On a recent visit to my son’s pediatrician, we arrived to find a frantic staff. Their Internet connection and phones had suddenly gone down, cutting off calls and access to patients’ charts. They’d rigged a paper-and-pencil system that still adhered to HIPAA privacy rules, cellphones were buzzing with emergency requests, and our checkup was old-school, without the usual long computerized checklists of developmental goals.
This service interruption went on for two days—a road-construction crew 10 miles away had accidentally severed the fiber-optic line to their office, which is part of a major university system. Our doctor later told us the outage had “finally gotten everyone’s attention” about the need for tech emergency plans.
So, what is your company doing to prepare for the unexpected?
No one can think of every possible eventuality, and business owners know Murphy’s Law often rules the day. But everything from wild weather events and service interruptions from a fragile power grid and persnickety telecom networks have forced companies to start coming up with backup plans for their offices and employees.
The main reason: the rising toll from some notable disruptions. For 2012’s Hurricane Sandy, economists at IHS Global Insights calculated $25 billion in lost business activity in just the first month after the storm. Raising the stakes, a 2011 Insurance Information Institute study found that 40 percent of businesses affected by natural and man-made disasters never reopen.
It’s also part of a greater emphasis on preparedness. Since 2004, September has been designated as National Preparedness Month—a move to educate the American public about how to be ready for, and respond to, emergencies.
While a poor online connection or a downed pole aren’t exactly super-storm material, having a Plan B ready can keep your company running smoothly during unexpected everyday disruptions. And being prepared for the worst can help lessen the bigger risks. Here’s a look at a few things to do to help protect your business in case disaster strikes.
Fail to plan, plan to fail. Since the summer 2003 blackout that left tens of millions without power on the East Coast, the federal government got serious about having individuals and businesses prepared for the unexpected. Along with a bipartisan mandate to upgrade the nation’s antique power grid, FEMA and the Small Business Administration started to push for companies to develop and practice backup plans to keep their staffs and shops safe (and hopefully running) in case of emergency.
It’s also given rise to an entire industry: business continuity planning. Experts in this field have the task of thinking of anything that could go wrong, from a shutdown by hackers to where to keep documents stored in case of a catastrophic event. An excellent and free resource for those getting started: Ready.gov, which has a step-by-step guide to help assemble a plan and get employees working on everything from crisis-communication details and tornado warning text message alerts to running drills and getting hard-copy contact information in case an IT meltdown cripples an office.
In late December 2006, business coach Craig Hohnberger watched helplessly while an ice storm crippled his Columbus, Ohio, office building (along with much of the Midwest). The power was out, phone lines were severed, backup generators weren’t working, and much of everything else was shut down. “Even the local Walmart closed for the week,” he says. Yet he and his team had landed a big deal, and were dependent on getting the contracts out and signed before the end of the year. They ended up driving some 20 miles before finding a suburban FedEx Kinko’s copy shop that was operating. His outsourced IT provider managed to get them into their files. They downloaded, modified, printed, bound, and shipped on the spot. “It was a close call,” Hohnberger says. These days, his files are routinely saved to cloud computing storage spots and he’s added a routine test process in case disaster strikes again. “As long as I have power and my laptop, I can get anything now,” he says.
Review your insurance policies
What exactly is covered? Insurance can be tough to navigate, and it’s tempting to focus just on the cost of the premium, but what’s covered is far more important. One type to consider for extended emergencies: business interruption insurance. While most standard policies cover only losses to tangible items—like a building, equipment, or inventory—they don’t address the profits you’re losing if you can’t operate. Buyers should expect to document several months of net income. Policies range in price from less than $1,000 to $10,000 a year, depending on the size of the company. And one spot to watch: the exclusions at the end of the policy. Review each carefully with your agent and business attorney—this is the part of the contract where coverage can be revoked for certain events and situations—and add a rider if necessary. In the case of Hurricane Sandy, some business owners found their policies specifically didn’t cover losses caused by downed utility services.
Invest in a generator
If electric service gets knocked out, be your own power supply. With the right modern technology, the changeover to a standby generator can be nearly seamless. Long a staple of rural operations where utility services can be an issue, repeated outages have been making generators far more common in metro areas. The hard-wired equipment isn’t inexpensive—anywhere from $2,000 to more than $15,000, plus installation, depending on the machine’s capability—but the benefits it brings during an outage can be priceless.
“There are certain small businesses that clearly have a return on investment, where the payback is much shorter,” says Aaron Jagdfeld, chief executive of generator maker Generac. “With a restaurant, if you lose a weekend night, it’s like losing an entire week,” he says. “No one can really afford to not be up and running.” He says much of the company’s past year has been dedicated to educating businesses on what they would need to provide an alternate energy supply to keep their operations going, and what could be lost if they go dark for too long. “The big part is understanding the financial ramifications of an outage. We’ve been hearing from many companies that it’s become too critical to take a chance anymore,” Jagdfeld says.
Greg Wiszniewski’s midtown Manhattan Busy Bee Cleaning Services was bustling last October, with 130 employees fanning out to New York City’s homes and offices. Then came Hurricane Sandy, which knocked out Wiszniewski’s access to his office for a few days while he was stranded in Queens thanks to the flooded subway system. In the meantime, he lacked contact information for staffers and clients; nor could they reach him. Appointments were missed for days. “It was a mess. A total mess,” he recalls. “It wasn’t just that I couldn’t speak to my cleaners, I couldn’t talk to my customers. I didn’t have a backup plan, and with the hurricane that was made obvious.” Some customers never called back, and a few employees didn’t return either—tough losses in an already trying time.
Flash forward a year, there’s an entirely different routine. Every Friday without fail, Wiszniewski makes a printout of contact information for everyone involved—clients and cleaners alike—for the appointments for all of the upcoming two weeks. It may seem like the bare minimum, but it’s peace of mind that helps minimize the risk of a similar disruption in the future. “You realize that you sometimes need to rely on paper, on physical copies, because you don’t know when a system is going to fail,” he says. “I seriously have not failed to print out that list of events, and even potential events, ever since.”