It’s doubtful that American small businesses have ever been impacted by as many potential business interruption events as we’ve seen in the past 20 years: beginning with the Oklahoma City bombing, the events of 9-11, and now the Boston bombings; hurricanes like Katrina and Sandy; tornados like those that wiped out Joplin, MO, and Hackleberg, AL, and many floods.
Recently we asked our online audience if they were financially prepared for an interruption with this question: “Could your business handle the financial impact of a business interruption?” Almost one-fifth said they, “… have cash and business interruption insurance if we need it,” and a little more than one-third reported they had “…cash and credit if we need it.” The other half admitted, “We would be hurting if it lasted more than a few days.”
There are three kinds of interruption preparation to focus on: operational, financial and digital. Here are examples of how to manage all three:
Operational
What would you do if your building became unavailable to you or your customers?
- Use laptops that allow key employees to work and connect remotely, both internally and with customers. And make sure they have high-speed Internet connections at home.
- Identify and become proficient with cloud-based applications that serve as an alternative for any installed programs that may be lost.
Financial
A significant part of the working capital of most small businesses is from cash flow. What would happen if your cash flow was interrupted?
- Purchase a “business interruption” rider on your property and casualty policy to pay you cash upon the acceptance of a claim. Read the fine print; all policies are not created equal.
- Maintain a close working relationship with your banker so you won’t have to introduce yourself to the person you might ask for a disaster loan.
Digital
Small businesses are increasingly using digital assets more and physical assets less. Are you prepared to protect your data as diligently as you do your building, equipment and inventory?
- Assign one person to be in charge of keeping all computers enabled with a proven firewall and anti-malware program, and keep them current.
- Regularly copy critical data from your hard drives and store it offsite. Better yet, backup your date with one of the cloud-based backup and recovery firms. Search for “online data backup.”
Business interruption – it’s a matter of when, not if.
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The Question:
In preparing for business over the summer, what does your economy look like?
38% - We’re seeing an improving economy for the next few months.
50% - We expecting our economy to maintain the current level this summer.
3% - We’re forecasting a sales decline from recent business conditions.
9% - Our business has been down and we don’t see improvement soon.
My Comments:
As you can see, less than four of ten of the respondents to our poll last week are expecting the economy to pick up over the summer. The rest, 62%, think business through the summer will be no better or worse than the recent past.
It’s almost four years since the technical end of the Great Recession and the U.S. Main Street economy is still limping along. When considering the awesome entrepreneurial energy that is pent up in America today, one has to wonder what could cause this. In an upcoming Feature Article I’ll answer this question and challenge those who can solve the problem. Stay tuned.
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In this week’s video I list the top 3 reasons why small business owners don’t fund a retirement plan.
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The Question:
How much outsourcing of tasks (payroll, accounting, web development, etc.) do you do?
24% - We outsource anything we can that isn’t our core competency.
39% - We do some outsourcing and expect to do more.
17% - We haven’t done any outsourcing but probably should.
20% - We don’t outsource and don’t plan to.
My Comments:
One of the most powerful and important small business management practices of the past generation is outsourcing: contracting with another person or company to perform certain tasks your business needs but is not good at. You should focus on your core competencies - usually whatever touches customers - and let someone else perform the non-core competency tasks.
As you can see from our responses to this week’s online poll, 63% are doing at least some outsourcing. I’m extremely pleased to see these numbers, but more than one-third are still MIA as outsourcers. This will change in time.
I’ll have more to say about outsourcing in an upcoming Feature Article, including the difference between internal and external outsourcing. Stay tuned and thanks for participating.
During a recent segment on The Small Business Advocate® Show I explain how outsourcing could help make you business run more efficiently. Click the link below to listen.
Use outsourcing to get that last drop of operating efficiency
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In this week’s video I talk about using the power of storytelling to grow your business.
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The Question:
Could your business handle it if your community was hit with a shutdown like Boston was recently?
18% - We have cash and business interruption insurance if we need it.
35% - We have cash and credit if we need it.
47% - We would be hurting if it lasted more than a few days.
0% - We could not survive a multiple day business interruption.
My Comments:
Last week, in light of the essential lockdown of Boston due to the Marathon bombings, we asked our online audience about their emergency financial preparedness. As you can see above, over half of our respondents felt they would have the financial foundation to weather an interruption. Even the rest were only worried about a prolonged interruption of more than a few days. And I’m happy to report, no one said they could not survive a multiple day business interruption.
There are two kinds of business interruption preparedness to work on: physical and financial. I’m going to have more to say on this topic in my Feature Article next week, including preparation suggestions. Thanks for your participation.
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Be sure to check out two interviews from The Small Business Advocate® Show with Jeff Zbar about emergency preparedness within your small business. Jeff and I discuss things you and your business need to do in case of emergencies.
Is your small business prepared for a disaster? with Jeff Zbar
Small business emergency plan. with Jeff Zbar
Check out more of Jim’s great content HERE!
Take this week’s poll HERE!
Watch Jim’s videos HERE!
