Disaster Plan for Your Business

Here is a very important scenario for you to consider. What would you do if you arrived at your office tomorrow morning and saw that it was on fire? The fire department is working hard to put out the fire, but it would immediately become apparent to you that almost everything inside your office would be destroyed. Do you have a disaster plan for your business that you could immediately put in place?

My guess is that most business owners and managers reading this posting do not have a disaster plan for their business. I would also guess that many do not even back up their computer files regularly. Could you continue to operate and CONTINUE MAKING MONEY if you had a fire, flood or other major disaster and everything in your office was destroyed? ..... or would you be out of business?

Chances are that you will never have a major disaster for your business. Nevertheless, I'll bet you carry homeowners insurance even though chances are your house will never burn down. You may carry business interruption insurance for your business. That insurance may help and you should certainly carry that type of insurance ...... BUT ......it does not replace a good disaster plan.

Obviously, I can't tell each and every one of you exactly what to put in your plan. However, I can list a number of items for you to consider.

Review your insurance .... NOW. Many business owners buy insurance and then forget about it. Have a periodic insurance review so that you will know that you are adequately covered in the event of a disaster - both in terms of property and in terms of data, business interruption and other areas that may be unique to your business.

Know where you can go to operate your business. Find another business with whom you can share space in the event of a disaster for either business. They could move in with you temporarily or you can move in with them temporarily. Consider getting a number of businesses together who can help each other with space for a short period or time. If you can't do that, know where there is available warehouse space that you could use. Worse case, know where there is a hotel/motel that would allow you to use some rooms as offices.

Know who can help you with finding new permanent space quickly. Establish a relationship with a commercial real estate broker and explain your needs. This will enable him/her to know your needs without starting from the beginning. Thus, he/she can start searching for space immediately.

Know which disaster restoration company to call. If your disaster is such that you are going to call a disaster restoration company, know who to call before you have a disaster. Get referrals from others. You don't want to be going on Google trying to find a company.

Establish an important contact list. Be sure to have a list of people that should be contacted immediately with YOUR NEW CONTACT INFORMATION, such as your temporary phone numbers and email addresses. This list should not only include your customers but also your attorney, CPA, insurance agent, suppliers, etc. Obviously, this list should be kept in multiple locations somewhere other than your office.

Know where to get the equipment, supplies, furniture you will need. When you are in the middle of a disaster, that is not the time to start shopping. When your "back is against the wall," you may not make the best purchasing decisions. Know where you can get what you need when the time comes. As with your contact list, this list should be kept in multiple locations somewhere other than your office.

Have a good computer back-up procedure. Make sure ALL of your computer files are backed up on a regular basis ..... AND ... the back up files are kept in multiple off site locations .... AND ... that you test the backup files so you know they can be used. If you are not disciplined enough to back up your files yourself, hire a company that will do it for you. Some companies will monitor your files and back up your files remotely. In a future blog, this will be discussed in detail.

Have back-up for critical non-computer files. Take a look at your non-computer files and make sure you have off-site copies of what you need. Perhaps you should have these files scanned and converted to computer files so you can easily have off-site copies.

Develop a list of service providers to help you at your new location. To get operating at a new permanent location as soon as possible, you may need to contact contractors, architects, phone and internet companies, furniture providers, computer providers, etc. Once again, you don't want to be shopping in a panic. Develop your list of quality providers that you can quickly contact and providers that you know can and will respond quickly to your needs.

Assign duties in advance. Don't wait until the disaster happens to decide who will perform which tasks to keep you operating. Decide in advance which tasks each staff member will perform when the disaster occurs. Who will call the disaster restoration company? Who will call your insurance company? Who will call the commercial real estate broker? Who will contact the people on your contact list? etc. etc.

Your business my have other special requirements. What is most important is to have a disaster plan in place. The better your plan is, the faster you will be able to recover and both work in a normal environment and return to a state of profitability.

Those are my suggestions. If anyone has additional suggestions, please post a comment. Your comments are always appreciated.

