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Preparing for the Unexpected

Being your own boss has its rewards. You get to make the rules and reap the profits. But there’s also a downside. Things will happen that are outside of your control and, as owner, you will have to address them. Are you up for the challenge? Read on.

Disaster Readiness and Recovery

Disasters can happen anytime, anywhere and they don’t have to be as devastating as a flood or a fire to seriously impact your business. Suppose your power goes out for half a day? Or 25% of your employees come down with the flu in a single week? And if the disaster is a major one — say a Category 3 hurricane — the destruction can be catastrophic. An estimated 25% of businesses affected by such an event never reopen at all.

While natural disasters cannot be prevented, steps can be taken in advance to lessen their effects. And the time to prepare is now.

 

Natubhai Patel
A bridge loan helped Natubhai Patel fix the damages and replace food that was lost after Hurricane Irma. | Photo: Michael Price

Q

I’ve never personally experienced a hurricane, but I’ve seen the damage these storms can do. What steps can I take right now to prepare for the possibility of a catastrophic storm or other natural disaster and the disruption of business it would cause?

AWhile we are powerless to prevent hurricanes and other catastrophic natural events or man-made disasters, a proactive disaster management plan can mitigate their effects and help speed your return to normal operations. Here are some topics to consider in developing your plan:

Identify potential hazards. In addition to the natural events most likely to impact Florida – hurricanes, floods and sinkholes – you should consider the likelihood of man-made disasters, such as fire, toxic chemical spills, civil unrest, vandalism and terrorism. Even if your business is not directly affected, these events could disrupt your utilities and supply chains.

Create an operational contingency plan. Could you operate out of a nearby rented office space, storefront or your own home? Perhaps you could share space with a supplier. Determine what equipment and other resources will be needed to continue operations. Back up computer files and store them off-site or on the cloud.

Ensure the safety of employees and customers. Develop an evacuation plan that includes access to shelters, hospitals and other emergency services. Keep emergency telephone numbers clearly posted, and maintain up-to-date emergency contact and essential medical information for all employees.

Take a safety inventory. Regularly clean and test smoke detectors and change batteries at least once a year. Have several well-stocked first-aid kits on hand; make sure all fire extinguishers are fully charged. Keep a supply of all types of batteries used in your business and consider purchasing a portable generator for emergency power.

Review your business insurance coverage. It should be enough to get your business back in operation at the earliest possible date and cover the replacement cost of buildings, contents and essential facilities. Additional coverages to consider include: windstorm, flood and business interruption.

Answer provided by Gray Poehler
Business Counselor, SCORE, Naples Chapter

 

 

Q

I’ve heard that the claims process following a hurricane can take a long time and that funds aren’t immediately available. So what do I do in the meantime? How can I reopen my business and continue to pay my employees?

AI understand your concerns about the claims process and ready availability of funds, but here’s the good news. Following a natural disaster in Florida, SBDCs all across the state serve as the business community’s primary contact for processing and submitting the paperwork for Florida Small Business Emergency Bridge Loans. For a business physically or economically impacted by a disaster, a bridge loan is the “first step” to receiving short-term, interest-free funds. As its name implies, the bridge loan provides quick access to working capital by helping a business bridge the gap from time of impact to the time when longer-term solutions, such as sufficient profits, federal disaster assistance or insurance proceeds, become available. Activated by the governor following a disaster, this program is funded by the state of Florida and it is a loan, not a grant.

To further allay your concerns, let me give you an example of how a bridge loan worked for one of our clients. After Hurricane Irma roared through Jensen Beach in September 2017, convenience store owner Natubhai Patel returned to find a soggy mess at his Seabreeze Food Store. The roof had sprung a leak, there was no refrigeration, and every bit of food was ruined. Patel turned to the Florida SBDC at Indian River State College for help in securing a bridge loan. “The loan helped us fix the damages and replace all the food that was lost,” he says.

Answer provided by Katherine Culhane
Associate Director, Florida SBDC at Indian River State College

 

On-site recovery assistance
In times of disaster, the Florida SBDC Network deploys its Mobile Assistance Centers into communities with greatest need so that affected business owners can receive on-site assistance close at hand. These assistance centers are staffed by Florida SBDC consultants who can help business owners recover more quickly by answering questions, creating short-term recovery plans and assisting with the completion of loan applications.

 

Find Back-Up Suppliers Now!

Don’t wait until a storm is bearing down to cultivate relationships with back-up suppliers; do it now! In the aftermath of a disaster, everyone is looking for help. To avoid being put on a wait list for repairs, become a “preferred customer” by building a network of reliable repair services and suppliers you can call on anytime.

Advanced Protection

Insurance is available to protect against almost any business risk. Consult with an insurance agent to determine which of the following types you’ll need, then compare terms and prices to find what’s right for you.

For your property
General Liability protects a business against financial loss resulting from bodily injury, property damage, medical expenses, libel, slander, lawsuits and settlement bonds or judgments.

Product Liability protects against financial loss resulting from a defective product that causes injury or bodily harm.

