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Suppose you were forced out of your building right now. Maybe you are the victim of a fire, flood or windstorm. How would you continue your business? The likeliest answer would be "with great difficulty" unless you have taken measures to assure the maintenance of a certain level of customer service and sales. "Businesses can take a number of steps to assist in getting through a crisis before the next disaster strikes," says Chris Hackett, director of policy development in the research division of Property Casualty Insurers Association of America. Perhaps one of the most important, he says, is the determination of a temporary relocation site. That temporary site might be a basement in your home or a rented room in another city. Whatever the location, it must be one where you can access your critical files. That includes your accounts receivable so you know who owes you money. It also includes your customer lists to protect your future revenue. Keep a computer at this location with continually updated company data. On the topic of alternatives, make sure you have a fallback Internet network into which you can plug your devices. And have a callforwarding plan prepared that will route incoming calls. Finally, put together an off-site list of emergency responders. These are people you'll need to call to help solve the problems the disaster has caused. Include the following: • Your attorney, accountant and insurance agent • Any firms that can accomplish recovery tasks, such as removing water, cleaning, hauling rubbish, painting, repairing electrical and plumbing systems, replacing locks and getting computer equipment running • Real-estate agencies that can set up a remote operational base while restorations continue The remote location is one thing; having employees who take the right actions is another. Identify the steps you'll need to take when disaster strikes, then assign them to key personnel. "Things will go much smoother if everyone knows what they ought to do in a crisis," says Williams. Have key individuals Take This Disaster Quiz Score 10 points for each "yes" answer to these 10 questions. Then total your points. If you score between 80 and 100, you are in a safe zone. Results between 60 and 80 mean you need to dust off the emergency plan. Score less than 60? Take immediate steps to get your disaster plan up to speed. Have you . . . 1. Backed up your data regularly to an off-site location? 2. Identified a remote site for relocated quarters? 3. Arranged for an alternative Internet network? 4. Assigned key employees specific tasks in event of emergency? 5. Drawn up co-worker and client call lists and assigned to employees? 6. Detailed your list of emergency responders? 7. Selected vendors for emergency repairs? 8. Obtained property insurance for 100% of replacement cost? 9. Maintained regular inventory? Taken photos as appropriate? 10. Obtained business-interruption, flood and earthquake insurance if appropriate? tackle the tasks of calling employees and customers to let them know what has happened, notifying suppliers and insurance companies, and arranging for repair work by plumbers, electricians and restoration contractors. REVIEW YOUR PROPERTY INSURANCE Do you have sufficient property insurance in place? What may be good one year may no longer be adequate several years later; so revisit your policies with a trusted adviser. "It's always good to have a regular session with your agent every year or so to review what you have," says Hackett. The No. 1 insurance category is, of course, property insurance that covers fire. "As it relates to fire, policies should insure your structure for 100% of its replacement costs," says Hackett. Replacement cost is the amount necessary to rebuild your structure using construction materials of like kind and quality. If you are thinking of adding an addition or making renovations that will substantially increase the amount necessary to repair or replace your property, you should inform your agent. If you have not done so, the settlement under the policy will be based on the replacementcost information the carrier had on file at the time of the loss. Consider, too, your deductibles. "There are pros and cons to having higher and lower deductibles," points out Hackett. 78 August 2013 | beautystorebusiness.com "Lower deductibles mean less money out of your own pocket after a covered loss but cost more in premiums. Higher deductibles mean lower premiums but more out-of-pocket costs when disaster strikes. You have to decide for yourself what you prefer. If a loss happened tomorrow, would you be able to come up with the deductible or not?" Insurance is great, but be prepared to prove your losses. "It's important to take inventory of the items in your business," says Hackett. "Walk through your building with a camcorder and make a video. That will help expedite the settlement of your covered loss with the claims adjustor." Store the video off-site in a safe or bank safe deposit box. Hackett further advises that you consider "… extra-expenses coverage. This insurance covers the higher expenses you might incur by moving to a new location, such as higher rents and the costs of relocation." You can also get coverage for payroll expenses. "Just because your business is shut down, that doesn't mean people will not expect a paycheck," says Hackett. "Paying them can be difficult if you are not taking in any income." You can purchase such insurance just for the highest-paid employees or for your entire staff. Two more things: Contingent business-interruption insurance covers the lost income that results when a supplier is unable to deliver. You can also purchase what's called "extra contingency expenses insurance." That covers the higher prices you might end up paying to an alternative supplier. Should you get either? "It depends on the nature of your business," says Hackett. "It's particularly important for manufacturers which assemble products in one location but utilize parts from elsewhere. Retailers may also need the insurance if they depend upon suppliers in different locations to keep their doors open." PROTECT YOUR REVENUE STREAM A disaster can interrupt sales, and that means your expected revenue stream can dry up quickly. Think about buying protection. "Business-interruption insurance provides critical coverage for lost income—what your business would have earned but for the physical damage of a disaster," says Hackett. Purchasing interruption insurance requires thorough consultation with your agent. "It's not as simple as an auto policy. The carrier will ask you questions about the nature of your business, your employees, your typical income in a month and whether your business is seasonal in nature," Hackett notes. UNDERWATER Standard property-insurance policies generally cover water damage that results from pipes bursting. Not covered, however, is flooding from causes such as tidal surges, the overflow of rivers or water flowing down from a mountain or along the ground. "Damage from flooding can be catastrophic," says Michael Sapourn, a Satellite Beach, Florida-based attorney who has dealt Thinkstockphoto.com OFF-SITE DATA