Archive for the ‘Everyday Disaster’ Category

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Hudson River Recovery Effort

Tuesday, August 11th, 2009
Recovery Effort Viewed from the Ferry on the Commute Home

Recovery Effort Viewed from the Ferry on the Commute Home

Nine people were killed Saturday, when a private plane collided with a sightseeing helicopter over the Hudson River. I saw the aftermath of the tragedy from my home office when I was on the phone as a guest on a live talk news program. For the past several days, divers from the New York Police Department and the Army Corps of Engineers have been working to recover the bodies of those who died in the crash as well as the remnants of the aircraft for official inspection by the National Transportation Safety Board. My commute home today was delayed as the ferry boats across the Hudson River were slowed to accommodate the U.S. Coast Guard boats involved in the recovery effort. It was a sobering reminder of a terrible tragedy.

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Flooding in Kentucky, Drought in Texas

Thursday, August 6th, 2009

Louisville, Kentucky was flooded when a storm left the area with more than seven inches of rain, resulting in flash flooding, and power outages. Thankfully, no casualties or serious injuries resulted from the storm, but the rainfall overwhelmed the area’s public infrastructure and caused major disruptions to local small businesses. The mayor of Louisville estimates that the main library sustained $1 million in damages when flooding destroyed books. Firemen led water rescue efforts for people stranded as animal shelters evacuated animals to minimize casualties due to drowning.

At the same time, Texas is experiencing a severe drought with 100-degree temperatures in an area that includes Austin, Dallas, Houston and San Antonio.  As a result, mandatory water restrictions have been imposed on 230 Texas public water systems, which prohibit practices such as watering lawns or refilling swimming pools.  It bears repeating; prepare for the more frequent disasters, such as drought and flash flooding, as such measures will yield a more immediate benefit against a more imminent threat at more reasonable cost.

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It’s Raining Losses

Monday, June 29th, 2009
Rainbow Over Geneva, Not New York

Rainbow Over Geneva, Not New York

Everyday disasters are taking their toll on small businesses in New York City where 21 of the 26 days of the month to date have been rainy and unseasonably cold. Businesses that cater to outdoor pursuits, such as street vendors, outdoor cafés, sports entertainers, beach vendors, Central Park carriage rides, amusement parks and others have seen dramatic declines in seasonally-adjusted revenues for the month of June.
Cumulative rainfall in New York City for the month of June is close to nine inches. I suppose the bright side is that umbrella vendors may be faring well this month. The economic impact of the rainfall is unlikely to make the news; news media prefer more dramatic, and less frequent disasters, such as major hurricanes. But this certainly illustrates how the everyday disasters are often ruinous to small businesses. I photographed this rainbow appearing over Lake Geneva when I lived in Switzerland. Unfortunately, for New York City small business owners, the rainbow has not yet appeared.

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Storefront Access

Tuesday, May 26th, 2009
No Physical Damage, But No Customers Either

No Physical Damage, But No Customers Either

A small bomb exploded outside an apartment building on Manhattan’s Upper East Side over the weekend. Newspapers reported that residents were unnerved by the blast and the nearby Starbucks coffee shop sustained moderate physical damage. Unfortunately, this is not the first small explosive device to detonate in a residential neighborhood in Manhattan. The police are looking for clues before the bomber strikes again. But the lesson that the small businesses in the affected area are likely learning now the hard way concerns the increasing disconnect between physical damage and economic losses and the nature of everyday disasters. The old insurance paradigm correlated economic losses with physical damages and provided commensurate benefits. If your office building became a giant smoking hole in the ground, you would likely have commercial insurance to indemnify the loss. But in a service economy, economic losses are becoming less and less correlated with physical damages. Apart from the Starbucks coffee shop, no other retail business in the neighborhood where the bomb exploded sustained physical damages and thankfully, there were no injuries or loss of life. But all of those businesses will lose revenues as pedestrian access to their storefronts and restaurants will be resticted for some period of time as the cleanup work is done and the police gather evidence.  This is why business interruption insurance is so important; it replaces revenues lost during a period of disruption. But most storekeepers lack this important coverage. Don’t learn this lesson the hard way. Have a conversation with your insurance broker about whether business interruption insurance is appropriate for your business.

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Be Careful About Your Information

Monday, May 18th, 2009
Each One Adds Up

Each One Adds Up

I had advised that small business owners should write to each of the publications to which they subscribe advising that your name, address and other contact information should not be shared with third parties. The idea is to reduce the amount of time that telemarketers can waste. This will improve your productivity in normal business operations. It will also help you to focus on critical communications in the event you are disrupted by a disaster. Spam, telemarketing and unwanted solicitations become more than a nuisance when you are operating from a remote location and trying to deal with a serious disruption to your business. I recently had the experience of receiving persistent calls from a telemarketer who played coy in response to my question as to how he obtained my personal information.

