In mid-September, Jeff Smith, a veterinarian in Middletown, California faced a business owner's worst nightmare. As what is now known as the Valley Fire swept through Lake County California--putting both his home and his animal care center in its direct path.
While the fire raged for days and consumed nearly 80,000 acres of land and destroyed more than 1,900 structures, including 66 commercial businesses in the area, Smith's three-person practice, Middletown Animal Hospital, was spared. That was certainly a lucky turn, but Smith had also prepared for the worst.
Despite living in a fire zone, the former Eagle Scout says he took steps early on to mitigate his risks in a fire. In the last five years, as wildfires have struck California with growing frequency, he retrofitted both his office and home with materials that don't burn easily. He also cleared away nearby shrubs that might easily catch fire, and he backed up his business data to the cloud. At home, he has a generator for backup power at the ready. He also has a 10,000 gallon tank of water on his home's property that can serve as backup to the municipal water supply in emergencies.
All that came in handy. As one of the few remaining, functioning businesses, Smith could supply desperately needed services to his community, including care to the dozens of cats, dogs, goats, horses and other animals in the community that suffered from burns and smoke inhalation.
"I really can't overemphasize the idea of being prepared, and that doesn't mean just having a first aid kit in the back of your car," Smith says.
Business owners across the country would be wise to follow in Smith's footsteps, as the effects of climate change are undeniable. The decade from 2005 to 2010 was the warmest on record, according the Environmental Protection Agency, and average global temperatures have risen 1.4 degrees Fahrenheit over the last century. The warming temperatures have caused ice caps to melt, and sea levels to rise, scientific agencies such as the National Oceanic and Atmospheric Administration say. That's led to increased flooding in many coastal areas. But other regions--California, for example, have experienced increased drought and risk of wildfire, also due to increasing temperatures.
Meanwhile, the difference for your business if it's out of commission just one day, one week, or even one month can be profound. An estimated 40 percent of businesses without a disaster recovery plan, which includes having business insurance, fail once calamity hits for lack of funds to cover downtime. A further 25 percent will fail within two years for problems related to the downtime, according to the U.S. Economic Development Administration.
Until just a few years ago, a good disaster recovery plan included insuring your company against flood and disruption, backing up your data and storing it in a different location once a week, as well as developing a contingency plan for your employees to work from home, or some other location. While not much has changed with regard to insurance, today you still need to go the extra mile. That's not only because the increase in adverse climate events will affect more businesses going forward, but also because new technological advances in the last two to three years enables less costly ways to ensure your business doesn't skip a beat when the worst happens.
Here are five things you can do now to make sure your business survives (even a prolonged) disaster:
1. Do your research.
There's more information than ever before about climate change and how it's likely to affect you. To pinpoint your vulnerabilities, you should identify the potential dangers near you, suggests Janice Barnes, global discipline leader for planning and strategy at Perkins and Will, an architecture firm in New York. Your first stop should be The National Climate Assessment, an interagency effort by the U.S. federal government, puts out a report every few years, assessing the likelihood of floods, fires, heat waves, hurricanes, and other climate-based events. It breaks down its forecast by region, so you can have a pretty good idea what to expect close to home. It's most recent report came out in 2014.
The Southwest, for example, is one of the warmest and driest regions in the country, and it's expected to see average temperatures rise another 2.5 to 5.5 degrees in the coming decades, the assessment says. That means more drought and potential for wildfires. Similarly, the Northeast is expected to experience more extreme weather events, like hot summers and, in the short run, super cold winters. And with sea levels expected to rise, the area is expected to experience more intense flooding.
If, for example, there are predictions for increased heat waves, you can expect more demands on the local energy grid, including more brownouts, which could lead to downtime for your business, Barnes says. That would suggest you might need to add a back-up energy source, such as solar energy panels, batteries, or a generator.
