It's been a year since the East Coast was rocked with one of those "100-year storms" - the kind that have shown up more and more frequently in the last decade. As small businesses found in the aftermath of Katrina in 2005 and are finding in the aftermath of tornadoes and wildfires this year, returning to full operations after a disaster is a long, arduous, and expensive process.
In fact, rebuilding from a storm like Sandy is as difficult as growing a business from scratch. The numbers don't lie: in the last year, nearly 30 percent of small businesses [PDF] impacted by Sandy have already closed their doors for good. In the long term, that number is likely to rise: FEMA estimates that up to 40 percent of businesses hit by disasters never reopen.
But bleak odds are just that - odds. And they don't mean your business is hopeless in the face of nature's whims. Here are three disaster-preparation strategies you can implement to survive the next calamity, whether it's a Sandy-like storm or something else entirely.
• Having a plan is half the battle. Nobody hopes their business will be hit by a storm like Sandy. But if it is, the ideal situation is to have a disaster plan you can execute immediately. If you're struck by disaster and you don't have a plan of action, there's a good chance your business won't survive. Your disaster itinerary should include plans for communicating with your employees, your clients, and your insurance agent (hint: program your agent's number into your cell phone now).
The disaster itinerary should also include a backup supply chain: what if one of your suppliers is also hit by the disaster and its inventory is decimated by the storm? (See below for more details.) Finally, you'll want a strategy for bringing in enough money to cover ongoing expenses such as mortgage or rent, utilities, employee salaries, taxes, loan payments, and anything else that will come due whether or not you're able to open your doors.
• Property damage is only part of the story. Yes, it's tough to replace flood-damaged inventory and equipment and expensive to replace a roof, but in order to keep your business open, you'll need more than your walls and cash register. If your suppliers are hit by a disaster and unable to ship goods to you, you can't sell anything, even if your storefront is in top shape.
Well before you hear reports of adverse weather events, take the time to set up backup supply channels in case something happens to your primary suppliers. It's even a good idea to order a small percentage of your inventory from these suppliers during "normal" operating conditions so that you have an established relationship with them if and when you need to lean on them more heavily. Word to the wise: make sure your backup supplier isn't exposed to the same natural disasters as your primary supplier.
• Your most important assets are your relationships. All business owners know that their success depends on their clients, but not all business owners take the time to nurture relationships with those clients and the other community members who support them. In times of crisis, though, it's these relationships that can make the difference between success and failure for both businesses and the communities they serve - and in the months and years that follow, crisis-time behaviors can affect how future clients view a business.
For example: in the days after Sandy hit, many small New York and New Jersey businesses with generators opened their doors to let residents charge their cell phones. And during the months of rebuilding, many community members pitched in to Kickstarter campaigns and other funding efforts to help their favorite businesses raise money for necessary repairs. Like most things worth having, of course, relationships can't be built quickly. Smart business owners know this and pay attention to customer service every day they operate.
The real lesson from Hurricane Sandy might be that you need to prepare your business to hunker down for the long haul. Nothing will do that like a thorough disaster action plan, a contingency operations plan, and strong customer relationships. A year after Sandy made landfall in the U.S., 27,000 households in New York and New Jersey are still displaced - in fact, only 10 percent of those affected by the storm - consider themselves "fully recovered."
As with anything in business, recovering from a disaster requires a combination of grit, innovation, tenacity, support, and luck. While you can't do anything about the last one, you can certainly learn from Sandy survivors how to support your business through anything.
Ted Devine is the CEO of insureon, an online small-business insurance agent.