Small businesses are more at risk from the effects of a disaster for one key reason. Smaller companies tend to be located in one area, rather than having their assets spread out, with much tighter finances versus medium and large businesses. A family owned corner store could be considered a prime example of a small company. In this case, all stock for the store is kept in the same central location. Money, employees, and any financial assets could also be situated in the same building. Therefore, if a disaster does occur, most everything is going to be impacted and affected.
Unfortunately, the plight of many small businesses is the sobering reality that they can't survive any type of unforeseen disaster or major expenses within the first few years of existence. They fail because there is no insurance policy or plan in place to protect from losses. Instead, these small companies are exposed to damages from a disaster without a roadmap for recovery.
It's in the best interest of small business owners to have an insurance policy in place and a recovery strategy. In Canada, small businesses (less than 99 employees), comprise 98% of employer businesses- a dizzying number, indeed. Only 1.6% are medium sized businesses (100-499 employees), with less than a fraction falling into the large business category (500+ employees). It's critical that Canada's small business owners are able to survive and thrive if disaster strikes.
Finding The Right Insurance Coverage
Business owners should be proactive in considering what type of insurance coverage is needed for their business. Ideally, a business owner should be looking at coverage that offers protection from all types of disaster. This could include theft, fire, flood, smoke, water, vandalism, damaged inventory, slip and fall and legal expenses.
When looking at different policies, managers should consider the assets of their business and what they need to cover. This might include assets such as technological equipment, employees or even work vehicles. By making a thorough record of the assets for the business, this information can be passed onto the insurance provider. They will then be able to determine what type of insurance the business requires.
Businesses must also consider the type of unique issues they might encounter that could impact their line of business, such a insurance against for skilled trades and contractors, professional services, shops and retail or a home based business.
Proactively Creating An Emergency Plan
Once business owners have assessed the issues their business could be exposed to, they need to create an emergency plan. An emergency plan can be used for two possible reasons. Either, it can be used to protect and secure the assets of the business such as staff. Or, it can be used to set up the possibility of a continuance strategy once the disaster has occurred.
There are also types of insurance to help recover financially when trying to recover, such as "Business Interruption Income"
Insuring a building, equipment and contents against loss is usually a given. But what about profits missed out on while trying to get a business up and running again? For many small businesses, an extended loss of income can be difficult, if not impossible, to recover from financially. That’s where Business Interruption Income insurance comes in.
Business Interruption Income protection will pay the loss of net income and continue paying normal operating expenses if a small business owner is unable to run their business due to a loss from a covered event. The policy should also include coverage for extra expenses to help limit loss and/or get back to business sooner.
Literal Emergencies and Escape Plans
Business owners should always have a plan mapped out for employees to safely exit the building in the event of an evacuation emergency. There should be a practiced exit strategy and a common meeting place for employees to congregate once they've exited the building. This will help make it easier for business owners to check that everyone got out of the building safely.
All employees and staff should be aware of the emergency plans that are in place. They should know how to leave the building in the event of an emergency. They should also know where they are supposed to meet with the rest of the staff once outside. Certain employees may also be provided with details of contingency plans if their input is crucial to its success. To ensure that the emergency plan is successful, it should regularly be tested. Employees should be trained to respond quickly in different situations. It’s also important that the plan is continuously built upon. Your business will change over time, and your emergency strategy should change with it.
There should also be an emergency kit and first aid kit on in an easily accessible spot that employees are aware of. In the emergency kit, there should be enough supplies to last anyone in the building a minimum of three days. Some of the things that should be included in the kit are a water supply and a wind up powered radio. A windup radio is important for two reasons. First, it means that anyone trapped in the building can be kept updated with what’s happening in the outside world. Secondly and perhaps more importantly, it can be used without a power source, as power may have been cut off during a disaster.
These days, even small businesses rely on tech to function. Many small businesses use tech equipment such as cloud servers for data storage and management. It is crucial that sensitive data is not lost or damaged during a disaster. As such, any servers or tech devices should be protected from power surges.
That is just one of the ways business owners can protect their business from a disaster. Emergency units should also be checked and upgraded regularly. An example would be fire sprinkler systems. Fire sprinkler systems can significantly reduce the damage from a fire in a small business. However, sprinkler systems do corrode over time. They must be regularly checked to ensure they will work in the event of a disaster.
Preparing For The Worst
A disaster in its many forms could occur at any time. For the sake of the business, it's best for owners to be prepared. They need to make sure that they are covered for any financial losses that they suffer from due to the disaster by having proper insurance in place. The best insurance plans can guarantee that a disaster won’t lead to the end of the company. In addition, contingency plans are essential. With forward thinking and preplanning, a small business owner can not only successfully navigate disaster while protecting their financial assets and employees, they can also fully recover and get back to business as usual as quickly as possible.