Connect with us

Business Operations

Disaster!: How to Survive When One of Four Businesses Perish

Advertisement

In the movie Forrest Gump, the lead character steps to the curb, scrapes stuff off the bottom of his shoe and says, “(Bleep) Happens!”

Advertisement
Click Here to Read More
Advertisement

What would Forrest say about a business that just stepped in it – or was just stepped on? “Disaster Happens!”

You can’t prevent disaster, but you can survive it. What will you do when – not if – the unthinkable strikes? Be forewarned: One of four businesses that shuts down due to disaster never reopens.

Business disasters can take many forms. They could be weather-related, like tornados, floods or hurricanes, or a natural disaster like an earthquake. The disaster could be an accidental fire, or criminal in nature like arson. Or, your business disaster could be more sinister, like embezzlement, fraud or a computer hacker or virus that disables your operations.

“But it won’t happen to me!” you say. Sure. The state of Florida was hammered by four major hurricanes, dozens of tornados and devastating flooding – all in the span of less than two months. Residual storm-caused flooding from some of those hurricanes hit dozens of other states, from Ohio down to Louisiana.

No one expected the great blizzard of 1979, the earthquake that shattered northern California in 1989 or the massive flooding along the Mississippi River just a few years ago. And, who knows what this year will bring? If you pretend that it can never happen to you, your dealership surely will be that one in four that becomes another disaster victim.

Advertisement

The Plan’s the Thing
The first step to surviving almost any business disaster is to have a look-ahead business continuity plan. This outlines how you will restore functions in the aftermath of a catastrophe to minimize downtime and retain customers. This also means you will have to consider multiple possible disaster scenarios. One size does not fit all here.

One vital aspect of a solid continuity plan: pre-assigned, specific tasks for personnel to salvage equipment and records so that you can operate at one or more designated recovery sites. Focus on the most important, most portable equipment. If you have a service truck with mounting and balancing equipment, all the better.

How do you go about establishing a business continuity plan? Begin with written records of clients, vendors, and suppliers plus records containing each employee’s address and other vitals. (Make a written list because your computer may go down in the disaster.) Store that list – along with all continuity plan elements – off site. You might consider using a safety deposit box at a bank (but not at the local bank, which may be similarly devastated by a tornado, hurricane or other natural disaster).

Advertisement

Arrange ahead of time for access to an emergency operating site. For instance, you may choose a rented warehouse, a parking lot or even an employee’s home. If you own multiple stores, your options are a little easier.

The location you pick will serve as Disaster Central – a place where you can conduct business, no matter how slight it might be, and where your customers can contact you.

Of course, you also need a system for obtaining emergency funds. Setting up a line of credit in advance is generally a good idea. A detailed, written inventory of your tools, equipment and product is a must for business interruption insurance. After the disaster, you’ll need proof of expenses, including employee salaries (another reason to keep records in off-site locations).

Prepare to Execute
Before that disaster strikes, have a designated emergency management team named and the team members advised of their responsibilities. A written plan for emergency procedures should be given to every team member before the awful and unexpected occurs. The plan should designate a location where every employee can meet within 24 hours after the disaster.

The emergency management team, along with other employees, should also be tasked with contacting your staff and customers as soon as possible.

Once you finalize your continuity plan, it’s a good idea to conduct a drill. Keep your staff and plan up to date with a mock situation, perhaps repeated annually. If your planning covers different disaster scenarios, make sure you drill on each – you never know what will happen and when.

Advertisement

Some investments, too, should be made in your disaster planning. You should make sure that your most valuable people have cell phones. You should also invest in top-of-the-line computer and fax surge protectors.

It’s also a good idea to assemble an emergency kit – containing first-aid supplies, flashlights, a weather radio, camera and film, a basic tool kit, portable fire extinguisher, extra batteries, water and non-perishable food.

Computer Disasters
One of the biggest business disasters, sometimes even more devastating than fire, flood or other natural disasters, is loss of data due to computer hackers, system failure or computer viruses.

Your best line of defense here is a solid, reliable backup system. Back up your computer data automatically, usually daily, and keep all backup disks stored well off-site and maintain permanent monthly archives.

Surviving viruses is one thing, but what about hackers? Once you connect to the Internet, you are automatically a target for hackers. To guard against them, make sure you have a hardware and software system that restricts access to your internal network, commonly called a firewall. If your employees connect to your network from home, then also require them to install a firewall on their home system. If you don’t, you are simply begging for disaster.

Advertisement

It is also a good idea, whether a disaster is involved or not, to have a reliable, extremely knowledgeable computer person. Consider the value of the information stored in your system and the value of that computer system to the daily operation of your dealership. Is it worth leaving in the hands of someone with nominal expertise?

How Others Survived
Perhaps the best advice for surviving a business disaster comes from those who have been there and done that. A few examples are arson-fire victim Petro’s Tire Sales and Service in Linton, Ind., and tornado-tossed T.O. Haas Tire in Lincoln, Neb.

