With the official kickoff today of hurricane season, and with the National Oceanic and Atmospheric Administration predicting a very active season, experts say small businesses both locally and nationally should be finalizing plans for a possible natural disaster.
The NOAA predicts that this season could see 13 to 16 named storms with 10 becoming hurricanes, of which four to six could become “major” hurricanes of Category 3 strength or higher.
According to Barbara Weltman, a small-business expert, author and national lecturer, the first thing small-business owners should do is evaluate their insurance to make sure it covers hurricane damage.
“Your insurance policy may have an exclusion or clause. ? You may need a separate policy,” Weltman said. “Businesses may also think about having business interruption coverage that will pay you if your business is temporarily shut down.”
Aside from insurance, Weltman said, companies should develop an entire plan, including strategies to get through the initial disaster period, backing up important documentsand materials, having alternate vendors and educating staff on details of the plan.
Planning, she said, is particularly important given Red Cross statistics that show an estimated 40 percent of businesses affected by disaster never recover. The National Federation of Independent Businesses estimates that 60 percent of small businesses do not have a disaster-preparedness plan.
Aris Melissaratos, secretary of the Maryland Department of Business and Economic Development, said state businesses, especially small firms, should remember the chaos that resulted when Tropical Storm Isabel pummeled Maryland?s shorelines.
“Isabel was a devastating blow to small businesses in Maryland,” he said. “Physically there is not much to do, but having learned the lessons from recent storms, businesses should know how to back up data, books and how to store their stuff. Those are normal things that come with experience.”
Following Isabel, the department mobilized 44 staff members to help businesses recover, devoting nearly 1,600 hours to the effort to educate businesses on filing claims with the Federal Emergency Management Agency and the U.S. Small Business Administration. For its part, the SBA offered disaster loans at 3.1 percent to impacted businesses. More than 2,550 applied for the loans.
Kenneth R. Stanton, an assistant professor of finance at the University of Baltimore, said small-business owners often overlook disaster preparedness because they are too caught up in the day-to-day operations of their companies. This, he said, is the reason so many fail to survive after a natural disaster.
“Typically with a small business, someone?s livelihood is at stake,” Stanton said. “I think people?s perception about probability is sufficiently lower than it should be. The probability of your individual business being impacted is probably low, but the cost of preparing is well worth it.”
Stormy seas
» The Atlantic hurricane season runs from June 1 to Nov. 30. NOAA will issue a midseason update in early August, prior to the normal August-October peak in activity.
