Hello, I’m Judy Henderson.
Today I want to talk to you about insurance coverage, emergency planning, payroll and employee preparedness to help your business survive a major disaster.
First, review your insurance coverage. Inadequate insurance coverage can lead to a major financial loss if your business is destroyed, damaged or simply interrupted for a period of time.
Find out what records your insurance company will need to see after an emergency and store them in a safe place.
Second, plan for utility disruption. Look at which utilities are vital to your business’ day-to-day operations. Identify alternatives such as generators to power vital aspects of your business in an emergency.
And third, create an Emergency Plan. Include co-workers from all levels in the planning and as active members of the emergency management team. Consider a broad cross-section of people from your organization, but focus on those with expertise vital to daily business functions. These will likely include people with technical skills, as well as managers and executives.
Define crisis management procedures and individual responsibilities in advance. Make sure those involved know what they are supposed to do and train others in case you need a back-up.
Coordinate with others.
- Meet with other businesses in your building or industrial complex.
- Talk with first responders, emergency managers, community organizations and utility providers.
- Plan with your suppliers, shippers and others you regularly do business with.
- Share your plans and encourage other businesses to set in motion their own plans.
And remember to review your emergency plans annually.
Another thing to consider is payroll continuity.
Payroll should be high on the list of preparedness and continuity planning for a small business owner. Consider:
- Encouraging your employees to go to direct deposit rather than paper checks.
- Meet with your financial institution and find out what they can do to help you if you are struggling to make payroll after a disaster; and
- Talk with your employees about your ideas on how to ensure payroll if your business is interrupted.
Ask yourself the following questions when considering the survivability of your payroll system:
- How long could I pay my employees if I were not actively receiving customer monies for two weeks?
- Is your payroll system fault-tolerant? If it's automated, do you have back-ups of necessary financial data and are those back-ups stored safely off-site?
- How good is your relationship with your financial institution that handles your business account? If you needed an emergency loan to make payroll, how quickly could you expedite that process?
- How many of your employees require a physical check as opposed to direct deposit? Physical checks are more difficult to produce and distribute during a disaster than simply continuing direct deposit.
Make sure payroll providers have fiduciary bonds. If you use payroll service providers, ask if they have a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.
Employee preparedness is the single most important effort that a business owner can undertake to ensure the business will survive a disaster and recover. Without employees, there is no business.
Employers who have taken the time to help employees prepare themselves and their family are more likely to be effective during a disaster and the recovery phase. Encourage employees to have a plan, make an emergency kit and get informed on the realities of a disaster.
Consider alternative staffing plans to ensure your business is operational if 40 percent of your staff is unable to come to work.
Keep your employees informed regarding the status of your physical office.
What incentives will you offer employees to work over-time to respond to your company's disaster?
If you are in a building with elevators, do you have a way to safely evacuate an employee who is mobility-impaired? What provisions have you made to take care of any special needs employees in the event of a disaster?
These are question you have to be prepared to answer.
I hope the information that I have shared today is helpful in making sure your business is ready if a disaster strikes.
Thanks for listening.
For the IRS, I’m Judy Henderson.
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