Survive or Struggle: Your Choice in a Business Disaster
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The document outlines key insights from a webinar discussing business disaster preparedness and recovery, emphasizing the significance of planning to mitigate the impacts of unforeseen events. It highlights statistics indicating that a significant percentage of small businesses fail after disasters and stresses the importance of integrated planning involving family and community support. The presentation concludes with three essential steps for businesses to enhance their resilience: planning, communication, and protecting investments.
Survive or Struggle: Your Choice in a Business Disaster
- 1. Your Choice in a Business Disaster Survive or Struggle Survive or Struggle: Your Choice in a Business Disaster Recording of this webinar can be found at learn.extension.org/events/1503
- 2. Rick Atterberry Webinar Moderator Media Communication Specialist University of Illinois Extension Extension Disaster Education Network Chair ratterbe@illinois.edu Your Choice in a Business Disaster Survive or Struggle
- 3. Glenn Muske Presenter Rural and Agribusiness Enterprise Development Specialist glenn.muske@ndsu.edu Your Choice in a Business Disaster Survive or Struggle
- 5. Disaster Planning Disaster Planning: WHAT ARE THE ODDS?
- 6. Webinar Outline 1. Business Disasters – What we know 2. Disaster or Disruption 3. The “so what” Question 4. Being Prepared 5. Fitting in the Family 6. Resources
- 7. 40-60% of small businesses fail after a major emergency (SBA) Additional 25% fail within the first year (FEMA) 80 – 90% may fail within 5 years (US DOL) Declared disasters more than doubled in recent years NFIB (2004) 30% of operating small business have been John Arens 24 hours or more in the last three years due to a natural disaster. Most common – blizzard/ice storms/extreme cold Why Plan?
- 8. Integrated Hazards Assessment Tool (IHAT) Hazard Frequency
- 9. SHELDUS Breakdown of Losses by Cause
- 10. A “Comprehensive” Definition “A disaster is a non-routine event that exceeds the capacity of the affected area to respond to it in such a way as to save lives; to preserve property; and to maintain the social, ecological, economic, and political stability of the affected region.” (Pearce, 2000)
- 11. Dahlhamer (1998) marginally surviving businesses before the disaster were less likely to recover. Webb, Tierney & Dahlhamer (2002) businesses that were in better pre-disaster financial condition were less likely to have recovered more than five years after the two local disasters. Galbraith & Stiles (2006) and Zhang, Lindell & Prater (2009) disasters accelerate existing trends small businesses are at a disadvantage obtaining access to outside assistance from governmental agencies that would improve their probability of disaster recovery and/or their speed of recovery larger businesses have a higher priority in communities for restoration of lifeline services Credit to George Haynes, Montana State University Extension, for this information What do we know business literature
- 12. What do we know business literature Cutter, Boruff & Shirley (2003) Cyclical industries such as oil development, fishing, or coastal area tourism may experience periodic high incomes, but when hard times strike or when they are affected by a disaster, their economic resilience decreases and they take longer to recover Galbraith & Stiles (2006); French et al. (2010); Zhang et al. (2009) certain industries thrive after disasters. They cite examples of construction, manufacturing and hospitality industries thriving after disasters Audretsch & Mahmood (1995) larger and older manufacturing firms were more likely to survive. Van Praag (2003) Businesses in the agriculture and repair services industries survived longer in an analysis of young white males’ self employment
- 13. What do we know business literature Gallopin (2006); Holling (1986 ) A history of past hazard exposure may enhance recovery in natural and social systems Dahlhamer (1998) the more business disruptions reported by a firm, the less likely it was to recover Wenger, James, & Faupel (1985) when disasters occur frequently, people manage them as if they are routine Enarson & Morrow (1997); Tompkins & Adger (2003) firms undertake mitigation only when they perceive disasters as a major threat
- 14. Dahlhamer (1998) concluded that recovery of a particular firm depended mainly on how neighborhoods, critical infrastructure, and the greater community were affected by disasters rather than on their direct physical damage. Danes, Stafford and Haynes (2008) and Haynes, Danes, and Stafford (2008) firms located in economically vulnerable rural counties were more likely to survive, whether or not there was a disaster. What do we know business literature
- 15. What do we know business literature Alesch et al. (2001) disaster assistance helps individuals recover, but not businesses. Webb et al. (2000) no significant effect of disaster assistance Dahlhamer and Tierney (1998) post-disaster aid was negatively related to disaster recovery Haynes, Danes, and Stafford (2008) firms located in counties receiving more disaster assistance were not more likely to survive, however these firms were more likely to realize increases in revenue than firms located in counties
- 16. Survival No impact from Federal Disaster Assistance Economically vulnerable rural county (+) Transfer business income to household (+) Woman-owned business (-) No impact of family resilience What do we know business literature Haynes, Danes & Stafford (2011) - Influence of Federal Disaster Assistance on Family Business Survival and Success, JCCM 19(2), 86-98.
- 17. Survival Federal Disaster Assistance to County (+) Federal Disaster Assistance to Family Business (+) Negative stress index (-) The negative stressors were: death of a spouse, divorce, marital separation detention in a jail or other institution, death of a close family member, major personal injury or illness, and being fired from a job. The negative stress index is a sum of the number of potential negative stressors from this list that occurred in the past year. Consistent family leadership (-) What do we know business literature Stafford, Danes, Brewton & Haynes (2011) Business Experiences with Disasters and Disasters Assistance, in-process.
