Advance Agreement

The Forbes website has a great column on key person insurance, titled “The Corporate Equivalent of a Kevlar Vest”. Key life insurance is an inexpensive term life insurance policy that pays a benefit to the business upon the death of the owner or other manager critical to the business. We discussed key person insurance in Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (Wiley, second edition paperback, 2009) in a more extreme context.

But the untimely death of a person who is critical to the continuity of the business can be disastrous if you have not planned for it. The proceeds of the policy may allow your business partner to buy out your heirs’ interests while providing operational continuity, which is critical to both your employees and your heirs. Banks often require such insurance coverage when extending business loans. But another benefit of key person insurance is that it imposes operational and financial discipline, as you must value the business annually to make certain your coverage is adequate. As the cost of such coverage is very low, all business owners should look into it.

On October 5, the first shipments of 6 - 7 million doses of the nasal spray swine flu vaccine will arrive in doctor’s offices. Thereafter, another 40 million doses of injectable vaccine will be delivered, with another 10 million to 20 million doses shipped weekly. Public health experts believe that those who most need the vaccine are pregnant women, health workers, young people and parents and caregivers of infants younger than six months. Check the website of your state’s public health department for further details. The vaccine is free, so be sure to advise your employees and their families.

No Need To Go Here

The World Health Organization (“WHO”) raised the level of influenza pandemic scale to Phase 6. The pandemic scale goes from 1 to 6, with 6 being characterized by human-to-human spread of the virus in at least two countries in the same region plus another region in the world.  Phase 6 indicates that a global pandemic is underway. However, according to the Director of the WHO, “Globally, we have good reason to believe that this pandemic, at least in its early days, will be of moderate severity. As we know from experience, severity can vary, depending on many factors, from one country to another.”

You should advise your employees to take the following precautions with respect to hygiene:

• Cover the nose and mouth with a tissue when coughing or sneezing, and dispose of the tissue after it is used.
• Wash the hands often with soap and water, especially after coughing or sneezing. Alcohol-based hand cleaners are also effective.
• If employees share equipment such as phones or keyboards, wipe these with a light disinfectant tissue. Do not use very wet cleaning cloths on keyboards.
• If an employee becomes ill, summon a doctor and have him or her remain home to limit contact with others until medically cleared to return to work.

The usual advice for remote telecommunications applies. Remember some employees may need to stay home from work to take care of sick family members, so where feasible, make arrangements for them to do so. Finally, given the public health risks, business travel should be limited to absolute necessity. Of course, this should be part of your small business policy for reasons of your budget!

Global Connections

In a previous blog entry, I wrote about swine flu motivating small businesses to consider telecommuting options, for employees for whom this arrangement is feasible. This could both slow the spread of the illness, by keeping people out of crowded workplaces and public transport, and allow employees to stay home and care for their infected loved ones, where necessary. Establishing procedures for working from remote operations, such as data storage and network security, is critical for all types of disasters, from fires to civil emergencies. And now there is another reason to look into telecommuting. While the swine flu appears to have slowed down its rate of new infections, it may be poised for a second wave of infections in six months’ time.

I remember reading the book about the influenza epidemic of 1918 (when you work in the reinsurance industry, you focus on many cheerful topics). One-fifth of the world population was ultimately infected with the flu, but this damage was inflicted largely in a second round of the virus, six months after the first one. And with the travel patterns in our global economy, an epidemic in this era would become a pandemic more readily.  Public health officials are now predicting that history might repeat itself and we should prepare for a second outbreak in the winter. Doctors report that the warm temperature of the summer months is not conducive to spreading the virus; the next threat will likely occur in the winter months. So let’s take advantage of what may be a six-month reprieve to prepare our small businesses for temporary remote operations and know that the effort will pay off, irrespective of what happens with the flu.

Spring Blooms Mean Spring Cleaning

I took this picture of one of my two favorite florists in Zurich. This one is inside Bahnhof Wollishofen, the Wollishofen train station, and shows spring flowers blooming.

I use the change of seasons in the spring and in the fall to update my records, including my office and home inventory for insurance purposes, and purge outdated or obsolete paper and electronic files. I try to keep up with this task during the year, so it doesn’t become overwhelming. But the change of seasons is a reminder to formally address this need. In addition to providing the serenity that comes with a sense of order, it reduces the risk of human error to ensure that no one is working with obsolete files. (Remember to check both the files and the backups.)

I also use the occasion to replenish essential supplies, such as long-feed fish tablets for the aquarium (should we have to leave the office for more than a half-day), bottled water and other items.

And it is also a reminder to check or change the batteries in the office and home smoke alarms! If you replace the batteries on a seasonal basis, you should never hear the chirping to indicate that power loss is imminent.

In an unusually positive business report, a welcome respite from the current gloomy news, the story of how the CEO of one Boston hospital resisted the idea of laying off workers as the first line of business cost-cutting is instructive. Faced with declining revenues and increasing costs, the CEO of Beth Israel Hospital turned to staff to ask their ideas on how the budget gap might be closed. He expressed particular sensititivity about the need to preserve employment for low-wage, unskilled workers. The employees rose to the challenge and suggested how they could each make sacrifices to preserve employment. For a large organization, this may be an unusual approach. As small business owners, the initiative and creativity of each employee is a valuable resource that we cannot fail to utilize.

One of the key lessons I learned in business school was that the work product of our team was always better than what any one of us could have produced on an individual basis. Take the opportunity to solicit the feedback from your employees as to how you might improve your planning process.