Colorado State University’s hurricane forecasting experts predict an above average Atlantic storm season for this year, calling for 15 named tropical storms, of which eight will develop into hurricanes. A storm becomes a hurricane when its sustained wind speeds exceed 74 miles per hour. The CSU experts further expect that four of those eight will become major hurricanes, defined as Category 3, 4 or 5, with wind speeds of at least 111 mph. Historically, ten named storms occur in the Atlantic hurricane season of which six develop into hurricanes, with two major hurricanes. The CSU hurricane forecasts are known for their conservatism, as historically they have tended to underestimate the number of storms more often not. Another forecasting group, AccuWeather, expects an even more severe hurricane season with 16 – 18 tropical storms forming in the Atlantic, leading to seven storms making landfall in the U.S. The U.S. government’s National Oceanographic and Atmospheric Administration releases its forecast closer to the June 1 start date of the hurricane season. The first three named storms of 2010 will be Alex, Bonnie and Colin. With government budgets exhausted, small businesses in the path of Atlantic storms should expect even less in the way of disaster preparedness and recovery support. Begin making preparations now to protect your business. Develop a budget to set aside $1,000 or so over the next two months for an evacuation fund. Should it not prove necessary, you can release the funds after November 30, when the hurricane season ends, for other purposes.
Forecast Calls for An Above-Average Hurricane Season
April 9th, 2010Resilience is the Key to Success
April 8th, 2010
Reception
This evening I attended a wine and cheese reception at the offices of Inc. magazine to hear Maria Bartiromo speak about her new book, The Ten Laws of Enduring Success. Inc.‘s new headquarters are located at 7 World Trade Center, the building constructed by private funds. Towers 1 and 2, dependent on public monies, are still holes in the ground as political gridlock has paralyzed the development process. It was bittersweet for me to be back in that area. Bartiromo’s book begins with the events of 9-11, noting the irony that her birthday falls on September 11 and had been a joyful date. But the tragic events of that date and the financial crises and economic recession that followed led many to question the meaning of success. This led to her book, identifying ten laws of success, including resilience. Certainly that is the critical characteristic in these challenging times. I enjoyed the discussion and of course, it was nice to reconnect with friends at Inc. magazine. Do check out the Comcast Productivity@Work promotion with Inc. magazine. I look forward to providing business continuity audits to the winners.
Check Your Stocks (Better Late Than Never)
April 6th, 2010
A Timely Reminder
The American Public Health Association reminds us that Daylight Savings Time in the spring and fall reminds us to check our stocks to ensure that we have fresh, usable batteries, that our non-perishable food has not passed its shelf expiry and that our emergency stock kit is complete and current. I also use the occasion of moving the clocks forwards or backwards one hour to check the batteries in all smoke detectors and carbon monoxide alarms, both at home and at work. I apologize for the tardy posting; I just started an entrepreneurial training program with the Kauffman Foundation. It is a great learning experience, but my group is doing the ten-week program in three and one-half weeks – in addition to full-time work! But the reminder is perhaps better late than never.
Succeeding in Government Contracting
April 5th, 2010
Small Businesses Take Aim
I attended the Inaugural Victory in Procurement Event of OPEN, the small business division of American Express, to learn more about how to succeed in government contracting. At that event in New York, American Express OPEN released the results of its first small business contracting survey. More than 1,500 small business owners listed in the government’s vendor database for federal procurement participated in the survey. It typically takes 1.7 years to win the first federal contract, the survey found. In addition, successful contractors submit an average of seven prime contracting bids and win almost three contracts per year. The survey included active contractors (small businesses that have been awarded a prime federal contract within the past three years), currently inactive contractors (small businesses that are registered on the vendor database, but who have either never landed a prime federal contract or who are designated as inactive) and non-contractors (a subset of inactive contractors who are registered but who have not yet landed a prime federal contract). The U.S. federal government is the world’s largest buyer of goods and services. Clearly, small businesses are eager to claim their share of the government’s stimulus funds, particularly with weak demand in the private sector. What I found most helpful was the insight that successful contractors invest time and money, on average $86,000 in 2009, to win bids. Median sales for these small business contractors were between $1 and $4.9 million, with federal government contracts accounting for 38% of the small businesses’ revenues. I intend to adopt their disciplined approach of investing time and money to submit bids. It clearly pays off. Thanks to American Express for a great day of networking and learning. For more information about the resources American Express is making available to help small businesses succeed in government contracting, click here.
Flood Emergency in Rhode Island
April 4th, 2010Record-setting rainfall spurred heavy flooding in much of the Northeast, including my home state of Rhode Island. During the month of March, more than 15 inches of rain fell on the state’s capital, Providence, an all-time record. The floodwater has begun to recede, but the cleanup of what is the worst flooding in 200 years will take some time. The pain is particularly acute as the state already has one of the highest unemployment rates in the country, close to 13% and, with a budget deficit, few resources to fund relief programs. Life has yet to return to normalcy, with National Guard troops deployed in the state, nonessential government workers given time off and schools and businesses, including the University of Rhode Island, closed. Transportation has been disrupted, as stretches of Interstate 95, the highway connecting Boston to New York, were closed. Amtrak suspended train service, as tracks were submerged underwater. The Rhode Island Emergency Management Agency has asked residents to limit their use of electricity and water owing to flooded electrical substations and sewage systems. Public health officials remind residents exposed to floodwater to wash their hands carefully to protect against bacterial and viral infections. The President has issued an emergency declaration for the state, thereby engaging the Federal Emergency Management Agency to coordinate federal relief aid programs. Relief for residents and small businesses, however, is likely to be limited. RI residents were given an extension, until May 31, to file their state and federal income taxes. However, in terms of direct aid, small businesses should not expect much. FEMA programs are generally designed to rebuild public infrastructure, not to provide private assistance. Businesses can adjust their taxes for uninsured losses, such as flood-damaged inventory. But this is where an appropriate insurance program, including business interruption insurance, is critical.
