Business Recovery After a Natural Disaster

10/20/2020 (Permalink)

A natural disaster has the potential to cripple a business. Preparing yourself adequately before one can ensure your business has minimal downtime.

Reopening a Business After a Natural Disaster

The U.S. has sustained 279 natural and weather-related disasters since 1980, with damage repairs costing in excess of $1 billion, according to the National Centers for Environmental Information. Only about 40% to 60% of small businesses that are affected by a natural disaster reopen their doors, according to the Federal Emergency Management Agency (FEMA).

Some natural disasters, such as a hurricane, are predictable and allow business owners the time they need to prepare. However, many natural disasters, such as wildfires, may occur without warning, leaving no time to ensure a business is safe and prepared. 

As a small business owner, creating a disaster preparation plan and ensuring you’re ready for any type of devastating event is key to your business’s survival. Review the information below to learn how to reopen your business successfully after a natural disaster. 

Emergency Plans

Your emergency plan is a crucial part of your business’s survival and your employees’ safety, both during and after a natural disaster. While you may feel you’ve created a comprehensive continuity plan that thoroughly addresses every aspect of your business, natural disasters can be unpredictable. The aftermath of a weather-related event may pose problems you didn’t foresee that haven’t been addressed in your general operational plans.

When you create an emergency plan, consider how to keep your equipment, environment, and staff safe in different scenarios. You should:

• Analyze potential threats related to precedented, regional, and seasonal natural disasters.
• Consider how to deal with business interruptions.
• Create a work plan for employees and vendors.
• Choose a professional cleanup and restoration company that will help your business estimate the costs of repairs or even remediation to help increase the resilience of your permanent locations. 

Consider all aspects of the natural disasters that may threaten your business at any point in time and create a plan that addresses these potential scenarios. Once your emergency plan is in place, implement the steps when it’s safe to do so. When you follow your plan, major issues and barriers are easier to tackle because you’re better organized and prepared.

Documentation and Insurance

Once a natural disaster occurs, it’s crucial to document the damages and losses your business suffers. Keep track of receipts and purchases you made to mitigate damages. Document your business’s current physical state with photos and videos.

Before providing compensation for mold remediation services or other aid, your insurance company may ask to see proof of damages. If you need smoke or fire remediation, the insurance company may request photos of the damage to your equipment and building first. Documentation of your property before disaster strikes can help you make your case and potentially expedite the aid you need to get back up and running. Likewise, retain any receipts for expenses incurred after the disaster, as your insurance company may not compensate you without a clear record of expenditures.

Constant Communication

Open lines of communication are the key to getting your business back on track and fully recovered from a natural disaster. Be sure your employees are aware of your recovery plan and their roles in each step. To keep the recovery process running smoothly, you may need to maintain constant communication with:

• Your insurance adjuster.
• Lenders and creditors.
• Lawyers or consultants.
• Suppliers and other businesses within your supply chain.
• Your employees and vendors.
• Customers and prospective clients.

Consistently checking in on everyone involved in the situation ensures you’re all on the same page with the mitigation process.

Safety and Infrastructure

After a natural disaster, it’s crucial to analyze all the risks associated with the damage. The damage that fire, smoke, water, or wind cause can be hazardous to you and your employees. Your work environment may not be safe for a period of time until the damages are repaired. 

If you don’t feel the work environment is safe, have an alternative plan in place to ensure your staff can perform their jobs without the potential for injury or health issues. Remediation work is best left to professionals because they can safely and effectively clear debris and mitigate damage. 

For example, if your business sustained flooding damage from a storm, you may need to hire a professional remediation company to help. Completing the cleanup process thoroughly and correctly ensures mold spores don’t begin to grow and cause future health effects for employees.

Seek and Provide Support and Assistance

Even if you have a detailed emergency plan, you may not be financially prepared for a natural disaster. If you have the proper insurance in place, seek financial assistance with remediation through your insurance coverage. 

Your employees may also feel the negative financial effects of business interruption. Encourage your employees to take advantage of natural disaster relief programs they may qualify for. These programs can help them remain financially stable while you work to get your business back up and running.

There are also several federally or locally funded programs that provide support and assistance to small business owners and their employees after a disaster. These organizations include the following:

• Chambers of Commerce and Economic Development: Your local chamber of commerce may have a grant or other type of financial assistance program available to help you get back on your feet. If you’re a member of your local chamber, ask about assistance programs your small business may qualify for.
• Community Support Organizations: Most communities have their own support organizations that are designed to assist small businesses when they need help. Your city or town may have programs available that provide financial assistance during natural disasters to ensure your business can remain intact and continue to thrive after recovery.
• The Small Business Administration (SBA): The SBA is a national organization that provides resources and assistance to small businesses. For example, during the COVID-19 pandemic, the SBA provided many small businesses with forgivable loans so they could continue operating with limited capacity and under other guidelines enforced by federal and state governments.
• Federal Emergency Management Agency (FEMA): FEMA is a federal government agency that focuses solely on assisting individuals and businesses after emergencies and natural disasters. Once a natural disaster strikes, FEMA generally implements several federally funded programs to financially assist businesses during the recovery process. Contact FEMA directly to inquire about programs your business may qualify for after a disaster.
• Tax Relief in Disaster Situations (IRS): After tornadoes, earthquakes, or hurricanes, the IRS usually implements tax relief for citizens and business owners who were affected. Since business is often interrupted for a period of time during recovery, the organization may allow for additional credits or relief at the end of the year. When you file your taxes, review the tax relief programs available and utilize the credits that your business qualifies for to decrease your tax liability. 

Exploring these financial aid options after a natural disaster may be helpful if you’re struggling to repair damages, pay your staff, and replace equipment.

Natural disasters can derail your business and or be expensive to recover from. When you have a thorough emergency plan, keep open lines of communication, and seek out financial support, you can work to get back up and running quickly and safely.