Having no recovery plan can be a bottom-line disaster

Having no recovery plan can be a bottom-line disaster

Marylou Doehrman

Small businesses are vital to economic recovery in the aftermath of a disaster, according to a national poll of 325 business owners taken last month. Yet, 79 percent of the responding business owners and managers said they do not have a disaster recovery plan in place.

No plan could spell further disaster – just ask New Orleans business owners.

Six weeks after Hurricane Katrina, the Small Business Administration delivered 58 checks totaling less than $550,000 to New Orleans small business owners. The amount represented just 2 percent of the 54,000 applications submitted to and approved by the SBA, said Mike Rudd, the director of client services for International Profit Associates Small Business Research Board.

IPA, an Illinois-based management consulting company with more than 1,800 employees, conducted the poll.

Big business has begun to rally around the small business owners caught off guard by Hurricane Katrina, Rudd said.

Private businesses have had to step up to the plate, in place of government, Rudd said. Part of the problem (with the SBA) is that too many people defaulted on loans after 9/11, he said. For every $5 they gave out, $1 was defaulted on.

Using SBA money affectively is vital. Rudd is going to New Orleans next week to counsel business owners. His efforts are part of a promise IPA owner Gregg Steinberg made during President Clinton’s Global Summit.

Small businesses are truly the backbone of our economy, Rudd said.

Citing statistics from the U.S. Department of Labor, he said small businesses create 75 percent of the net new jobs and represent 99.7 percent of all employers, 50.1 percent of the private work force, 40.9 percent of the private sales of products and 95 percent of all U.S. exporters.

But very few small companies have disaster plans, he said.

Ninety percent of small businesses either don’t have a plan or don’t have an adequate plan. The same is true for big business, said Bill Wolf, president of William Wolf & Associates, crisis management specialists.

Wolf moved to Colorado Springs last December from San Diego, where he served as a police officer and the city’s emergency management coordinator from 1979 to 1996. Wolf also helped develop emergency plans for the 1984 Olympics, two Super Bowls, the 1996 Republican Convention and the America’s Cup yacht races.

He has served on emergency preparedness and anti-terrorism committees and was recognized by the Federal Bureau of Investigation for his work on San Diego’s anti-terrorism efforts.

I don’t care how good your plan is – the plan is just 20 percent of the overall success, Wolf said. Thirty percent is delineating tasks and ensuring people know their role in an emergency, which requires ongoing training. Fifty percent is practice.

There are three types of practical applications of training, Wolf said. The first is discussion – table top exercises. The second is functional – command/control, administrative and management response exercises. The third is full scale – an exercise that involves everyone: a fire drill, a simulated crash, etc.

Table top discussions should take place monthly, and functional and full scale practices should occur quarterly, Wolf said. Surprise drills are ineffective, he said. You do not test your employees, you train them.

Wolf said weaknesses in the following categories threaten a disaster recovery plan: management, the perception of the program’s scope, expertise, complexity, training and practice, maintenance and implementation.

Who is designing or heading up the disaster plan – do they have emergency preparedness experience, Wolf asked. And can you think outside of the box as to what could happen to you?

A disaster isn’t necessarily a Hurricane Katrina.

Anything that disrupts the normal flow of business, the revenue stream – a fire, a flood, an electrical storm, the death of an employee – is disaster to a business, Rudd said. A major food poisoning could take a business down for a couple days, Wolf said.

The psychological aspect of developing a plan keeps business owners from acting on it. And it can be overwhelming to a business owner centered on meeting Friday payroll, Rudd said.

Small businesses pride themselves on surviving anything – it’s not part of their makeup to think otherwise, Rudd said.

But what has happened in New Orleans should be a lesson learned, he said.

The bureaucracy is so balled up, and we keep floating other balloons in the news to draw attention away from it, Rudd said. Meanwhile, the businesses are suspended in air.

Government has a moral obligation to address the issue of emergency preparedness for businesses, Wolf said.

However, Rudd and Wolf agree that businesses can’t rely on the government.

The biggest detriment to emergency management is apathy, and it’s not always intentional, Wolf said. Companies are focused on the bottom line, he said, but they have a responsibility to their clients and employees to mitigate a disaster, and it doesn’t matter whether it’s a big corporation or a small retailer.

This article was originally published in The Colorado Springs Business Journal., another Dolan Media publication.

Copyright 2005 Dolan Media Newswires

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