Most small business owners lack a disaster recovery plan
Natural disasters such as fires or hurricanes can cripple or permanently shutter a small business.
Sixty-one percent of small business owners say they don’t have formal disaster recovery plan, according to a recent poll conducted by Insureon in partnership with online small business directory Manta.
Natural disasters like fires or hurricanes can cripple a small business, due to their limited resources. The poll found that 31% of small business owners don’t know if their business would survive a forced closure of a month or more; an additional 13% say they are confident it wouldn’t survive.
While only 10% of those surveyed said they have ever been forced to close following a natural disaster, 20% of those who closed never reopened.
According to the Federal Emergency Management Agency, 40 to 60 percent of small businesses never reopen in the wake of a natural disaster.
Related: FEMA emptied its Puerto Rico warehouse just before Hurricane Maria struck
Insurance can help keep the lights on
A critical component of any disaster recovery plan is business interruption insurance. This policy can help replace a business’s lost income and pay expenses if it forced to cease operations due to a disaster. However, 60% of business owners surveyed don’t have this coverage.
The typical business interruption policy can provide up to one year of benefits and help pay for lost revenue while the business is closed, rent and/or relocation costs if the business is forced to move and day-to-day operating expenses such as employee wages, taxes and loan payments.
Related: Most small business owners feel they don’t have adequate insurance
If a natural disaster strikes, here’s what to do
If a natural disaster impacts your business, your first priority after making sure everyone is safe should be filing a claim with your insurance company. If possible, take photos to document the damage. By streamlining the claims process, you’re likely to receive the money you need to mitigate a business interruption in a faster manner.
Next, reach out to everyone closely involved with your business, including employees, vendors and customers. Let them know what happened, explain the steps you’re taking to address the situation and tell them when you expect to reopen. Finally, consider setting up an alternate business location.
By acting to file a claim as quickly as possible and opening the lines of communication with everyone impacted by the closure, business owners can minimize the financial damage to their company.