If there is no way to stop business disasters, then what can we do?
Business during a disaster, while we have had economic recessions for years and the economy ebbs and flows, the shock from 9/11 reverberated around the world and into many industries. Then we take a look at the 19 years after and what has happened, 2005 Katrina, 2008 mortgage crisis, 2010 Deep Water Horizon oil spill, wildfires year after year in the west, and now COVID-19 is wreaking havoc on us. Not all of these may have affected you, if any at all, however, it teaches us that disasters will occur no matter what we do or how we prepare.
We can prepare for them. Unfortunately, unless you are a time traveler who I am not, we don’t know what that disaster will be or how it will affect you. If you don’t know how it will affect you, how do we prepare for it? That is a loaded question as there is no way to prepare for everything, what we can do though is prepare as best as we can for what we can anticipate.
Build a Reserve
Have a reserve or backup plan; once your business is profitable, but at least 10% of your profit into a savings account every month. This is not to be used for taxes, business growth, or other investments; this is your rainy-day fund. The goal is to provide you long-term with funds to operate for six to twelve months even if you are not profitable. While this won’t carry you through some disasters, it will give you a chance to make a plan to restructure your business, depending on what the disaster is. At the same time, everyone else is having to get back on their feet.
Stay on top of Marketing and Technology Trends
Stay at the forefront of your market and technology; this doesn’t mean to be an initial adopter, but make sure you are staying apprised of changes. Once something is proven, move forward with it. Five years ago, having a digital invoicing system was unheard of, so was having remote office staff. Luckily for those who adopted specific technology, they aren’t stuck in an office managing their business, and their team of employees doesn’t have to come in. They can work remotely or stay in the field. This reduces the need for an office, and when we are in a social distancing situation like we are, it makes it even easier to continue operating. Who knows where we will be in another five or ten years, what I do know is that the technology will change again and there will be better ways to do business than today? Always look toward the future and keep moving forward.
Have a plan in place
Make sure that you have a disaster plan in place. This isn’t a detailed plan of what exactly you are going to do but at least bullet points of how things will work in a disaster. Now you can’t plan for everything, and there is no reason to, however, take a look at the big things that can affect you. If you live in Florida or the gulf coast have a hurricane plan to act on, if you are out west, it is a fire plan, Midwest is tornados, the north is blizzards. Take a look at the natural disasters that will generally happen near you to anticipate and prepare for those. While this sounds like a waste of time because it won’t benefit you when something does happen, even if it is not what you planned for. You will have action items, and you are going to be prepared and ready to move forward. The basics you want to have are how you will communicate, dispatch, get to jobs, and find jobs based on the damage. What will you do if you no longer have an office? What will you do if a client’s home that you are working on gets taken out? How will you work with others affected by everything? These small things can lead to no downtime figuring it out later and being able to keep moving forward after a normal disaster occurs.
More unusual disasters can be harder to plan for. How would you know to prepare for a worldwide pandemic that causes massive job losses or having to shut down, or for a massive terrorist attack, or a massive oil spill? You really can’t, so don’t try to, a lot of your plans for common disasters can be applied to these unique situations with some minor tweaks. Hence, you are already ahead of most people. One thing to consider is there needs to be an active plan, don’t plan once, and then forget about it; this is ever-evolving and needs to be treated as such. If your methods of doing things change, so should your emergency plans. So, review this plan every year or two and make sure that you make any necessary modifications. Furthermore, make sure that your second in charge is aware of those changes, which leads to the next thing to consider.
Have a second in command
If you are a small business with two or three trucks or a one-person show that is hard. But if you have more than three trucks, even if you have three trucks, you should have someone that you can trust to be your second who can keep the show running if you’re not around is a must. First, it helps you to feel comfortable taking vacations and escaping from the business because it should operate the same even without you. But this is even more important in a disaster situation because you don’t know what will happen to you or your family and what you will need to do to help them. Having someone that can take over for you or that you can trade back and forth with so you both can take care of your families will pull a lot of stress away from you.
Insurance!
Finally, we have the most obvious one for most, but many people don’t think about it. They get it and don’t read it, which ends up screwing you over in the long run. Insurance! It’s so simple, and everyone tells you to have it. Most everyone does, but do you understand what it covers? Probably not. You need to read all the details and understand what it means and covers and what it doesn’t cover for any insurance policy. Then grill your agent for everything that it will cover. Most policies will cover loss of business damages, i.e., something happens that your business can’t operate. The insurance will payout for a time a certain amount to help cover losses. However, the insurance company can use a ton of holes to weasel out of paying those. You need to make sure that you understand what it will and won’t cover because the worst feeling is when you need your insurance, and you put in a claim and then get denied because your plan doesn’t cover it. Better to be in the know, even if your insurance doesn’t cover something, then to find out when you need it the most. At the same time, shop around if you find a policy, but it doesn’t cover what you need it to then reach out to some other agents and see if you can find a policy that will protect you. Two things you always want to be covered for are natural disasters and terrorism, the latter usually is an add on and will cost a dollar or two a month, but the right coverage will protect you from both foreign and domestic terrorism in case there are riots and you get vandalized, but again it all depends on your policy.
Ultimately you can’t prepare for everything but take some time to prepare for the big stuff so that the unusual disasters are easier to handle. It won’t be perfect in any way, shape, or form. Still, if you are a month or two ahead of your competition, it will significantly benefit you. A few years ago, I had a client in Florida who lost his whole shop in a hurricane and just had his work trucks. Still, he had an action plan in place and used it and was the first to help people reopen and fix things. He ended up tripling his sales for the period because of his plan and the fact that he had reserves to dig into. As we worked through it, I kept hearing how there was no one else out there doing anything, why? Because they weren’t prepared, and some didn’t make it. The same thing happened with COVID-19. Those with a plan, and some reserves, acted on it and survived the temporary lull with little assistance. Others are still struggling or have closed. Luckily home improvements have been significant with this disaster, but that is not always the case and can generally lead to a lot more shuttered business. Look at 2008 for a perfect example of that.
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