How would your business respond to a power outage? What about a computer crash or a broken water pipe? When we talk about small business disasters, our thoughts usually turn to something big. But disasters come in all shapes and sizes. Bottom line -- Are you ready for whatever disaster heads your way?
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Survive or Struggle: Your Choice in a Business Disaster
1. Your Choice in a Business Disaster
Survive or Struggle
Survive or Struggle:
Your Choice in a Business Disaster
Recording of this webinar can be found at
learn.extension.org/events/1503
2. Rick Atterberry
Webinar Moderator
Media Communication Specialist
University of Illinois Extension
Extension Disaster Education Network Chair
ratterbe@illinois.edu
Your Choice in a Business Disaster
Survive or Struggle
3. Glenn Muske
Presenter
Rural and Agribusiness Enterprise
Development Specialist
glenn.muske@ndsu.edu
Your Choice in a Business Disaster
Survive or Struggle
6. Webinar Outline
1. Business Disasters – What we know
2. Disaster or Disruption
3. The “so what” Question
4. Being Prepared
5. Fitting in the Family
6. Resources
7. 40-60% of small
businesses fail after a
major emergency (SBA)
Additional 25% fail within
the first year (FEMA)
80 – 90% may fail within
5 years (US DOL)
Declared disasters more
than doubled in recent
years
NFIB (2004)
30% of operating small
business have been
John Arens
24 hours or more in the last
three years due to a natural
disaster.
Most common –
blizzard/ice
storms/extreme cold
Why Plan?
10. A “Comprehensive” Definition
“A disaster is a non-routine event that exceeds the
capacity of the affected area to respond to it in such a
way as to save lives; to preserve property; and to
maintain the social, ecological, economic, and
political stability of the affected region.”
(Pearce, 2000)
11. Dahlhamer (1998)
marginally surviving businesses before the disaster
were less likely to recover.
Webb, Tierney & Dahlhamer (2002)
businesses that were in better pre-disaster financial
condition were less likely to have recovered more than
five years after the two local disasters.
Galbraith & Stiles (2006) and Zhang, Lindell & Prater
(2009)
disasters accelerate existing trends
small businesses are at a disadvantage obtaining
access to outside assistance from governmental
agencies that would improve their probability of disaster
recovery and/or their speed of recovery
larger businesses have a higher priority in communities
for restoration of lifeline services
Credit to
George
Haynes,
Montana State
University
Extension, for
this information
What do we know
business literature
12. What do we know
business literature
Cutter, Boruff & Shirley (2003)
Cyclical industries such as oil development, fishing, or
coastal area tourism may experience periodic high
incomes, but when hard times strike or when they are
affected by a disaster, their economic resilience decreases
and they take longer to recover
Galbraith & Stiles (2006); French et al. (2010); Zhang
et al. (2009)
certain industries thrive after disasters. They cite examples
of construction, manufacturing and hospitality industries
thriving after disasters
Audretsch & Mahmood (1995)
larger and older manufacturing firms were more likely to
survive.
Van Praag (2003)
Businesses in the agriculture and repair services industries
survived longer in an analysis of young white males’ self
employment
13. What do we know
business literature
Gallopin (2006); Holling (1986 )
A history of past hazard exposure may enhance recovery
in natural and social systems
Dahlhamer (1998)
the more business disruptions reported by a firm, the less
likely it was to recover
Wenger, James, & Faupel (1985)
when disasters occur frequently, people manage them as if
they are routine
Enarson & Morrow (1997); Tompkins & Adger (2003)
firms undertake mitigation only when they perceive
disasters as a major threat
14. Dahlhamer (1998)
concluded that recovery of a particular firm depended
mainly on how neighborhoods, critical infrastructure, and
the greater community were affected by disasters rather
than on their direct physical damage.
Danes, Stafford and Haynes (2008) and Haynes,
Danes, and Stafford (2008)
firms located in economically vulnerable rural counties
were more likely to survive, whether or not there was a
disaster.
What do we know
business literature
15. What do we know
business literature
Alesch et al. (2001)
disaster assistance helps individuals recover, but not businesses.
Webb et al. (2000)
no significant effect of disaster assistance
Dahlhamer and Tierney (1998)
post-disaster aid was negatively related to disaster recovery
Haynes, Danes, and Stafford (2008)
firms located in counties receiving more disaster assistance were
not more likely to survive, however these firms were more likely to
realize increases in revenue than firms located in counties
16. Survival
No impact from Federal Disaster Assistance
Economically vulnerable rural county (+)
Transfer business income to household (+)
Woman-owned business (-)
No impact of family resilience
What do we know
business literature
Haynes, Danes & Stafford (2011) - Influence of Federal
Disaster Assistance on Family Business Survival and
Success, JCCM 19(2), 86-98.
17. Survival
Federal Disaster Assistance to County (+)
Federal Disaster Assistance to Family Business (+)
Negative stress index (-)
The negative stressors were: death of a spouse, divorce, marital
separation detention in a jail or other institution, death of a close
family member, major personal injury or illness, and being fired
from a job. The negative stress index is a sum of the number of
potential negative stressors from this list that occurred in the past
year.
