Developing Survival Strategies

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Unless you as a business owner make good decisions about recovery, your largest losses may come in the years after the disaster rather than from the direct damage of the disaster itself.

Following a large-scale hurricane things seldom, if ever, get "Back to Normal." The community almost always experiences significant and permanent changes.

It is possible, if you take the right steps, to not only survive a major hurricane, but to flourish in the post-event environment. But, unfortunately, most businesses are not prepared and many fail.

Among the factors found to contribute to disaster induced business failures are:

  • The impact of the disaster on customers
  • The kinds of goods or services offered
  • The inability or unwillingness to respond appropriately to the new post-event environment
  • The weak financial condition and stability of the business before the event
  • The inability or unwillingness to recognize and exercise available options

After a major disaster such as a hurricane, your financial survival depends on how well you make decisions in the new environment. There are at least three basic options available to you.

Option one is reopening your business.

  • You can finance your business reopening with insurance proceeds, traditional loans, low-interest loans, family loans, company assets, personal savings, and so forth.
  • You can reestablish your business at the same location or you can relocate your business.
  • You can reopen your business offering the same goods and services you provided before the hurricane or you can change, in part or entirely, the goods and services you provide.

Option two is closing your business.

  • You can simply walk away.
  • You can liquidate your business.
  • You can start a new and different business with new products and services.
  • You can go to work for someone else.
  • Perhaps you can retire.

Option three, you can (or try to) sell, transfer or merge your business.

These options are not exclusive. For example, you may walk away from your business and start a new business, in a new location, that provides goods and services which may be the same or different from your previous business.

Very likely, you will be able to think of other options. These three basic options are just for starters--something to get you thinking.

Here are some questions you should answer before making decisions on reopening your business.

  • What just happened and what is happening now? Interpreting what happened and what is happening as a result of the event may be very difficult given the confusion that will take place in the aftermath of the disaster. Information you receive will be unreliable. You will need accurate, reliable information on which to make decisions about your business. You must make a continuous effort to discover what is going on in your neighborhood, your business community and your community in general.
  • What happened to your customers? If you suffered significant losses and will have to be closed for some time, it is important to learn what your customers will be doing during the time it takes you to reopen. If your customers did not suffer major losses, they may change their buying habits or they may buy from someone else and you may have to fight to win them back. Can your customers get to your place of business? Do they still want or need your products or services? Can they afford them?
  • How much did you lose and where will the money come from to reopen? Even if you are insured, it is unlikely that insurance proceeds will cover the full cost of reopening your business. Research has found that many small business owners use their life savings, SBA or conventional loans, credit cards and help from customers and/or suppliers to fund reopening. Before you decide to use life savings or loans that require you to use personal assets as collateral, you should take a very serious look at your business prospects in the post-hurricane environment. It is quite possible that your old business plan is no longer viable. It is also possible you could lose both your savings and the business. While banks and the SBA will probably be willing to loan you money to reopen based on your pre-disaster experience, before you make that commitment, make sure you have a solid business plan for the new environment.
  • How strong is your business? Even if you are doing well now, it is important for you to take a hard look at where you are with regard to the trends in the area where you do business. For instance, small downtown merchants may be having a tough struggle against giant chain retailers located in the suburbs. Only you know how strong your business is. If you are losing out now, there is no reason to believe you can do better after the hurricane. If you are doing well, growing and becoming more profitable each year, chances are you can do well after the hurricane, provided demand continues and you can retain your customers through the unsettled times.
  • Are you willing and able to give what it is going to take? It takes a lot of energy and commitment to start a new business. You know that. You've done it. Remember that, following a real disaster, it usually takes at least that same level of commitment and energy to revitalize a business that has suffered a disastrous event. Ask yourself whether you still have the drive and desire needed to do it again.


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