THE BLOG

Grim Forecast? How Your Small Business Can Weather Sudden Storms

06/02/2015 06:54 pm ET | Updated Jun 02, 2016

So far this year, Mother Nature has pummeled us with a not-so-motherly barrage of punishing weather. We've been hit with horrible blizzards, record rainfall in Texas (just this past week), almost no rainfall in California, golf-ball-sized hail, more than a few tornadoes and other severe power-killing storms. Now, with hurricane season approaching in June, people will be bracing themselves and preparing for yet another round of dismal forecasts from meteorologists.

But will they be prepared enough? Well, if we're talking about small business owners, unfortunately the answer is "no."

When it comes to destructive weather, 57 percent of small businesses have no disaster recovery plan, according to a recent survey from Small Business Majority and the American Sustainable Business Council (ASBC). For those businesses that do have risk management plans, 90 percent spend less than one day a month maintaining them.

That's troubling. Small businesses -- which, at last count employed about 60 million Americans -- don't have access to the same capital and resources as larger corporations. So when natural disasters hit, they can pack a powerful punch and be financially devastating.

Fortunately, there's a bright side to this scenario: With a few proactive steps and the right tools, small businesses can weather just about anything Mother Nature might throw their way.

Step 1: Change the task of emergency preparedness planning from a "to-do" to a "must-do."

Chances are, a disaster preparedness plan has always been one of those items that linger forever on your to-do list. You know you need one. You keep meaning to create one. But you never seem to get around to it.

So here's a reality check on the relationship between weather and your money to help motivate you. Let's put it into perspective with a few more stats cited in that Small Business Majority/ASBC study:

  • Approximately 25 percent of small to medium-sized businesses don't reopen after an extreme weather event shuts them down
  • The average cost of downtime for a small business affected by extreme weather is3,000 a day
  • In a nationwide poll of 838 small business owners, one-third reported that they've personally been affected by a severe weather event
  • Of the 60,000 to 100,000 small businesses that caught the brunt of Hurricane Sandy in 2012 - the second costliest natural disaster in national history - an estimated 30 percent failed as a direct result

This past winter alone, offers a perfect example of the weather's potential financial impact. In Xero-commissioned surveys conducted to determine how small businesses fared during that harsh weather, 58 percent said they were negatively affected, with revenues down for 31 percent of them.

On a broader scale, White House analysts recently reported that this year's historically punishing weather played a possible key role in reducing annualized Q1 growth by about a full percentage point.

Step 2: Back-up your crucial data.

Power outages or destruction of property can wreak havoc on small businesses - and often times bring them to a screeching halt. That's why backing up critical accounting records, employee data, payroll plans, contact lists and other essential information is crucial. While most companies in the United States regularly back up data, fewer than half keep their data off-site as advised, according to various studies.

The safest ways to achieve that is by using an online service provider or by backing up to servers at least 50 miles from your business, according to the Wall Street Journal's Small Business Guidebook. Or simply switch to a cloud-based accounting service.

Case in point: David Koch, owner of Pinstripe Media, a media production company, says peace of mind during turbulent weather is one of the primary reasons why he switched to cloud accounting software.

"It's safer than the lock on your front door," he said. "All it takes is one office disaster and your files are compromised. Hard copies of old accounts are often irreplaceable, and many businesses don't fully recover from disasters for this reason."

Step 3: Go remote.

For the sake of preparedness, let's imagine a worst-case scenario for a moment. It's hurricane season. Your business happens to be in a vulnerable location. As torrential rains pound the streets and gale-force winds send trees crashing into your office, you realize chances are slim that you'll be returning to your desk any time soon. How do you safeguard against that?

The simplest way would be to make sure your physical office location isn't essential to your business's core operations.

Step 4: Customize your plan.

There isn't a one-size-fits-all extreme weather preparedness plan for all small businesses. Location, industry and operational logistics all play a role in that preparation. Fortunately, several resources are available to aid small businesses in this effort, including the Federal Emergency Management's Ready campaign and the U.S. Small Business Administration's emergency preparedness planning tools, which even get disaster-specific.

First and foremost, a good plan should not only safeguard your business operations, but also protect your most important asset -- your employees. Keep their safety top of mind. If worse comes to worse, you can always revive a business plan. A human life is irreplaceable.

Step 5: Practice, practice, practice.

The best natural disaster preparedness plan in the world isn't going to do you a darn bit of good if you have no clue how to effectively implement it. If a hurricane hits, you're not going to have time to grab and peruse your emergency handbook. So review and update those procedures regularly. Run frequent drills. Make it a periodic item on your calendar.

You've read the above statistic on business owners who create plans and then inevitably neglect them. You probably don't want to be one of them, so work on being prepared. And think about keeping an old pair of rubber boots stashed away in your office. You never know when you might have to ditch your freshly shined loafers and go brave the elements.