Preparing for an emergency...when you own a business.
So today, we want to talk about something that doesn’t get much thought or discussion among small business owners. What happens to you, your family and your business when there is an emergency? If you have a long-term illness or accident, would your business be able to continue without you? Do you have a plan in place to handle a situation where you are not able to do the day to day work for your business? If you answered no to any of these questions, then you need to read this post and plan for an unforeseen emergency.
Take the time to consider the different ways your business may be vulnerable. What do I mean by vulnerable, well it could be an asteroid or a zombie apocalypse, but you know if that happens, it’s pretty much lights out anyway. Really what I’m thinking about are things that would keep you or your business from functioning normally. It could be something like a car accident, health issue or even a loved one having a problem that requires your support. We’ve all known someone who has had this happen to them, so it just makes sense to plan for it.
Crisis Communications Plan
The first thing that comes up in an emergency is the flow of information. You need someone to help with communication, whether it’s communicating to employees, or customers. Someone that can let everyone know what’s happening and convey that the plan needs go into action. It’s good to have a partner, trusted friend, or family member that has enough information to at least reach out to your clients, advise them of the situation and be able to manage the day to day administrative tasks that need to be handled, like paying bills and answering emails. Be sure to reach out to this person ahead of time and have any information they will need in a safe place that can be easily accessed by them at any time – even without you or your voice present.
Also, be sure this person has contact information for other small business owners that can support your business. For example, if you are a photographer, provide a few other photog friends that can jump in and help with your workload. And, of course, include the contact information for your accountant, lawyer and any other business professional that supports your business. These people can be a huge help to your emergency contact – especially, if they are a wife or husband that may not know a lot about your day to day activity.
Protect Your Financial Data
Sometimes our crazy life disasters have nothing to do with our health. It can be a fire at your building or a leaking roof or something completely random. To that end, make sure you are backing up your financial information to the cloud or at least to another location. This goes for important documents as well. Having these items in a safe secondary place can significantly improve your ability to mobilize somewhere else and keep your business on track.
I’m sure you have all seen the commercials on TV with a certain duck. Well, he represents a company that sells supplemental insurance. If you get into an accident and have a hospital stay or an illness with a lengthy recovery, supplemental insurance can help you pay bills and even pay you a portion of your normal salary. There are many options with supplemental insurance, but I will tell you that the monthly fee is relatively low and as a small business owner, knowing you can be out of the office for a medical reason, but still have income coming in the door is a great piece of mind.
Financial Impact Assessment
Sounds highly technical and maybe even a little scary. Easiest way to think about this is, how much money does my business need to cover the important bills if things were forced to shut down. I know with my clients, I like to see 2 months of overhead in their accounts at all times. The thought process is simple. If you have enough in reserve to pay your bills for two months while you recover from whatever emergency you’re dealing with then you should be in pretty good shape. If what you’re dealing with is going to take longer than 2 months to resolve and let you get back to normal, then a more comprehensive plan and some tougher decisions may need to be made.
A lot of young, creative entrepreneurs don’t think too much about their life expectancy. Things like wills and life insurance aren’t typically spoken about with any regularity, but you should always be prepared for the worst. If you pass away unexpectedly, your debts, bills and even client disputes could fall back on your family, spouse, partner or children. I always recommend ensuring that your life insurance policy will cover any debts and ensure that your family can move forward with no concerns regarding financial stability.
Planning ahead of time for unexpected emergencies will give you peace of mind and ensure that your family is cared for in your absence. If you have more questions on this topic or if you need support creating your emergency plan, please let us know.
Written by Tom and Allison Barnhill, Owners of Business by Barnhill