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Business Tip of the Month

Business Tip
of the Month
For the month of October 2005

How well could your business handle a disaster?

In the wake of Hurricanes Katrina and Rita, every business manager should be thinking about how a disaster would affect their business. Here’s a quick look at some of the things you can do beforehand, and what relief might be available afterwards.

Before disaster strikes
Disaster planning. Too few businesses do any kind of disaster planning. Yet even a simple plan can make the difference between being back in business quickly and floundering in chaos for weeks.

Bring together the managers of key areas and brainstorm on the critical steps needed to recover from a disaster. Consider at least two scenarios: a company-specific event such as a fire that affects just your business and a regional disaster that affects the whole area.

You may not anticipate every need, but just identifying key issues and making basic preparations can make a huge difference.
Communications. Think how you’ll communicate with employees, vendors, and customers. At a minimum, each manager should have a contact list for his or her key employees. Include phone numbers and personal e-mail addresses.
Records. Identify essential company records and how you’ll access them. Computer backups are a key measure, but make sure the backup tapes or disks are stored in a safe location off site. You may also need paper backups of certain key information in case of a power blackout. Don’t overlook data such as federal, state, and city tax information, bank account information, and insurance policy numbers.
Insurance. Meet with your agent and review the scope and dollar limits of your coverage. Discuss business interruption insurance. Make sure you clearly understand your coverage.
After disaster strikes
Relief payments. Your sources of relief will be insurance payments and possibly federal disaster loans. You may also be eligible for a variety of tax breaks.
Tax breaks. At a minimum, your business may qualify for a casualty loss deduction. If you’re in a Presidentially declared disaster area, you have the option of claiming the deduction against your prior year’s taxes. Often this will give you a faster refund. A variety of other tax benefits cover replacing damaged property, or even abandoning the business and starting anew. Get tax advice on your specific situation.

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