Business that seek contracts with the U.S. federal government are required to register with Dun & Bradstreet, which I did for my own small business when I was responding to a Request for Proposals of the U.S. Agency for International Development. As my registration was a matter of some urgency in order to ensure that I would meet USAID’s deadline, I gave my cell phone number to Dun & Bradstreet solely for the purpose of processing  my registration.  Unbeknownst to me, Dun & Bradstreet re-sold this information to third parties. I began to receive telephone calls on my cell phone from Fortune 500 companies seeking to sell products and services that are totally inappropriate for my small business. Ordinarily I would switch off my cell phone in business meetings out of courtesy to the others present. But as I would explain to other participants at the beginning of each meeting, my circumstances were not ordinary. As my mother was recovering from a traumatic brain injury, I needed to ensure that I could be reached at all times. Since that was the only use of my cell phone, you can imagine how my heart would race and my palms would sweat whenever that phone would ring. And you can further imagine my fury that the calls were unwanted solicitations. When I traced the source of the calls, I notified Dun & Bradstreet in writing that my information is not to be sold to third parties and I wish to be placed on their internal “Do Not Call” list. You should do the same. I think it is an appalling practice that D & B would re-sell this information without the consent of the small business owner, facilitating the abuse and waste of our time. It is particularly offensive to me because we are a captive audience, required to register with D&B if we want to bid on government contracts. Stop the abuse; notify them to keep your information private.

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Spring Snow Storm Disrupts Small Businesses, Travelers and Residents

Monday, April 20th, 2009
Beautiful but destructive

Beautiful but destructive

Over the weekend, a powerful storm left more than three feet of snow across the Rocky Mountains and areas west of Denver, stranding hundreds of travelers, as airlines canceled flights. United Airlines, which has a hub at Denver International Airport, canceled 76 flights Friday, 14 on Saturday and delayed several others. Dangerous road conditions caused numerous traffic accidents across the area, one of which resulted in a fatality. The snow fall ranged from 3 to 10 inches in Denver to as much as 52 inches in Pinecliffe. The snow had prompted the closure of Interstate Highway 70 between Vail and Golden, forcing more than 500 people to spend the night at American Red Cross shelters in Idaho Springs and Georgetown. The National Guard delivered two truckloads of cots, blankets and food. About 15,000 homes and businesses in and around Denver were without power. Restoration of power was delayed by the lack of access to roadways caused by heavy snowfall. While severe snowstorms in the spring are unusual, power outages are not. This presents an opportunity for all small businesses to remember certain basic preparations for dealing with power outages.

Protection of computers and data.
Even when electrical power is available, there are quality issues, like peaks in voltage as well as micro-outages. Since IT equipment is sensitive, use an uninterruptible power supply unit (UPS), which is usually a surge protector, together with a small buffer battery that would supply energy for about ten minutes after the electricity supply is terminated, enough to finish important work and to shut down the system. Most units support an automatic shutdown before the battery is completely depleted. Some buildings supply self-generated backup power. Please note that this power is usually much “dirtier” than power from the outlet. Under these circumstances, you must use a UPS unit, preferably one that is designed to smooth out erratic electricity supply.

Certain high-rise apartment and office building have back-up generators that provide low levels of power for up to fourteen hours after termination of the central electrical supply. Many workers and residents of these buildings mistakenly believed that a volt of electricity is a volt of electricity irrespective of whether it comes from the central utility or a back-up generator. They often use their home and office computers with electricity delivered from a back-up generator, without the benefit of a UPS unit, and damage their computers in the process. Also, remember to turn off appliances and equipment during a power outage as power supply may be erratic when it is initially restored.

Basic measures of preparation.
Of course, all of the basic measures for preparation apply (keeping battery-operated radios, extra batteries, non-perishable foods, flashlights, bottled water, etc.) for both your home and your office. It also bears repeating that measures recommended for small business contingency will yield immediate benefits to your business in terms of improved operating efficiencies, even if disaster never strikes. Finally, remember that each suggestion put forward for small business contingency solutions can be applicable to home and to personal needs.

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Sign of the Times

Saturday, April 18th, 2009
Lots of Space Here

Lots of Space Here

Yesterday, I participated in a telephone interview with Joyce Rosenberg, the small business writer of the Associated Press for an article she was researching on small business disaster preparedness. To see the article, which was published today, click here.