T.O. Haas Tire re-opened its 12,000-square-foot flagship retail store on May 17 after a $400,000 remodeling. Less than a month later, a vicious storm struck. While not officially designated a tornado, the brutal storm destroyed 14,000 square feet of attached warehouse space. The roof was torn off and landed 150 yards away. As a result, an entire warehouse wall collapsed. Associated costs were estimated at almost a half-million dollars.

Fortunately, when the storm struck around 8:45 p.m. on a Saturday, Haas Tire was closed and no one was on the premises. “The first issue we had to deal with was security,” recalls George Hoellen, Haas Tire president. “The police and sheriff’s department secured the area until sunrise, when a private security firm we hired took over,” he says.

Advertisement

“It was amazing how many people are drawn to these kinds of things and will walk right up to a partially collapsed wall and push on it. No kidding,” Hoellen exclaims. “First thing: We had to secure the area from a public safety standpoint.

“By 9 a.m. Sunday, we had two claims adjusters and a structural engineer on site,” he continues. “A contractor and crew were working by Sunday afternoon to install bracing for the remaining two walls. By Sunday afternoon, we had also made arrangements to rent some replacement warehouse space.

“Then, on Monday morning, all available personnel and some hired labor loaded product onto three rented trucks to shuttle it to the rented warehouse space. So, less than 48 hours after the storm struck, everything had been moved from the 14,000 square feet of destroyed warehouse space, and we were back in business,” Hoellen says.

Hindsight being what it is – 20/20 – would Hoellen have done anything differently? No. “It sounds kind of bad, but honestly, I don’t think we could have been more fortunate in how well things went in the aftermath,” he states. “We are just very thankful that no one was hurt.”

Advertisement

T.O. Haas Tire operates a chain of 29 retail tire and automotive service facilities in Nebraska, Kansas and Iowa – states that see plenty of bad storms and tornados.

Fire – actually arson – was the disaster that struck Petro’s Tire Sales & Service’s store in Linton, Ind., on July 1. The store was one of the firm’s seven units. Fire destroyed $270,000 worth of inventory and three vehicles. It was a total loss, and not just because of the burning; damage also resulted from the million gallons of water used to fight the blaze. An arson suspect has been arrested.

Currently C. Eugene Hendricks, Petro’s president, is casting about for another location. “One of the first things to do is make a decision to remain in the location or move elsewhere,” says Hendricks. “If you plan on remaining in the city and rebuilding, you should find a temporary location as quickly as possible.”

Relatively speaking, Hendricks was lucky. “We were able to find a temporary location to move into after about a month and have been able to maintain the majority of the business we were doing before the fire,” he says. “For the first month, we operated on the lot out of the back of a truck and were able to maintain about 30% of our monthly revenue.

Advertisement

“We kept the majority of our customers from going to our competitors,” Hendricks recalls. “We took some vehicles we had in for repair to other locations when we did not have equipment to service them at that site.”

Other tips from Hendricks: “I would suggest you familiarize yourself with exactly what insurance coverage you have, how you are to be paid and when you will receive payments. It took us weeks to establish what we had in equipment and tools in the building. We are still finding some items that we missed in our mental inventory.”

It has been more than three months, now, and Hendricks still doesn’t know how long it will take to get a new location. “Having the fire ruled arson was a benefit for us. In the case of arson, each person having a loss caused by the fire, including compensation for lost time and income, could not claim our company as liable,” he explains. “They each had to turn the loss in to their own insurance carriers. They could not hold our company responsible.”

Advertisement

Hendricks offers some words of advice for other companies: “I suggest that each company have in place a plan to rebuild or move, awareness of what insurance covers, knowledge of when insurance will pay for inventory and tool replacement, and an inventory of all tools and equipment.”

Remember, as Forrest would say, “Disaster Happens,” and one in four will not survive. Plan wisely and ahead of time to ensure you’re one of the three that makes it.

Learn More
Where can you find more information on disaster planning? As always, your computer is the best source. Go to the Web and search on “business disaster.” That’s what we did for this article, and we found several excellent entries, including the Institute for Business and Home Safety (IBHS), Wendy Fontaine, at [email protected]

Among the best material was IBHS’ booklet, “Getting Back to Business.” It detailed seven steps to recovery. Right after the first step, “Reporting the Loss Right Away,” came “Putting Safety First.” Before all else, buildings need to be secure and inspected by structural engineers and contractors to determine the extent of damage. Just as T.O. Hass Tire did.

Advertisement

IBHS gave three additional resources of information on getting back in business. The American Red Cross (www.redcross.org) offers tips on disaster planning and emergency training. The Association of Contingency Planners (www.acp-international.com) discusses business resumption planning, and the Federal Emergency Management Agency (www.fema.gov) offers many publications on this topic, and most of them are free.

Advertisement
Click to comment

Loading Post...

Loading Post...

Loading Post...

Advertisement

POPULAR POSTS

Back to Basics: Step-by-Step Tire/Wheel Balancing

Business Operations

Back to Basics 3: Rotating Vehicle Tires

Legislative Update

Business Operations

Back to Basics 1: Basic Tire Repair

Connect