Staring Down Disaster

For Dayton, Ohio-based Comtactics L.L.C., 2008 was turning out to be a banner year. The five-year-old marketing and Internet solutions firm, which develops Websites, logos, and videos, finished 2008 with $540,000 in sales and in December moved into a larger, newly renovated office.

“We had spent several days painting and putting up wallpaper,” recalls CEO Sean Fields, who co-owns the company with his wife. “Two days later I walked into our office and standing water and ceiling leaks were everywhere.” Burst water pipes flooded several floors, including Comtactics’ office; about $75,000 worth of computers and digital equipment were destroyed. As of February, the building was still shut down until further notice. While the company was displaced (Comtactics recently relocated to downtown Dayton) for about two months, Fields, 38, and seven employees ran the business from their homes. “We are now challenged with providing documents to the insurance company and relocating, all while meeting project deadlines,” says Fields.

No matter how much forecasting business owners do, they can never predict exactly when or how a disaster will strike. Technology provider Hewlett-Packard and SCORE: Counselors to America’s Small Business, a Washington, D.C.-based organization that advises entrepreneurs, teamed up to compile research showing the impact of disasters on small businesses. Among the findings: 43% of businesses that experience a disaster without an emergency plan in place never re-open.

“A business disaster is that point in time when you cannot provide your customers and clients with the minimum level of goods and services they need and expect,” says Diana L. McClure, business resiliency program manager for the Institute for Business and Home Safety in Tampa, Florida. This 501 (c) (3) organization is supported by the property/casualty insurance industry and promotes disaster preparedness among small and mid-sized business owners.

Mother Nature–which can bring destruction in the form of hurricanes, tornadoes, and floods–isn’t the only threat. Common man-made disasters include fire, data loss, and robbery, experts say. And small businesses are particularly vulnerable because they’re less likely to have large cash reserves to handle a crisis, or risk managers on staff to anticipate one, says Laurence Barton, author of Crisis Leadership Now: A Real-World Guide to Preparing for Threats, Disaster, Sabotage, and Scandal (McGraw-Hill; $39.95). But disasters don’t have to be devastating. The following steps can help business owners prepare.