Prepare Your Business to Weather the Storm
By Jennifer H. Elder, CPA
Business owners who are in areas where hurricanes or other natural disasters can occur always need to be prepared for the worst, even if it never comes.
Careful planning will make a big difference in how quickly you get back to business. If you have a disaster preparedness plan, then it will be much easier to cope under difficult conditions. How far in advance you begin planning depends on how much work you have to do, but following are issues to consider:
- How much time will you allow your employees to prepare themselves, their families and their homes? If your area is placed under a mandatory evacuation order, you need to allow your employees enough time to get home, gather their possessions (and family), and get out.
- When will you expect your employees to return to work? Can you use a generator to provide power to your office? Can you access your computer data from a remote location?
- How will you stay in contact? One option is to create a “phone tree” so multiple people can share the responsibility for making calls to employees and co-workers. However, telephones, power and Internet connections all are lost early in a nasty storm and two-way radio service can become overloaded with traffic. If your land-line phone service is down, do you have a spare cell phone that you can forward calls to?
- Do you have a list of emergency contacts — especially your insurance agent?
- What preparations do you need to make to protect your office? Do you have hurricane shutters that can be put in place? Do office windows and doors need to be protected? How about furniture in front of those doors and windows?
- How will you protect computers? At a minimum, files should be backed up, but you also need to determine how many copies to make and where to house them. How many will you make and where will you keep them safe? Software programs and licenses should be secured in a safe location, such as a safe deposit box, but you also need a plan for computer equipment. Can you protect your computers from your office flooding? And how about your paper files? Are they secured against the elements?
- What can you do to protect yourself against theft? If your windows or doors are broken during a storm, your offices may be a target for looting. Lock every cabinet for which you have a key. Make sure checks, checkbooks and petty cash are accounted for and secured. Where will you keep key documents, including insurance policies and original corporate documents?
- Who will be responsible for preparing your model homes? Who will move furniture away from exposed doors and windows?
- How will you secure your job sites? Materials left outside, such as bundles of shingles left on roofs, become instant missiles in high winds.What will you do with the portable toilets? Who will be responsible for locking each house? Can you delay delivery of materials or appliances until after a storm?
Surviving the Aftermath
Once you have survived a natural or other disaster, you need to get your business back up and running as quickly as possible. Get in touch with as many of your employees as you can to let them know what is expected — do they come to work or not? Is there an alternate location? What if an employee has damage to personal property that needs to be addressed?
If you have damage, you need to follow five steps:
- Notify — Inform your insurance agent of the damage. Let the representative know whether you are filing a builder’s risk or general liability claim. Find out how the insurance company intends to handle the claim. When will they be sending out an adjuster? When can you start repairing and replacing damaged property?
- Stop further damage — Do whatever is necessary to prevent further damage. By all means, board up broken windows, pull back wet carpeting and pump out water. But don’t start repairing until you have documented the damage and have the go-ahead from your insurance company.
- Document — Take notes and pictures — the more the better. Identify the lot and address. Write a detailed description of the damage, for example: “water damage to the southeast corner of the bedroom drywall, wet to the touch along the baseboard and up two feet along one-half of the wall.” Take pictures from every angle, with close-ups for detail and wide-angle for an overall view, but be reasonable and safe when doing so: Don’t climb on a roof that may not be structurally sound just to get a shot.
- Organize — Depending on the extent of damage to your property and the surrounding area, the claims process can take several months to several years. Set up files for each lot damaged. Make a copy of all documentation, descriptions and pictures to give to the insurance company, keeping your originals. All conversations with the insurance company, the adjuster or your insurance agent should be documented in a memo, fax or e-mail. Be prepared to provide the insurance company with budgets and reports of the actual costs incurred. You may even have to provide copies of invoices or paid checks.
- Repair — Once your insurance company has given its approval, you can begin repairing and replacing damaged work. Some damage is obvious — missing shingles or ridge vents, or torn gutters. But other damage is harder to identify, such as moisture intrusion.
You may want to consider hiring an industrial hygienist who can assess moisture content and damage in areas such as drywall, baseboards, carpeting and insulation, using moisture meters and thermal imaging cameras. A professional can identify where there are issues and then prepare a protocol for addressing them.
For example, if you had water seep into a wall from around a window and the moisture content of the wall is only slightly elevated, you may to be able to address the problem by simply opening up windows and doors. If the moisture content is too high, the recommended solution may be removing a specific section of drywall around the damaged area and replacing the window.
If you decide to hire an industrial hygienist, go to a reputable company that has expertise with buildings that are under construction. Water issues in an unoccupied structure are quite different from those in an occupied residence.
There’s no such thing as being over-prepared. If you find yourself facing a disaster, you will rest easier knowing that you have done your best to minimize disruption to your business.
Jennifer H. Elder is a CPA and certified management accountant (CMA). She is CFO of Tiffany Construction in Melbourne, Fla.
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