When I started to write I was planning to write about a topic near to my heart, creativity and Creative IQ, which I wrote about on my personal blog.
As I was thinking about the topic of lifelong learning another topic came to mind, Disaster and Emergency Planning. In my next book, Tips and Traps for Writing an Effective Business Plan (in stores this winter) I devoted an entire chapter to the Disaster and Emergency Planning.
I sensed that the best contribution I could make to this Lifelong Learning Forum would be to write about this topic, especially in light of the fifth anniversary of the World Trade Center attacks in New York are just five days away from the publication of this article.
The catalyst for writing this article was a documentary I saw on A&E interviewing survivors and engineers. Two things stood out in the A&E documentary. First, an engineer stated that they need to study fire and come to a better understanding of the structural engineering and the effects of fire on these types of buildings.
Second, I was struck by the image of the chief engineer of the Word Trade Center, in the interview this man appeared old beyond his time. He had large bags under his eyes and the quote that A&E chose to use of his interview was, "I could have done a better job designing that building." I cannot imagine the burden he carries and my heart went out to him. Then I remembered something I read about Thomas Edison in the book, Uncommon Friends – Life with Thomas Edison, Henry Ford, Harvey Firestone, Alexis Carrel, and Charles Lindbergh.
At the age of 67 Thomas Edison had to start over. His main laboratory burned to the ground. In the book Edison states that they "under-insured the building because we believed it to be fireproof." Fortunately, Henry Ford was his neighbor in Florida and when Henry heard of the news he came to Edisons’ aid with a check for $750,000 and said, "If you need more just ask."
Where would Edison be had it not been for Henry Ford? I am sure he would have made out all right but certainly $750,000 changed his life. Edison later repaid Ford with interest despite Ford’s objections. Let’s get back to the topic at hand, Disaster and Emergency Planning.
When I think about Edison stating they purposely under-insured his laboratory because "we believed it to be fireproof" and then the senior engineer in the A&E documentary stating that "we need to learn more about fire" I immediately saw the connection between the assumptions we make the decisions we make.
Accepting something to be true without proof is dangerous. Even the simple act of insuring your property could make or break your ability to survive a major disaster or crisis.
In both cases Edison under-insuring his building and the engineering team of the World Trade Center failed to recognize the threat of fire.
A Simple Disaster Plan
Creating a disaster or emergency plan for your business or your family is an act of the will. You have to choose to take action and apply the discipline of asking probing questions. Ask yourself, "What If…" questions.
What if, an employee is seriously injured on the job?
What if, a car drove into the front of the building?
What if, we lost power for days or weeks?
What if, a Tornado or Hurricane hit our building?
What if, a major account went bankrupt?
What if, you the business owner became sick and unable to work for an extended period of time?
How would you respond, what would you do, would you be prepared? What would need to change for your business to be better prepared? To the degree to which you plan so goes your ability to respond to major crisis.
As the Cub Scouts say. "Be Prepared."
What is the Purpose of a Disaster & Emergency or Contingency Plan?
The purpose of your Contingency & Emergency Plan is to think ahead about the potential risks and plan how you will respond, manage, and act when specific events occur. Taking the time to conduct a risk assessment in advance allows you and your management teams to think through possible scenarios, define the implications, and plan a response.
What is an Disaster and Emergency Plan?
An disaster or emergency plan is a specific response to a natural or man-made disaster. It defines what you will do when it (the event) happens. It details a specific tactical and practical response to deal with the problems, issues, and confusion after a major emergency.
Your emergency plan can focus on just the business or it can also include employees, customers, and suppliers. It involves the creation of specific strategies, organizational issues, and a structured response to provide an opportunity for members of your team to discuss the issues, train, and prepare.
What is a Contingency Plan?
A contingency plan is the portion of your business plan that examines the underlying assumptions in your business plan. Every business plan is based upon specific assumptions – such as certain facts, projections and market trends – that you believe are true. The process of writing your contingency plan will help you examine the viability of the business when these assumptions change.
Remember that Which You Choose to Ignore or "Assume Will Never Happen" Can and Do Happen
I remember the impact that 21% interest rates had on my customers in the 1980’s.
I remember the impact that rising fuel prices had on the transportation industry in 2000 and 2001, yet here we are again in 2006 with the highest energy costs in history.
I remember the economic impact of the World Trade Center attacks had on business worldwide.
Have we learned anything? Perhaps, or maybe not. I know I am resisting buying a new vehicle to make sure that I keep my costs down and remain lean despite my desire to drive a nice new shiny car.
What assumptions have you made about your business and do you have a contingency or emergency plan in case things do not turn out as expected? It is called a "Plan B".
Top 10 Scenarios You Should ‘Be Prepared’ For
To ensure your are prepared it is very important to examine all your major assumptions. You should work to answer the following questions:
1. Drop in revenue: What would you do if you do not reach your sales and revenue targets? How much of a difference would need to occur before you reexamine your marketing and strategies?
2. Borrowing costs increase: If you are borrowing heavily and interest rates suddenly increase, what would you do to compensate for the increased costs? How much of an increase in interest rates would the business be able to absorb before it starts to impact the viability of the business.
3. Customer Bankruptcy: What is your contingency plan if your business suffers a sustained interruption to cash flow due to a major customer going out of business?
4. Disaster: In case of a major accident, event or disaster what would happen you’re your business based on your current level of preparedness? How is your business at a lower/higher risk than others?
5. Loss of a Key Staff member: What will you do if a key staff member suddenly becomes ill, quits or dies? How would that affect you? How easy would it be to replace the person? How much would it cost?
6. Regulatory Restrictions: What is your plan if the health board closes your business? Are there any real estate or development caveats that could negatively affect the business? Are you compliant with all health, safety, and employer laws?
7. Increase in costs: What is your plan if utility, fuel or raw materials suddenly increase in cost? Are any of your products dependent on energy? If so, how can you mitigate the impact of a steep increase in energy costs?
8. Loose a major supplier: What is your plan if a supplier goes out of business? What would happen to your business if they loose the right to continue to sell or distribute it?
9. Accident on Premises: How will you respond if a customer gets injured, ill or creates a disturbance? What would need to change to ensure an appropriate response from you, your staff, and the business?
10. Robbery or Violent Act: How vulnerable is your business to theft from employees, customers, and third parties? What is your data backup routine? What would be the impact of an act of vandalism or theft on your computer systems? Would you be able to restore operations on another system? How long would it take? How much would it cost? Does insurance cover the costs?
Be Patient and Persistent
Planning your response to a disaster is hard work. Making a contingency plan, or Plan B just in case your assumptions about your business change or some unplanned external event hits your industry, market, or business will require resolve and commitment. Here are a few tips:
1) Answering the questions on this list will take time.
2) Set aside a regular date and time to work on your emergency, disaster, and contingency plan.
3) Identify your most pressing and potentially disrupting event and start planning for that one scenario and then move onto the next until the plan is complete.
4) Review your plan with your staff and make sure you have the appropriate resources in place.
Your employees, customers, and family will be glad you did, especially when you start implementing your plan after a major emergency or disaster. Plus you will sleep better knowing that you are as ready anyone can be.
Congratulations, your community thanks you in advance.
Greg Balanko-Dickson, LPBC is a Licensed Professional Business Coach and a founding member of the Professional Business Coaches Alliance. He is the author of two business books, with clients throughout the Canada, the US, South Africa and the UK. Greg has been coaching since 1991 and has worked with 100’s of business owners in more than 32 different industries. You can learn more about Greg on his personal blog.