Imagine for a moment walking into the office on Monday morning to find collapsed ceilings and two inches of water on the floor because a pipe leaked all weekend. Workstations, equipment and electronics are soaked. There are suddenly many questions to answer: Is the building safe to enter? How do we shut off the water? Who can I call to repair damages? How will this affect business? When will operations resume?
The reality is disasters happen. From the smallest emergency to the largest disaster, companies are susceptible to these types of setbacks.
One of the largest contributors to facility disasters in NH is weather. While changing seasons are a draw for residents and tourists alike, it brings potential threats. Winter poses the largest risk. Frigid temperatures can burst pipes. Heavy snow can lead to roof leaks or even a roof collapsing. New Hampshire also has its fair share of notable weather events—the Mother’s Day flooding of 2006, the ice storm of 2009, Hurricane Irene in 2011 and the endless winter of 2015. These events led to tens-of-millions of dollars in property damage across the state.
But natural disasters are not the only cause of property damage. Mistakes and accidents happen year-round, such as kitchen fires at restaurants or clogged pipes in an apartment complex. Mechanical failures can also lead to fire or water damage, including broken hot-water tanks, leaking HVAC units and blocked roof drain systems.
The physical damage to a facility is the obvious effect of a flood or fire. But what are the long-term implications for the company? According to FEMA, 40% of businesses never reopen after experiencing a disaster. Of those that do, 25% shutter within two years.
A risk analysis will reveal exposures to a business if the facility is shut down due to a property disaster. The most obvious loss would be the inability to generate sales and serve clients. A large business disruption can slow or even stop revenue.
Staff are also affected. How long can employees last without the ability to go to work and earn income? So much of the workforce lives paycheck to paycheck. If they can’t work, will they wait around or look elsewhere? New Hampshire has one of the nation’s lowest unemployment rates and other companies will gladly scoop up those employees.
Businesses also risk losing market share. If consumers need a certain product or service, they will seek it elsewhere and there’s no guarantee those clients will return.
Unexpected expenses can also be incurred. Property damage cleanup and repairs are often covered by insurance, unless a business does not have the right coverage limits and policies in place. Insurance does not always cover what a business owner expects it will, resulting in significant out-of-pocket expenses. Even with insurance, a business needs to pay the deductible, which can be in the five-to-six-figure range depending on the size of operation.
Preparing A Disaster Plan
Property disasters are not completely avoidable but planning for them is in a business’s control. Some industries, such as education and senior housing, are mandated to create these plans. Though, most industries don’t require it and don’t do it.
Pre-disaster planning may not sound exciting, but it may end up saving the business. Getting started is easy.
Here are the key components for creating a pre-disaster plan:
Stakeholder Analysis: If something happened to the building today, who are the primary people within the organization to be notified and involved in the resolution process? Typical answers include ownership, executives, general manager, director of facilities, shift leaders, HR and public relations.
Communication Plan: Organizing the messaging both internally and externally is important following a disaster. If a business does not control the narrative of what is going on, people will create their own stories. This applies to staff and customers. Not controlling the narrative could negatively affect employee morale and consumer confidence.
Facility Mapping: Understanding building components and documenting them properly can make the difference between a small emergency and a catastrophe. Something as simple as documenting where the water shut-off valves are located can stop hundreds of gallons from flowing through the building.
Vendor Coordination: Does the business have an organized and approved contractor list? Building a network of contractors before a disaster happens can drastically improve recovery efforts. Common trades to include in this list are plumbers, electricians, roofers, and disaster restoration companies.
Insurance Review: Include an insurance agent in planning. Create “what if” scenarios so the agent understands the company’s insurance coverage. This may uncover areas in which coverage should be increased. It is also important to know the deductible, so as not to be caught off guard by that expense.
Executing a recovery plan is much easier than trying to react to a chaotic situation.
Joshua Solloway is COO of Soil-Away Cleaning & Restoration Services in Hooksett. He can be reached at email@example.com or 603-641-6555.