Consistent family leadership (-)
What do we know
business literature
Stafford, Danes, Brewton & Haynes (2011)
Business Experiences with Disasters and Disasters
Assistance, in-process.
18. Issue is not the disaster,
it’s the disruption
THINK
CONTINUITY
Think Continuity
19. With Disruption in Mind:
More Often the Little Things!
External (Key supplier)
and internal (Coffee on computer)
Big and small
Personal issues
(health of owner or key employee)
Loss of key equipment
Delivery van breaks down or driver
doesn’t show up
Food recall
Computer virus
The disruption can be something
positive
Rapid growth
– i.e., Bakken oil boom
20. So what?
Biggest problems
Loss of sales and customers (62%)
Uninsured losses (18%)
Loss of suppliers (8%)
Businesses
About 40% had emergency
preparedness plan
Often related to size and past experience
Vary extensively in terms of events covered and potential
responses/resources
No information on how recently they were updated
21. Disaster / Disruption
Impacts
• Uses resources
• Money, time, & goodwill
• Business PLUS
• Family
• Intermingling of time and money
• Even greater in family businesses
• Perhaps some or all of the community
• Interdependency in communities – Smaller the community, the
greater the interdependency
23. NDSU
Being Prepared or Planning
Preparedness enhances
recovery from
Business disruption
Financial losses
Loss of market share
Damages to capital assets,
equipment or inventory
Preparedness bolsters
Business’ security
Credibility with customers,
vendors, supply chain and
the community
24. In a family business (most small businesses)
If you don’t know the family, then you don’t know the
business (inextricably intertwined)
Healthy families combined with healthy businesses make
healthy family businesses which are . . .
More likely to survive a natural disaster
More likely to succeed after a natural disaster
Family and the Business
25. As an owner, where do you respond first?
Business or family
As an owner, where do your employees, key suppliers, etc.
respond first? (Where do you want them responding first?)
Business or family
Masuo, Fong, Yanagida & Cabal (2001); Olson et al. (2003)
Firm management and family interactions affect firm success.
Heck & Trent (1999); Stafford et al. (1999); Duncan, Stafford &
Zuiker (2003)
The long held belief that work and family life are separate spheres
operating independently has been challenged by studies that suggest
that there are extensive, positive and negative bi-directional
influences between work conditions and outcomes that affect family
life and vice versa
Family and Business Disaster
28. Resources for Moving Forward
EDEN Courses
Plant Biosecurity Mgmt
Protecting America’s Food System
Pandemic Preparedness for Business
Pandemic Influenza Preparedness for Faith-based
Organizations
Animal Agrosecurity and Emergency Mgmt
Family Preparedness
Ready Business
eden.lsu.edu/EDENCourses/ReadyBusiness/
32. It will happen
1 out of 3 chance a business will experience a disaster in a 5-
year period
Preparedness helps
Family and community support important
It’s the little ones
Cumulative effect
Conclusion
33. 1. PLAN to stay in
business
2. TALK with your people
(and family)
3. PROTECT your
investment
Three Steps for Preparedness
34. Glenn Muske
Rural and Agribusiness Enterprise
Development Specialist
glenn.muske@ndsu.edu
Your Choice in a Business Disaster
Survive or Struggle
35. Questions?
Recording of this webinar can be found at
learn.extension.org/events/1279
Your Choice in a Business Disaster
Survive or Struggle
44. Thank You
Recording of this webinar can be found at
learn.extension.org/events/1503
Your Choice in a Business Disaster
Survive or Struggle
Notas do Editor
According to the Small Business Administration (SBA), 40% to 60% of small businesses fail following a major disaster….mainly because they are unable to recover quickly enough to survive the loss …. they often just don’t have the capital to restart. The number of presidentially declared disasters has more than doubled in recent years. Most disasters don’t affect a large number of people like the declared events do.
Too much emphasis is usually placed on dramatic, worst-case scenarios…the declared disasters, like major hurricanes, floods, tornadoes or terrorist events. These are not the only possible disasters that could occur.
In fact fire, which typically affects a small area, is the most common business emergency, according to the Small Business Administration.
In truth he basic multi hazard emergency plan does not take much time or money. Businesspeople who have completed plans with broad common-sense protective measure often say the minimal investment helps them improve some processes and gives them peace of mind so they can quickly and efficiently respond to emergencies of any kind. By using a template, developing a plan is relatively simple.
The materials in the course provide you several preparedness solutions and many are no or very low from keeping a current list of suppliers to keeping a backup record of important papers of site…like the secret donut recipe.
The greatest investment is time…time to put together a plan so everyone every one knows the protocol of what to do in any situation…..what is the policy when bugs are found in the flour…….do you just hope the customers don’t notice? What do you do when the electricity goes off in the middle of baking?
Course info page – overview
Encourage to complete the course tracker so we can see what kinds of people are going to the training materials
Section 4: Three Steps for Preparedness
After assessing the risks of various hazards for your business, it’s time to start the actual planning process. The major steps to properly prepare your business for a disaster are: plan to stay in business, talk to your people and protect your investment. In this training, you’ll develop a plan that includes these three steps.
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