Colorado is facing yet another year of state-wide wildfires which are impacting tourism and businesses across the state. However, many small businesses do not have disaster contingency plans in place. An article in the Wall Street Journal estimates that roughly 25% of small businesses fail to reopen after a disaster. The Article further offers the following tips to help protect your small businesses from the financial impacts of a disaster:
- Put together a set of instructions outlining how your business functions and security passwords and contact information for key vendors, clients, employees, and insurance providers – store this information offsite in a secure location such as a safety deposit box.
- Account for extra working capital when raising start-up funds.
- Begin building a cash safety net to cover short-term expenses such as payroll and suppliers.
- Ensure that your key business partners have a business continuity plan so that your business is not at the mercy of another company that is ill prepared for disaster.
- Obtain insurance beyond property coverage such as fidelity and business interruption insurance that will cover you in the event of employee theft and for loss of income and relocation expenses resulting from a disaster.
We also recommend that you include a disaster recovery plan in your company’s policies and procedures. Such a plan should include information such as employee and management contact information; evacuation procedures; business recovery phase policies such as temporary command and procedures for relocation and the recovery of necessary business files and documents; and implementation procedures such as letters to be sent to clients and vendors providing relevant information about the status of your business.
If you would like more information regarding preparing your business for a potential disaster or to review your current plan please contact our Business Law Group partner, David A. Closson at [email protected].