WASHINGTON – Less than 60 percent of small businesses closed during the recent spate of hurricanes will reopen, research shows, and 51 percent of those will shut down after two years.
Why the grim numbers? Because 90 percent of small businesses don't have business continuity plans, say experts.
And the buzz phrase "business continuity" doesn't just mean preserving computer data and having adequate insurance. It means thinking creatively about your post-disaster customer base – or lack of one.
Across the Southeast, there are flood-soaked mom-and-pop restaurants, crushed landscape sheds and damaged franchises. It's obvious that small businesses have taken a huge hit this hurricane season.
And it's the businesses owners who are thinking creatively that are squeaking by right now, says Diana McClure, director of public safety strategies for the Institute for Business & Home Safety (IBHS).
The 2000 U.S. Census shows 75 percent of all Florida's business establishments have fewer than 20 employees.
"In Florida, for example, the demand for high-end landscaping businesses just stopped after the hurricanes hit," says McClure.
Hotel properties, amusement parks, golf courses, and other service or tourist locations that hired landscape contractors aren't using them – at least temporarily.
"But even small landscaping companies have the trucks and equipment to help with debris removal," says McClure.
Other landscape contractors started preparing long before hurricane season started by establishing relationships with local conservation commissions, she says. "I know one landscaper who has now positioned himself to help his town with replanting," McClure says.
The bottom line is that when it comes to disasters, business owners need to think ahead because even adequately insured businesses with no structural damage are at high risk for going under. "Your customer base is gone or is moving away," explains McClure. "Or you're selling services or goods that people – at least for the time being – don't need."
Business in video stores, for example, is at a complete standstill in some locations because people without power simply don't rent videos, and some people have been without power for weeks now.
Chain video stores and other franchises might be able to fall back on national coffers, but businesses on their own need to preplan, or the odds will be stacked against them, says George Haddow, a former Federal Emergency Management Agency official turned consultant.
"You need to look at how to provide protection for your business when disaster strikes," says Haddow.
That means, of course, getting insurance for both structure and contents of your business. But it also means thinking about how you'll market your product or service in a post-disaster situation.
"That means you need to examine vendor steams and financial streams," Haddow says. "It's difficult to get prepared but it pays off tomorrow."
To help small businesses get ready, more than 40 partner organizations and supporters from the private sector have launched the Global Partnership for Preparedness, a nonprofit foundation that will focus on creating industry standards and sharing best practices.
The partnership's first effort, a Small Business Preparedness Campaign, is unfolding in three pilot programs, one in Charlotte County, Fla., a second in Charlotte, N.C. and a third in Los Angeles.
In Charlotte County, the Global Partnership for Preparedness worked with local and regional economic development officials to set up a small business assistance center.
"We were excited to be able to assist more than 200 small business owners over the course of three days," says John Copenhaver, president of the partnership. "However, though disaster response is critical, disaster preparedness in the form of business continuity planning is what it will take to keep small businesses strong in the face of disaster."
The partnership plans to provide more than 16,000 hours of pro bono certified business continuity planning expertise to small businesses that otherwise could not afford to put such plans in place.
The pilot program in North Carolina will offer practical tips that will potentially help a business that has one person or one that has 500 employees. For small businesses, "A disaster is not necessarily a major storm or earthquake but may be as mundane as a broken water pipe on the floor above a business location or a fire from an appliance left turned on next door,” says David Shimberg, chair of the Contingency Planning Association of the Carolinas.
About one in five small businesses suffer some kind of major disruption – whether from a large-scale disaster or localized mishap – every year.
Within the three pilot programs, IBHS will debut and test a "disaster planning tool kit" for small business owners. The toolkit will offer tips and worksheets that help small businesses identify natural hazards they may face, protect employees, protect buildings and contents, and help resume essential operations.
The tool kit will also provide details on protecting buildings and inventory from power outages, earthquakes, windstorms, hailstorms, floods, freezing and bursting pipes and wildfires.