From fires to the destructive floods in Alberta, we have experienced a variety of unexpected disasters in recent years. People often think something like this will never happen to them, but we've seen that anyone can be affected. Statistics show that small businesses are often not prepared for emergencies and rarely think about disaster recovery – in the same way many people postpone writing a will or planning their funeral.
However, any business that's serious about longevity needs to stop and consider what risks they might face in future. Could your business location fall prey to a fire? What if one of your major suppliers gets cut off? Who will serve your clients if you can't? Do you have backup data in case your computer or storage facilities are destroyed?
Every business faces risks like these and should take steps to prepare for crisis, long before a frightening threat becomes a reality.
To begin, know your risks
Before meeting with an insurance agent, determine what risks you might face. What do you require to keep your business running? Most business policies cover tangibles like computers, inventory and physical assets, but there are other things you need to consider. No matter what type of business you have, your records (invoices, contracts, drawings, etc.) are valuable, so you have to consider the cost of losing this paperwork.
Valuable papers insurance
Several years ago, our office experienced a fire in the middle of personal tax season. At the time, most of our clients had dropped off their tax documents. Though papers were water damaged during the fire, fortunately we had the coverage necessary to get them freeze dried. Without that insurance, it would have been incredibly expensive to salvage these records or get them reproduced. Our insurance also covered the expense of removing mold spores, to clean the affected paperwork and deal with the health hazard.
Business interruption insurance
What happens if a disaster of some kind prevents your business from operating? You will still have costs that you must continue to cover. For example, we know of a bakery that was destroyed by fire and was forced to close for an extended period of time while finding a replacement location. In the meantime, they still had to make bank loan payments and lease payments on equipment.
Also keep in mind that you probably want to keep your staff while salvaging your business after a crisis, thus you will need coverage to pay salaries. You can even obtain insurance that compensates you for lost profits, though you must maintain good records in order to demonstrate your consistent level of profit and/or growth.
The value of cooperation
It is also wise to create a cooperative system with other businesses. For instance when we experienced the office fire, other businesses in town pitched in to offer us support in our time of need. An accounting firm brought us computers to use until we got up and running, another business provided temporary office space. While this happened organically in our case, it always pays to be proactive about the uncertain crises your company may face in the future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