- 18. Issue is not the disaster, it’s the disruption THINK CONTINUITY Think Continuity
- 19. With Disruption in Mind: More Often the Little Things! External (Key supplier) and internal (Coffee on computer) Big and small Personal issues (health of owner or key employee) Loss of key equipment Delivery van breaks down or driver doesn’t show up Food recall Computer virus The disruption can be something positive Rapid growth – i.e., Bakken oil boom
- 20. So what? Biggest problems Loss of sales and customers (62%) Uninsured losses (18%) Loss of suppliers (8%) Businesses About 40% had emergency preparedness plan Often related to size and past experience Vary extensively in terms of events covered and potential responses/resources No information on how recently they were updated
- 21. Disaster / Disruption Impacts • Uses resources • Money, time, & goodwill • Business PLUS • Family • Intermingling of time and money • Even greater in family businesses • Perhaps some or all of the community • Interdependency in communities – Smaller the community, the greater the interdependency
- 22. Acceptance Insurance Planned mitigation strategies Resources to cushion Insurance Planning Community Family Options
- 23. NDSU Being Prepared or Planning Preparedness enhances recovery from Business disruption Financial losses Loss of market share Damages to capital assets, equipment or inventory Preparedness bolsters Business’ security Credibility with customers, vendors, supply chain and the community
- 24. In a family business (most small businesses) If you don’t know the family, then you don’t know the business (inextricably intertwined) Healthy families combined with healthy businesses make healthy family businesses which are . . . More likely to survive a natural disaster More likely to succeed after a natural disaster Family and the Business
- 25. As an owner, where do you respond first? Business or family As an owner, where do your employees, key suppliers, etc. respond first? (Where do you want them responding first?) Business or family Masuo, Fong, Yanagida & Cabal (2001); Olson et al. (2003) Firm management and family interactions affect firm success. Heck & Trent (1999); Stafford et al. (1999); Duncan, Stafford & Zuiker (2003) The long held belief that work and family life are separate spheres operating independently has been challenged by studies that suggest that there are extensive, positive and negative bi-directional influences between work conditions and outcomes that affect family life and vice versa Family and Business Disaster
- 26. Sustainable Family Business Model
- 27. Families support Financial Time Pitch-in when needed Leadership Importance of Family
- 28. Resources for Moving Forward EDEN Courses Plant Biosecurity Mgmt Protecting America’s Food System Pandemic Preparedness for Business Pandemic Influenza Preparedness for Faith-based Organizations Animal Agrosecurity and Emergency Mgmt Family Preparedness Ready Business eden.lsu.edu/EDENCourses/ReadyBusiness/
- 32. It will happen 1 out of 3 chance a business will experience a disaster in a 5- year period Preparedness helps Family and community support important It’s the little ones Cumulative effect Conclusion
- 33. 1. PLAN to stay in business 2. TALK with your people (and family) 3. PROTECT your investment Three Steps for Preparedness
- 34. Glenn Muske Rural and Agribusiness Enterprise Development Specialist glenn.muske@ndsu.edu Your Choice in a Business Disaster Survive or Struggle
- 35. Questions? Recording of this webinar can be found at learn.extension.org/events/1279 Your Choice in a Business Disaster Survive or Struggle
- 36. eden.lsu.edu
- 37. extension.org
- 44. Thank You Recording of this webinar can be found at learn.extension.org/events/1503 Your Choice in a Business Disaster Survive or Struggle
Editor's Notes
- #8: According to the Small Business Administration (SBA), 40% to 60% of small businesses fail following a major disaster….mainly because they are unable to recover quickly enough to survive the loss …. they often just don’t have the capital to restart. The number of presidentially declared disasters has more than doubled in recent years. Most disasters don’t affect a large number of people like the declared events do. Too much emphasis is usually placed on dramatic, worst-case scenarios…the declared disasters, like major hurricanes, floods, tornadoes or terrorist events. These are not the only possible disasters that could occur. In fact fire, which typically affects a small area, is the most common business emergency, according to the Small Business Administration.
- #24: In truth he basic multi hazard emergency plan does not take much time or money. Businesspeople who have completed plans with broad common-sense protective measure often say the minimal investment helps them improve some processes and gives them peace of mind so they can quickly and efficiently respond to emergencies of any kind. By using a template, developing a plan is relatively simple. The materials in the course provide you several preparedness solutions and many are no or very low from keeping a current list of suppliers to keeping a backup record of important papers of site…like the secret donut recipe. The greatest investment is time…time to put together a plan so everyone every one knows the protocol of what to do in any situation…..what is the policy when bugs are found in the flour…….do you just hope the customers don’t notice? What do you do when the electricity goes off in the middle of baking?
- #30: Course info page – overview Encourage to complete the course tracker so we can see what kinds of people are going to the training materials
- #34: Section 4: Three Steps for Preparedness After assessing the risks of various hazards for your business, it’s time to start the actual planning process. The major steps to properly prepare your business for a disaster are: plan to stay in business, talk to your people and protect your investment. In this training, you’ll develop a plan that includes these three steps.
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