Plan Today for Tomorrow’s Disaster
With Mother Nature in a particularly destructive mood lately, Tim Schuster, EisnerAmper private business services manager, discusses the need for proactive disaster planning. Tim gives us a few areas that businesses can focus on to protect themselves, keep their operations running and maintain financial stability.
Dave Plaskow: Hello and welcome to The Bottom Line. This podcast examines the everyday business and finance issues faced by closely held and private businesses.
We hope to provide you with news you can use and what we like to think of in a “jargon-free” zone. I’m your host Dave Plaskow and with us is Tim Schuster, a manager in EisnerAmper’s Private Business Services Group. In this episode we’ll discuss the very important topic of disaster planning. Tim, good to see you again.
Tim Schuster: Dave, it’s a pleasure to see you as well.
DP: Tim, unfortunately we’ve all seen the devastation brought by this year’s hurricane season, which was a pretty bad one. In fact, according to the Red Cross for every dollar invested in disaster preparedness it could save seven dollars in recovery. Let’s talk about a few things closely held businesses can do to protect themselves from a natural or manmade disaster.
TS: Absolutely. There’s just a few points that I really want to discuss today. The first thing is make sure you have a communication plan and updated with staff, customer and vendor information. Each employee should know his or her role in the event of a disaster. And make sure that you have a chance to practice this. Some companies actually have a plan, but they don’t practice it. Make sure you do.
TS:Also, make sure critical information is backed up and exists in separate locations, so if something were to happen you would have access to this information. The cloud is a good data storage option. Back it up to the cloud, and you’re good to go. Next, look at your supply chain. Do you have alternative space you can operate from? How will you continue to get goods or services to customers in the event of a catastrophe? Be aware of your local recourses. You want to make sure you are in communication with or know who/where first responders are. The flip side also is knowing what your responsibilities are for informing the authorities should a catastrophe happen at your location. Perhaps most importantly, make sure that your employees are educated and trained in how to respond to a disaster. FEMA is a good resource to learn more about this.
DP:Excellent. Tell us a little about insurance.
TS:The first thing you want to do is make sure you have a good agent and be proactive in having discussions with him or her on the vulnerabilities and needs of your business. For example, are you in a flood prone area? You probably are going to need some sort of flood insurance. Are you located next to a chemical plant? Is there risk of an explosion? Another thing that businesses should really look into is business interruption insurance. I have a client whose business recently got damaged in Hurricane Harvey in Houston and, thankfully, he had business interruption insurance. Essentially, this covers a business’ income in case of a disaster. This insurance covers that gap so there’s no interruptions in income during the recovery period.
DP:Worth checking out for sure.
DP:There’s certainly a lot to talk about with respect to what you do, Tim, as a business and financial advisor.
TS:Yes. I look at things such as what kind of cash reserves you should have on hand. How will you continue to meet payroll and other financial obligations? Those don’t go away in a disaster. What new resources might be needed or new expenses occur as a result of a disaster? How will the interruption impact revenue?
DP:What’s the key takeaway?
TS:There are two actually. One is just be proactive in your planning. I can’t emphasize that enough. It’s great to have things written down, but you want to make sure that your staff actually reviews it and know what to do in the event of a disaster. Run drills. Think back to when you were in school. You had fire drills twice a month. You’ve got to keep doing that to make sure you’re ready to act when necessary. And make sure you have everything written down. Some people just talk about preparedness, but take the time to formalize it on paper. It’s time well spent.
DP:Don’t wait for the disaster to happen to come up with a plan.
DP:Alright Tim, now one of my favorite parts of the program.
DP:What’s our New Jersey fun fact for today?
TS:I think people forget how influential New Jersey has been in the modern era. Not more than a couple of miles from where we’re actually recording today is Edison New Jersey as in Thomas Edison who had his laboratory in Menlo Park. Here such inventions as the light bulb and phonograph were invented.
DP:Tim, thanks for this valuable information. And thank you for listening to the bottom line as part of the EisnerAmper podcast series. If you have any questions or there’s a topic you’d like us to cover, email us at email@example.com. And visit EisnerAmper.com for more information on this, and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business.