2. Assess your customers and suppliers.
Most small businesses don't bother to conduct a formal assessment of who's buying from them, and whom they're buying from, says Anthony Scriffignano, chief data scientist at business data and intelligence company Dun & Bradstreet. In the past few years, software that assesses your supply chain risk have proliferated from numerous companies. While that may be useful, most small business owners may not need anything that complex. That's because the majority of business owners really only depend on about 20 percent of their customers for sales, and an equivalent percentage of vendors to supply their businesses, Scriffignano adds. So it's critical for you to identify those stakeholders--and figure out clear ways to communicate with them--in case your business or theirs is hit by a disaster. You'll also need to identify a back up vendor or two, as part of your analysis. That way, you'll always be able to get what you need on time.
Keeping the lines of communication open can, for instance, help you avoid turning away orders if your business suddenly finds itself under 10 feet of water. Similarly, if your supplier shuts down for months, you also don't want to commit cash to an order that won't make it to you.
Develop a plan to keep customers informed. You want your best buyers to know you're up and running so they can still purchase your goods and services. On the flip side, if a key customer is incapacitated, the big order they're expecting from you won't do them much good. You'd be smart to reshuffle and serve other customers first.
"Small businesses have very limited resources and don't have time to monkey around with data" after a disaster, says Scriffignano.
3. Put your e-commerce plans in hyperdrive.
More customers than ever before are shopping online, and they have a tendency to do even more online purchasing during extreme weather events, such as blizzards or flooding, says Sarah Quinlan, senior vice president of market insights for MasterCard International. So if you don't have much of a Web presence now, it's time to develop one.
Meanwhile, your e-commerce strategy should rely on different geographical locations for fulfillment. If you mainly ship out of a local fulfillment center, for instance, basing one or two alternatives in regions farther afield makes sense. "One of the things you always look for in disaster planning is making sure you are clearly in a bunch of different places and that your warehouses are not all in one place," Quinlan says.
4. Protect your buildings and critical equipment.
There isn't much you can do if your business is in the direct path of raging wild fire or category 5 Hurricane. But taking precautions can help. If you live in a fire zone, build or reinforce with fireproof materials such as flame-resistant fire board or cement and metal, as Smith did. In addition to using these materials, he cleared away low-lying shrubs, and filled in his driveway with gravel. He also built outside sheds with cinderblock. If you live in a flood zone, waterproof your foundation. And if you can, move your offices to a higher floor, says architect and resiliency design expert John Cetra, partner at CetraRuddy, based in New York. If you have the funds to purchase a backup power source, put it on your roof or above ground floor level, he adds.
5. Create a distributed workforce.
Every business has key employees who have to show up, whether that's machine operators or the pilots who fly your planes. But make a regular practice of letting other employees work from home, or some other place they can get the job done. That's possible now more than ever because there's plenty of collaborative workplace software, complete with built-in messaging applications. Much of it is either free or low-cost, such as Google Docs, Campfire, and Slack. The more confident you are in the flexibility of your workforce, the easier it will be to assemble workers in disparate places after a disaster, Barnes says.
"Depending on what the business does, ask yourself whether or not it makes sense to have your people there at all," Barnes says, adding it will also reduce the carbon footprint of your business.
6. Don't just store your data offsite.
Continuously back it up, and make sure you can get to it quickly and securely. Just a decade ago, the sole option was storing physical backup disks or tapes in a secondary location. Now, thanks to the cloud, you have numerous options from companies that include Inc. 5000 company Box and Dropbox, as well as tech giants Amazon, Apple and Google. Smith, for example, backs up his data every hour to Dropbox.
But your strategy shouldn't just focus on storage in the cloud. It also matters how quickly you can send and access your data there, so you can make use of it. In the past three to four years, technology that allows big companies to automatically move massive amounts of data to the cloud rapidly, has been downsized for smaller businesses.
Generally, these are known as data synchronization, managed file transfer and file sharing services, says Paul Lavery, senior director of product marketing for Cleo, a data integration provider in Rockford, Illinois. In addition to Cleo, other vendors in this space include Accelion, and Cloudscape. You should be able to get set up with a data integration service for as little as $1,000 annually, Lavery says.