In addition to covering the small business beat, Joyce also writes about banking and finance issues for the Associated Press. As we are both based in the New York City area, our conversation took a turn around the topic of the banking crisis and its implications for our local economy. I took this photograph of an empty subway car (the #5 from the Wall Street station!), a sure sign of the times. It wasn’t that long ago when we worried about the risk of injury to passengers on overcrowded subway platforms. For the local small businesses that serve banking clients, such as restaurants, accounting firms, law firms, messenger services and copy and printing businesses, the ripple effects have been devastating. Unfortunately, business interruption insurance only obtains when there is a triggering physical event, not an economic downturn.  In my former neighborhood (where residents choose to live largely because of its proximity to Wall Street), there is an entire apartment building in foreclosure. Tenants who have lost their jobs are seeking to terminate their leases without penalties.

Speaking from experience, one of the most challenging issues in disaster recovery is for the small business to make a hard-headed assessment about whether cash reserves can sustain the business until revenues return to pre-disaster levels. This is not an easy assessment to make as small business people are optimistic by nature. In discussions with my peers in the Lower Manhattan small business community today, we arrived at a consensus view that the economy will recover, but Lower Manhattan and Wall Street will likely never again return to the wealth-generating capacity of the past. It is difficult to be a global financial capital within a debtor nation. For the local small businesses that depend on banking clients, it is time to make some tough decisions.

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Seeing the Forest for the Trees

Wednesday, February 18th, 2009
Seeing the Forest for the Trees

Seeing the Forest for the Trees

I enjoy reading materials from a wide variety of sources, as this practice stimulates creativity. When I read the story in USA Today about the high turnover rate among nursing staff and attempts to remedy that problem with residency programs and careful mentoring, I thought of the quality control issues implied for hospital patients with such turnover. Then I tried, without success, to find comparable figures for the small business sector. But certainly the message is clear: higher staff turnover correlates with higher quality control problems which, in turn, imply something about the organization’s management practices. These management practices, and the staff turnover they cause, can increase the susceptibility of your small business to human error, the most frequent cause of disasters. Develop more enlightened management practices, retain experienced and valuable staff and your business will become more secure and more resilient. So, let us in the small business sector all learn from the mistakes of the hospitals and consider what we can do to improve our working environments.

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Home Based Offices

Sunday, February 15th, 2009
Home office

Home office

With the economy officially in recession, many people are working from home, either voluntarily or involuntarily. According to the Census Bureau, nearly half (49%) of all businesses in the U.S. are home-based. Add to that the number of displaced workers who are consulting from home, freelancing or using their home offices as a base from which to seek other employment and corporate employees who telecommute and you have a large home-based workforce.

If you operate your small business from home or you and/or your employees work from home occasionally, you need to be as vigilant about computer security as you would working from a traditional office. If you issue laptops to your employees, make sure that they understand that the laptops are for business use only. Do not allow your teenagers or others to use them as their most popular music and video download sites and social networking sites are often misused for mal-ware and other types of viruses. Exercise the same degree of caution with respect to passwords, VPN’s and other protocols as you would in the office.

Finally, be aware that your homeowner’s or tenant’s insurance almost certainly does not cover commercial activities performed inside the home. You can obtain a policy for a home-based business at very low cost, often offered as part of a membership benefit package in many small business associations, making the cost of joining well worth the membership dues.

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Category Number Seven?

Sunday, January 25th, 2009
Money Troubles?

Money Troubles?

In both the first and second editions of Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (Wiley, second edition, 2008), we presented a framework for six categories of disaster from the high-frequency/low-severity category of human error all the way to the high-severity/low-frequency extreme of terrorism and sabotage. Ellen Heffes, the editor-in-chief of Financial Executive, had suggested to me that it might be appropriate to add a seventh category of financial disasters, owing to the meltdown of the capital and credit markets. Ellen had invited me to contribute a bylined article to the magazine (which will appear in the April 2009 issue) and certainly the credit crisis is at the top of every executive’s agenda. I would not change the framework of disaster categories that had been set forth, because we had explicitly defined disaster to mean an event that displaces your business and extends to longer and longer period of remote operations, based on its severity. The financial crisis would not qualify for our treatment, although I am certainly considering writing a book on finance for small businesses. However, I would be remiss not to mention it, because the financial and credit crisis is certainly creating stress for my business. Like many small business owners, I am caught between the proverbial rock and the hard place, trying to collect monies that I am owed from large corporations (that should have behaved more responsibly) while remaining current to obligations that my business has to small vendors. A recent article in the Wall Street Journal indicates that I am not alone. As I read the WSJ story of the small business in California that has no hope of collecting the $53,000 it is owed by Lehman Brothers, I thought of the futility of the current government focus on strong-arming banks to extend their loan portfolios. Is it time for a new book on small business finance?

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