Preparing for a disaster can help save your business

By Carolyne Lynch
The (Louisville, Ky.) Courier-Journal

Firefighter Robbie Jackson of Jeffersonville, Ind., surveyed the damage to the Horner Novelty store after a blaze destroyed most of the block. Gannett News Service

Now the valued assets are the insurance plan, a fireproof box, three off-site locations and the connection Horner's owners have made with their community.

Everything else was gone.

In one night, a fire that began from faulty wiring in Horner's 37,500-square-foot store ravaged almost an entire block. It damaged or destroyed seven businesses and smoldered for five days.

"I had no idea what steps to take," said Chuck Mattingly, Horner's president.

After two weeks of post-fire experience, Horner's owners and those of the other businesses are learning what they did right and wrong in preparing for a disaster.

It's a lesson many small-business owners could stand to hear.

"Small-business owners are so busy keeping their businesses going that they say, 'I don't have time to plan for disaster,' " said Diana McClure, director of public safety strategies for the Institute for Business & Home Safety in Tampa. "But when something happens, they sure wish they had."

Though business owners may not be able to save their building, with the right planning they may be able to save their business.

Jim and Angela Bethurem opened their business, New Millennium Mortgage, in 1999. After taking stock of their assets, they bought only liability insurance, because they had little equipment and no employees.

When fire crept onto the roof of the building they rented, the Bethurems had 12 employees at that location, and $30,000 to $40,000 in equipment. Most of it was intact, but some of it suffered smoke and water damage.

Owners should evaluate their insurance plans to make sure they cover the cost of the physical loss, McClure said, as well as the expense of getting set up again and the loss of income during the down time.

"We should have revisited it," Jim Bethurem said. "Insurance is always good when you need it and always expensive when you don't."

The Bethurems and other business owners who had multiple locations think having an alternative place to work will be the biggest factor in their survival. McClure suggested businesses with one location consider an agreement with a business in the same industry that allows either company to use temporary space in case of disaster.

"The business stops, but the bills don't," Jim Bethurem said.

He wishes he'd had business interruption insurance — which covers bills and other costs that owners can't pay while they're getting set up again.

Horner's Mattingly had business interruption insurance, helping him pay a handful of his 25 employees to help him get the business running again. He and the others work at his Jeffersonville home, which he jokingly calls "Horner East."

Emergency plans recommended

Small-business owners should have an emergency plan that will protect their money and their business in case of a disaster.

Diana McClure, director of public safety strategies for the Institute for Business & Home Safety, suggests these precautions.

• Protect vital information by storing copies in another location. This should include all documents owners would need to file an insurance claim, contact information for people and employees who might need to be notified and other information on business workings, such as electronic backups of databases and accounting records.
• Insure the building and company equipment. McClure said it's especially important for small-business owners, who are growing more than other businesses, to look at their policy yearly to make sure it fits.
• Choose location carefully. Is the building up to date on safety codes? Are the structures near it also up to date? Is it getting the proper maintenance?
• Connect with the community. Business owners should know the people they might tap in an emergency. Accountants, attorneys, city officials and insurance agents should be on the list.
• Can you get back on your feet? Business interruption insurance can help owners sustain themselves while rebuilding. Also, create alliances with other business owners in similar fields. That way, business owners could use each other's space in emergencies.
• Plan. Figure out what your business couldn't do without and protect it. Also, be prepared for what would happen if suppliers or other closely related businesses were hit with a disaster.
• On the Web: To download a Disaster Planning Toolkit log on to the Institute for Business & Home Safety's Web site at www.ibhs.org, and click on Business Protection.