tomorrow you worried about yesterday.” – Dale Carnegie
Millions of new businesses start nationwide every year. (Yes, millions.) On the flip side of that coin, is the reality that a large number of them will be out of business within the first five years of opening.
While a lot of businesses close because they have a bad business plan, poor execution, or other controllable factors, about 10 percent of businesses close due to a specific external event — aka: disaster strikes.
We’re seeing the effects of this firsthand right now in North Carolina and other southeastern states. And we saw the effects of it in 2020 and 2021 (and are still feeling in 2024) when economic struggles overwhelmed the country.
The unfortunate fact of the matter is that disasters and other larger forces can strike anywhere, any time. And if you aren’t prepared for it, it could mean you’ll end up closing your doors for good.
So how can you prepare?
Obviously, different business models call for different resources, but there are some generalities that apply to all businesses.
1) Cash is king. A business needs capital to operate, and while it’s easy to think you can simply bootstrap all the funding you’ll ever need if your ideal client can’t pay you, the money has to come from somewhere.
Enter cash reserves.
As a baseline, all businesses need at least three months of operating capital reserves available to them in cash or easily liquidated securities. These funds are earmarked only for emergencies and can be the difference between staying afloat while your business handles whatever disaster has befallen it.
2) Insurance and resources. At the same time, it’s important for you to understand two other important resources that can provide capital after a disaster. One is your insurance policy. Know what types of coverages you have, how to make a claim, and store copies of important policy documents away from the business location – such as scanned and uploaded to the cloud.
The second is to know what resources will likely be available to you from local, state, and federal government agencies, including FEMA and the SBA. Contact local emergency management agencies to learn more about what resources – including possible grants and emergency loans – are usually made available after local disasters. Learning about this stuff now will better equip you to navigate all the red tape later.
3) Seeing the needs of your customer base. While many companies may be forced to shutter operations in a disaster, other businesses may be able to shift their operations into new markets and actually grow business. Even new businesses can start in disaster moments, as crazy as that sounds.
The lesson here is simple: You must know your customer. This is critical for being able to survive a disaster situation. By knowing and understanding your customers, you’ll be prepared to do what is necessary to shift your operations to continue serving them.
For example, in 2020, when restaurants were forced to close their dining room, they shifted to take-out orders. And now there’s a very large market for delivered meals. The same went for grocery stores that offered grocery delivery or curbside pickup.
Or, what if you own a factory? Can production be shifted from one product line to another to meet the needs of a changing business climate?
Take the time now to learn more about your customers. Find out how they would respond in certain situations. Learn about what kind of support, products, and services they need and how their consumption changes during a disaster situation.
4) Secure your supply chain. It’s also important to understand how your suppliers will fare in a disaster (or to prepare if there’s a shipping strike which limits access to goods).
Relying on a single supplier can cripple your business. Many companies learned the hard way in 2020 that when their sole supplier’s operations were disrupted, they had no alternative. Diversifying your supply chain by building relationships with multiple suppliers is critical to minimizing risk in your business disaster plan.
You also need to understand how your suppliers will respond in a crisis. Will they be able to continue delivering goods if faced with a disruption? Do they have contingency plans in place? If your supply chain is fragile, your business is too. Use this insight to build a stronger, more resilient business disaster plan.
If you’re scratching your head on any of these questions, that’s OK. That’s the whole point of a planning exercise like this – to make you dig deep and find the answers now, rather than after disaster strikes.
5) Outline a plan. Common sense would dictate that no one can create a plan to handily cover all disasters – this year alone, we’ve seen hurricanes and flooding decimate cities, monstrous wildfires reduce towns to ash, and the economic impact of rampant inflation.
Every one of them impacts somebody’s business, and a hurricane offers a far different “type” of disaster than a shipping strike. Any business disaster plan simply starts with asking “What if?” and beginning to think about what could be done in such an event.
The next step is simple though: Begin to write it down and document it, step by step. Share it with your team, share it with your suppliers, and even your customers. More importantly, don’t stop refining it and amending it.
Imagine it was your business washed away by floods or facing the threat of wildfire. Create a solution to defend your company against that possibility.
Having a disaster response plan sussed out well in advance is the best way to ensure your company’s survival. It’s just like insurance: You hope you never need it, but it sure is handy when you do.
Need help assessing how to respond to common disaster situations? Want to bounce ideas off another Minneapolis business owner to help tweak your plan? Would you like to learn more about the financial resources, such as grants and loans, that might become available to us locally in the event of a disaster?
Let’s chat about it:
calendly.com/gmdaffin
To getting things done,
Grant Daffin