Why Home-based and Small Businesses Need to Prepare for Disasters.
Some Basic Information from the Small Business Administration and other sources:
What do Apple Computer, Hershey's,HP, Mary Kay Cosmetics, Ford Motor Company and yes, CMS, Inc. have in common?
These well-known corporations all started out as home-based businesses. In fact, more than half of all U.S. businesses are based out of an owner's home. While much is said on TV about how taxes on the wealthy will kill small business. Most or the 27 million small businesses in the US do not take in vast amounts.
- 28% take in less than less than 100,000 per year. (this is revenue, not take home)
- About 27% generate between 100K and 500K
- 14.6% are between 500K and $1million
- Maybe another 5% do between $500k and a million. and 3% more that generate between 1-5 million in sales annually. the majority of small business owners salaries average less than $50,000 per year.
People constantly hear the phase "Small Business" and wealthy owners but don't have the correct definition of how big is a small business? The SBA considers a business a "small" if it is doing less than $250 millions in revenue
and has less than 500 employees. (A few businesses have a slightly different qualifying number) Most small businesses have less than 10 employees. and 52% are "Home-Based" small businesses with few if any employees. Few home-based or small business owners will prove to make a 6 figure income. Small Businesses and Disasters:
Because we now know that home-based and small businesses are the majority of businesses in a disaster area and we know that most sink the majority of assets back into the company (not off-shore banking accounts for a rainy day) small business is particularly vulnerable to failure during even minor disasters or business interruptions. Additionally because a disaster is a first time event for most owners, these business are unaware of the many things that can be done to reduce damage, continue operations and/or recover from this event. The last point to make here, is a shop owner may have a fire that destroys her business but is still able to go home and plan out a next move. The without planning, a home-based business losses the business and the stability of the family's place to live and far fewer of these businesses have any fall-back or proper insurance to cushion the blow.
Our experts would like to try make you more aware or small business preparedness and provide some great tips to deal with this type of emergency.
Why do I need to think about disaster preparedness with all I already do?
You many have bought some insurance for your home or business but do you ready know what it will cover under these situations:
• Fire with minor damage
• Fire with major damage or completely destroyed
• Flooding (Flood insurance is a different policy from you regular insurance) water leaks in from your basement windows in a storm - that's flood damage)
• Sewer back up or plumbing damage
• Mud slide (could mud make you house shift? that is probably not covered under home or flood insurance)
• Tornado verses hurricane damage. Some coverage is different state by state and company by company, you need specifics BEFORE it happens to you.
• Business interruption insurance. Disasters yes, but smaller problems like snow storms, community Haz-Mat, incidents, prolonged power, communications or gas outages could shut your business and even cause the loss of weeks of future business. What limits are in place on the policy to prevent from recovering a full payout?
• Riot, Terrorist damage or act of war. Sounds far fetched but many of the 2013 Boston business effected by the bombing may not qualify for payments under business interruption policies due to a terrorist act.
• If you are Home-Based your home owners insurance, if may not cover all (or any) of your computers, software, construction tools, inventory and special commercial equipment. Your home sewing machine is covered but your $18,000 embroidery machine is not without additional coverage.
• Are your vehicles "Personal" or because you have your company graphics on the side the insurance company now considers them "commercial" so they are not covering the car or supplies stolen.
Get the picture? Schedule an appointment with your insurance people and get specific answers to real life situations that would test your insurance policy in a disaster. After meetings like this it will expose things you were not aware of and loopholes that will cost you money. Generate some ideas for things you need to protect better.
Isn't it expensive to do disaster preparedness for my business and get all this stuff?
If you are a large company with a huge building, you may want or need a very expensive installed generator and fuel tank costing $40-100K to install. But thinking small
a couple of small UPS for your essentials (phone, cash register, laptop and printer) may cost less than $200 and a small generator to light your store
OK smart guy, what things should I do first (the low hanging fruit)
If a disaster stirkes how quickly should I react or should I just wait until the insurance people are done.
How can I run the business remotely and temporarally to loose the least amount?
In a National Disaster, what kinds of assistance are available?