It’s now six months since the wettest UK winter ever, which saw nearly 6,000 homes and businesses flooded. In that time the insurance industry has dealt with nearly half a million storm insurance claims and paid nearly £1bn to get homes and businesses back on their feet. These payments went out to support UK businesses with the cost of repairing their business property, but also to help manage the financial impact of being temporarily out-of-action.
For small businesses, such disruption can be unexpected, distressing and costly. The Federation of Small Businesses says that the three months of bad weather cost small businesses £831 million, at an average of £1,531 per business in flood hit areas.
While some businesses were unable to access flooded premises, interrupting their ability to continue with ‘business as usual’, others were devastated by damage to stock and equipment. With weather forecasters predicting that extreme weather events will become a more regular feature of the British climate, what should small businesses do to ensure they can reduce their exposure to the next flood or storm?
Business as usual
You may think that focusing on business continuity – identifying what could stop your business from functioning normally and putting in place fail safe precautions – is strictly for big organisations. But it’s just as relevant for any size of small business, from freelancers upwards.
Here we look at suggestions from the UK government’s Business Continuity Management Toolkit, developed specifically for the small business sector, to help make sure your business survives the next storm, flood, or fire, or any other event that could prevent business as usual.
- Step 1: Business impact analysis
The first step is to look at your main products and services and what critical activities are required to deliver them. What would happen if any sort of disruption made it difficult to undertake these activities? What resources do you need to maintain these critical activities in terms of manpower, premises and technology?
- Step 2: Risk assessment
What risks does your business face from extreme weather? Staff unable to get to work for instance? Could you lose important systems such as broadband, or are your computers or servers liable to get damaged? Would suppliers be unable to deliver to you or your customers?Rank the risks you identify in terms of their potential impact on your business and the likelihood of them happening. You will then have a better idea of the contingencies you need to put in place.
- Step 3: Action plan
Put together your plan. Divide it up into people, premises, technology, suppliers, and information.So for people, think about whether your employees can work across other functions and cover for absent colleagues. For premises, is it possible for staff to remote work if the office in inaccessible? How about your technology – can the same equipment be maintained in a different location?For suppliers, consider whether you can get what you need from another supplier if your main supplier is unable to deliver. When it comes to your company information, is your data backed up off site and can it be accessed easily?Put in place tactics to deal with each scenario to make sure you can continue to provide those business critical activities.
- Step 4: Test your plan
Don’t wait for a disaster to see if your plan works. Test it out. Better to discover a weakness under test conditions rather than under three feet of water.
Consider business interruption cover
Insurance can also play a key role in getting your business up and running in the event of a disaster. Business interruption cover includes payments to make up the difference between your actual income and expected income after your business is interrupted by an unforeseen event, such as a fire, flood or theft. It will also pay up to 30% of the sum insured to cover reasonable additional costs incurred in order to continue operating your business as usual, such as setting up a temporary office or employing additional staff.
All businesses will differ in the amount of preparation needed to get back to business as usual following a flood or storm damage. But, whether you’re a sole trader or employ 10 staff, the critical factor is to plan ahead for every eventuality. That way, you can be confident that, whatever the UK’s weather throws at you next winter, it’ll still be business as usual.