Chile’s Recovery from Earthquake Likely to Take Years
March 14th, 2010
Seismically Active Pacific Ring of Fire
The earthquake that struck Chile on February 27 was an 8.8 magnitude event, making it one of the most powerful in history. The earthquake killed hundreds of people and damaged more than one million homes. Preliminary estimates suggest economic losses in excess of $15 billion, with one quarter to one half of those losses covered by insurance. Even without taking into consideration the consequences of the follow-on quakes, this is likely to be one of the most expensive disasters for the global insurance industry. Chile is at particular risk for its location along one of the most active seismic zones in the world, the Pacific Ring of Fire. During my lifetime, Chile has experienced 13 earthquakes of at least a 7.0 magnitude, but most were removed from populated areas. Chile is well prepared to withstand earthquake shocks; it has appropriate building codes and a developed insurance market Indeed, even though the Chilean quake was 500 times more forceful than that of Haiti, it sustained several hundred casualties as compared with 250,000 in Haiti. It will likely take at least four years for the Chile to rebuild, owing to significant losses to its economy. With a recent seismic event in Turkey, this is a sad reminder that natural disasters pose the greatest risks to those with the least to lose.
Temporary Reprieve for Flood Insurance
March 3rd, 2010Following an earlier post, the U.S. Senate approved a 30-day extension in the National Flood Insurance Program. I am betting that on Day 29, we will still have no resolution as to the Program’s status on a longer-term basis. Congress appears to favor stop-gap measures rather than dealing with the issues in a way that would allow for businesses to plan their risk management programs and insurance coverage.
Gap in Flood Insurance Program
March 1st, 2010Consistent with its past practice, Congress allowed the expiration date of the National Flood Insurance Program to pass without timely action, allowing the program to lapse. “Failing to act in time – again – and allowing the National Flood Insurance Program to expire is disconcerting,” said Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies. “If nothing else, this episode should make it clear that short-term extensions, which can be blocked by any Senator or congressional caucus, are untenable.” The NFIP was brought to the Senate for a vote just days before the program was set to expire, leaving inadequate time for the procedures required to renew the program. If recent history is any guide, the lapse will be of short duration, as the most recent extension was authorized at the end of December after the program had lapsed for nine hours. Nevertheless, after flooding in areas affected by the three blizzards that struck the eastern states this past month, Congress’ apparent indifference to the issue of flood insurance and disaster mitigation is disappointing.
Impact of February’s Blizzards
February 17th, 2010
Still Feels Like Christmas
EQECAT, a company that provides risk management and modeling services to the insurance industry, estimated insured losses from the two blizzards that struck the East Coast this month to be in excess of $2 billion. The snow, ice and wind impacts caused businesses to close and additional costs in recovery. The Mayor of New York City, for example, reported that each inch of snowfall imposed $1 million in cleanup costs. So what are the key lessons for small businesses?
- Businesses physically removed from the affected area may also sustain storm-related losses. If your business is located in the southern or western states, for example, but you have key suppliers or customers in the eastern states where the blizzards struck, you have to plan for contingencies. One helpful strategy employed by many e-commerce websites was to advise customers of shipping delays on orders owing to erratic weather. It is better to manage the customers’ expectations of prompt delivery beforehand, than to deal with disappointment afterwards.
- Plan in advance for telecommuting wherever possible. It is best to keep your employees and customers off the roads, so that they won’t be in harm’s way and the emergency vehicles can do their jobs. This means you should have procedures in place to ensure network security while telecommuting.
And of course, be patient. We are all at the mercy of forces beyond our control and would benefit from humor in dealing with such situations.
Adding Insult to Injury in Haiti
February 16th, 2010The only thing more horrifying than the human tragedy in Haiti is the so-called “disaster aid” that compounds the suffering of those who have already lost what little they have. Unfortunately, bureaucracy is the first order of relief efforts. USA Today reports that the U.S. Agency for International Development (part of the U.S. State Department) ordered U.S. soldiers to stop distributing food packages to desperate Haitians. However, the troops continued to give bottled water because they were not forbidden to do so. Sound crazy? Not really. Did you know that counselors of our Small Business Development Centers were forbidden to help their colleagues in the Gulf Coast assist their small business clients in the aftermath of Hurricane Katrina? The U.S. Small Business Administration prevented the counselors from crossing state lines. So many counselors went as unpaid volunteers. Bureaucracies have inflexible rules that get in the way of offering help. But had we acted honorably, the Haitians might not today be in such desperate straits. Tageschau Deutschland is reporting that U.S.-backed governments of developing countries received aid that motivated the relocation of the poor to areas particularly prone to natural hazards. Even worse, a public display of aid assistance may be used to weaken demands to accept more immigrants from Haiti to the U.S. where they would have a credible shot at rebuilding their lives. It is sad, but true, that the poorest are the most vulnerable to disasters, whether in the U.S. or overseas and that relief aid more often than not serves the interests of the donors, not the recipients.