Professional Liability protects against financial loss resulting from malpractice, errors and negligence.

Commercial Property protects against loss and damage of company property due to events such as fire, smoke, wind and hail storms, civil disobedience and vandalism.

Home-Based Business Insurance A rider added to your homeowners insurance that offers some protection for business equipment and liability coverage for third-party injuries.

Business Owner's Policy combines all of the typical coverage options in a single package at a reduced price; generally available only to businesses with fewer than 100 employees.

Additional options:
Flood Property insurance does not cover damage from floodwaters, whether from rivers, lakes or oceans; however, business owners may insure their building and contents for up to $500,000 each through the federal government’s National Flood Insurance Program.

Windstorm Available through Citizens Property Insurance Corp., the state-created insurance provider, or private insurers; type of construction, size, location and proximity to water determine cost and availability.

Business Interruption Pays ongoing expenses such as rent, utilities and, in some cases, payroll when a business must close due to an insured property loss — i.e., in the aftermath of a hurricane.

 

For your people
Directors and Officers Liability Protects the company and individual executives should employees, shareholders, government agencies and/or others sue directors and officers over financial losses due to alleged company mismanagement.

Key Employee Protects a business following the death of an individual considered vital to the firm’s success. Similar to a life insurance policy, except the death benefit is paid to the company rather than to the individual’s family.

Workers’ Compensation Florida law requires employers with four or more full- or part-time employees to have workers’ compensation coverage for their employees. Sole proprietors and partners are not considered employees; corporate officers are, unless exempt.

 

For your ideas
Intangible assets — your company’s reputation, name recognition, know-how and/or creative ideas — have no physical existence, but they have commercial value and should be protected by one of the following:

Patent A patent is a property right granted by the U.S. Patent and Trademark Office to an inventor to exclude others from making, using or selling the invention without permission for a specified period of time. Visit www.uspto.gov for information and filing instructions.

Trademark Words, symbols, names, internet domain names, packaging and labeling that distinguish one company’s products from another’s may be registered as trademarks through the U.S. Patent and Trademark Office or, for more limited state protection, through the Florida Department of State, Division of Corporations.

Copyright An author’s exclusive right to use his or her original writing, musical compositions, artistic designs and other works of expression is automatic when a work is created, and lasts 70 years after death. Official registration is optional in most cases; for protection, simply add the word “copyright” or © symbol, first year of publication and name of copyright owner(s) at the top of the page.

Cybersecurity

While cyberattacks against big companies get the lion’s share of media attention, it is small businesses that are actually in greatest peril, and Florida businesses may be especially at risk. According to the FBI, Florida ranks No. 3 in the nation for cybercrime incidents. To avoid becoming a victim, learn all you can about cybersecurity and take preventive measures now.

Q

I’m a small niche business so I can’t imagine anyone would want to hack my company. Do I really need to be concerned about cybersecurity?

AYes, and here are two reasons why:

1. More than half of cyberattacks nationwide are aimed at small- and medium-sized businesses, and they are on the rise. In 2017, 61% of cyberattacks targeted small businesses, up from 55% the previous year. You need to be concerned about cybersecurity because cyberbullies are primarily concerned with targeting businesses just like yours.

2. Thieves think differently about business size. They know, for example, that a small jewelry store probably has more valuables to steal than a large lumberyard. Likewise, your business may be small in stature, but it likely contains important assets in the form of confidential digital information on clients, employees, vendors and/or partners that need to be protected.

Whether you are working solo from an office in your home or running a mid-sized company with 50 employees, you must take responsibility for the safety and care of all of your business assets, digital included. Don’t wait for a cyberattack; act now!

Answer provided by Marc Farron
Consultant, Florida SBDC at Florida Gulf Coast University

 

5 Tips to boost cybersecurity
1. Be proactive. Equip all computers with antivirus software/antispyware and update often. Safeguard your internet connection with a firewall and encrypting information. Password protect router access on your Wi-Fi network.

2. Educate employees. Establish written policies for handling/protecting sensitive data, using social networking sites and reporting lost or stolen equipment; hold employees accountable if they violate these policies.

3. Limit entry. Create a separate user account for each employee and restrict administrative privileges to trusted IT staff and key personnel. Use multifactor authentication (password + additional information) to gain entry; change passwords often.

4. Create backups. Back up critical data on all computers automatically; store copies offsite or on the cloud.

5. Control physical access. Lock computers when unattended; require employees to password protect personal mobile devices that access your business network and install security apps to prevent data theft.

 

Florida Cybersecurity Conference
In 2018, Florida SBDC hosted 455 participants at 25 cyber workshops across Florida … and more are scheduled. Check with your nearest Florida SBDC office for upcoming events and locations.

Need Help?

Every small business should be prepared to weather a cyberattack. If yours is not, look to the Florida SBDC Network for assistance. Attend a workshop on cybersecurity basics for small business and/or connect with an Florida SBDC counselor for one-on-one guidance in structuring a cybersecurity plan tailored to your specific needs.