When to Fire A Customer

Is every customer a good customer? Is the customer always right? Is there a time to tell your customer to go someplace else to buy the products or services they need? When is it time to "Fire A Customer?"

Sorry, but I do not believe that a customer is always right. Yes, sometimes you must tell a customer that it is time to shop elsewhere. I know that is not an easy thing to do and I have only done it on a few rare occasions. However, sometimes it is necessary to fire a customer for the benefit of your business. Here are a few important points to consider.

1. You are in business to make money. As much as you want that well-known customer or that big increase in volume, you have to make money on a sale. Usually the rule of thumb is that as long as your revenue covers your cost of goods sold and there is money left over to put toward fixed costs, then make the sale. I am not saying you need to make money on every sale no matter what the circumstances. Sometimes losing money on a sale is necessary for future sales. But be careful you don't sell at a loss because the customer "promises" future purchases. You need to make darn sure that the potential for future sales is excellent. If not, it's best to fire the customer.

2. You have limited resources. Some customers are so demanding that they require twice as much of your resources (which means costs) as a normal customers. That's OK if using those resources is not keeping you from acquiring new customers or providing good service to current customers. If they are, then it is time to fire the customer that is using those resources.

3. One rotten apple can spoil the barrel. I am sure you have heard that saying. If you are in a business where your customers come into contact with each other and communicate with each other, then a customer who is a constant complainer can spread negativity to others. You have to ask yourself if that rotten apple is having a negative effect on others. If that negativity is hurting your business, it is time to fire the customer.

4. You are probably familiar with the 80/20 rule. Do an analysis on your customers. Look at the 80% that are only generating 20% of the sales and see what resources of yours they are consuming. Sometimes, by reducing revenue from customers who are too costly, you can actually increase profits. If you need to increase profits to stay in business in these recessionary times, you may have to fire those customers, if that will help you increase profits.

Don't get so wrapped up in day-to-day operations that you forget to do a good customer analysis. It is a valuable function that may help you increase profits and stay in business.

Those are my thoughts. I would like to hear your comments.

Monitoring Your Strategic Plan

Sure, you know having a strategic plan is important. You wrote one about four (or was it five) years ago. It's in that big, dusty binder in the back room - or is it in the storage box in the basement? Anyway, you wrote a plan. Isn't that good enough?

You probably know the answer to that. NO !!!! Of course not. Would you like your pilot to file a flight plan and then decide to improvise once he reached 33,000 feet and not bother to keep in touch with the air traffic controller? Do you want your child's teacher to write lesson plans and then toss them aside before he enters the classroom and just decide to talk about whatever comes to his mind? As a business owner, you need to DEVELOP, IMPLEMENT and MONITOR your strategic plan.

I am certainly not advocating that a plan is to be developed and then followed without any deviation. I am saying that it is useless to develop a plan and then leave it on the shelf.

As a business owner, you need to not only be disciplined enough to develop the plan, but you also need to be disciplined enough to implement the plan and monitor the progress. I believe that requires help. If you are the owner, I usually recommend outside help. I recommend outside help so you become ACCOUNTABLE to someone else. It is all too
easy to put the task aside if there is no one to ask you about it. With someone else monitoring progress, there is someone to ask you questions. Even though you are the boss, you have to provide explanations.

The two most common ways to have an outsider monitor progress are to hire a consultant or to "trade" with another business person. By trading, I am referring to you acting as the monitoring person for another business owner and that business owner acting as the monitoring person for you. Naturally, hiring the consultant is more expensive. However, it sometimes takes an investment in order for the business owner to "get serious" about the process. If he has paid a fee, he is more likely to continue. Nevertheless, trading can be a good option if the two owners are disciplined enough to follow through with the practice.

Either way, a strict timetable for monitoring needs to be established. You should have progress milestones set so you can measure against those milestones. You can then make adjustments to the plan as needed.

Remember, developing the strategic plan is only part of the job. The plan needs to be implemented, monitored and adjusted as needed.

Your comments are always appreciated. Thanks for reading The Business Adviser.