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Can Your Business Finances Weather a Natural Disaster?


Can Your Business Finances Weather a Natural Disaster?


Palm Trees in Storm.jpegWith two major storms, Harvey and Irma, already having made landfall in the United States this hurricane season, it's a good time for small businesses to put emergency financial preparedness top-of-mind. After all, research has shown that 90% of businesses fail within a year of being taken offline by a natural disaster if they're unable to reopen within just five days.

Having spent 10 years building and implementing disaster recovery plans for several Fortune 100 companies with headquarters in Texas and offices/distribution centers throughout North America, I've seen how basic preparation can save lives, save business assets and speed up the recovery effort.  In a previous blog post, my colleague Pete Denholm, who is based in Florida, outlined the basics of a business continuity plan, such as storing financial records in the cloud.

I'd like to expand on Pete's timely advice with four additional strategies to keep in mind.

  • Employees are your most valuable resource. Make their safety your top priority. If a fire, tornado, flash flood or other emergency occurred at your place of business, would you be able to safely evacuate or shelter your employees, customers, vendors or anyone else who happened to be onsite? If you don't know, it's time to draw up an evacuation plan and make a test run with your staff.
  • Use checklists. One of the first casualties in any natural disaster is a sense of order. offers a variety of free downloadable checklists, such as "What to Take When You Evacuate" (all of your vital business-related passwords, for example) and "Critical Business Functions."
  • Even distant disasters can have an impact. Budget accordingly. A natural catastrophe doesn't have to strike your business directly to have a significant negative impact. Case in point: Gas prices rose an average of 18 cents per gallon across the United States in the week after Harvey hit the Texas coast, shutting down many refineries. The increase was "higher than most experts had given as a worst-case scenario," Time magazine reported. If your business relies on a fleet of vehicles, it pays to budget for unexpected rises in energy costs.
  • Even if you have flood insurance, it might not cover your losses. Is your business located in a known flood zone? If so, you might want to consider moving, even if you have flood insurance. The Wall Street Journal reported that the National Flood Insurance Program — the only real flood insurance available in the United States — is badly overstressed and often provides inadequate coverage. For example, a Maryland cafe that was damaged in a 2016 flash flood suffered $250,000 in damages along with a potential $450,000 in lost revenue. Its federal flood insurance payout was just $109,000.

According to, every dollar invested in emergency preparedness can yield $7 in return. That's something every small-business owner needs to keep in mind. Money spent on disaster preparedness isn't a luxury — it's a necessity.

Andy Hale


Andy Hale

Andy is managing director at Supporting Strategies | Texas.

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