This year’s wildfires, record rains, flooding, tornadoes, hurricanes and potential for earthquakes should all act as reminders that you should be prepared for a disaster. Sure, it will take some effort on your part and you may never be affected by a disaster, but if you are, you will sure wish you had been prepared. It can become a nightmare, whether it impacts you personally or your business.
If you are a business owner, unexpected events can have a devastating effect on your business. You need to be protected from any number of natural and unnatural events, such as fire, computer failure and illness or the loss of key staff, all of which can make it difficult or even impossible to continue day-to-day operations.
Good planning can help you take steps to minimize the impact of a disaster and protect your business. The following recommendations can help your business cope with an unforeseen calamity.
By identifying possible disasters that may affect you and your business, you may be able to minimize the risks and losses that might occur. A well-thought-out business continuity plan will identify an action plan, safety concerns, applicable computer back-ups and alternative operational headquarters. It will also provide a road map back to normal activities by highlighting the points of contact for insurance and emergency relief way ahead of time.
How will you escape? Where will you meet up? How will you communicate? Map out and practice escape routes from your building. Familiarize yourself with the local authorities and emergency radio signals announced at the time of a disaster. What happens if you survive the disaster but your biggest supplier does not? Develop backup vendors and relationships ahead of time. Don’t forget that many employees will have families to care for and that their homes may be damaged or destroyed by the disaster. Have you stockpiled water, batteries, first aid kits and food in case emergency services are delayed?
As many realize after the fact, they are not insured for many natural disasters under their existing business policy. You may need to add or increase coverage, if it is available. Check with your carrier for details on your coverage.
Different types of businesses have different computer system needs, and those systems need to be backed up in case an event damages or causes the loss of the business’s computer capabilities. Backups are easy with the current online technology. Many businesses now have outside vendors that host and back up their computer systems for them. Inquire about whether they have redundant backup systems and request information on their emergency plans. In fact, in many cases, businesses now have their entire computer systems and data online, and these backups function from anywhere, from any computer.
If the disaster is only temporary and shuts down the electrical grid to your business, a generator may be a sound investment. The generator can power your computer system, equipment, refrigerators and other crucial items.
Family and Home
Just like a business, your family needs to have an emergency plan. They may be in different locations, such as school, work and home, when a disaster strikes. You need to have plans in place for where to meet if separated and a pre-planned evacuation route or action plan for unexpected disasters. The pre-planned evacuation route should avoid areas that can flood or are dangerous. It is good practice to never let the fuel level in your car(s) get below half-full, or let your electric car be less than half-charged, because the area may lose power, and gas stations may also be damaged by the disaster or run out of fuel.
While many people these days use credit or debit cards or other electronic payment methods in lieu of cash for their purchases, it’s a good idea to have some cash on hand for times when a disaster causes the electricity to be out for an extended period of time. Without power, vendors won’t be able to process non-cash payments.
Is your insurance coverage appropriate? Do you have supplies of batteries, flashlights, water, food, medications and first aid supplies in case of an emergency? And don’t forget to consider the needs of your pets during and after an emergency.
We now live in a digital world, and if you are computer savvy, an easy way to keep your records out of harm’s way is to store digital copies of the documents on a remote server (i.e., in the cloud). It may cost a few bucks a month, but the digital files will be there when you need them, regardless of what happens to your home or business location. If you aren’t a fan of cloud storage, you should maintain an up-to-date backup of your computer files on an external hard drive or thumb drive(s), preferably with a copy stored in a secure location away from your home or office that is not likely to be affected by the same disaster.
Most financial institutions these days provide all of their documents digitally, and you can store those documents on your remote server or even retrieve them from the financial institutions’ websites. However, before relying on the financial institutions, make sure they retain your records for long enough to meet your needs.
For example, you generally need to keep individual tax records for at least 3 years after the tax return’s due date for that tax year or the date when you filed the return, if it was filed after the due date. For example, your 2017 return was due April 17, 2018. If you filed it on or before April 17, the statute of limitations for the 2017 return would not run out until April 15, 2021. So, you would have to keep the records for the 2017 tax return until then. (The statute of limitations runs for 4 years for some states, and some records need to be kept longer for both federal and state purposes.) If some of your files are not already available digitally, you can always scan the originals to create digital copies.
Another very important thing to everyone is family photos. Modern-day pictures are digital, so you can save them on a remote server, or many photo services will save them online for you. For the older important ones, you can scan them or take digital pictures of them with your camera.
Another important document to have is a list of your home’s and business facility’s contents for insurance purposes. The quick and easy way is to take a video or pictures throughout the house or business showing the furnishings and equipment. A better method is to take the pictures or video and back them up with a detailed list of the items in each room.
Whenever there is a disaster, lowlifes show up and try to scam generous individuals out of money intended to go to victims of the disaster. Don’t you be another victim of the disaster – watch out for scammers claiming to represent charitable organizations, who will pocket the donations for themselves instead. Besides fraudsters soliciting on behalf of bogus charities, some so-called charities aren’t entirely honest about how they use contributions.
You may receive phone calls, emails, snail mail or appeals on social networking sites for donations to help the victims of the most recent disaster. Some of these appeals may come from fraudsters and not legitimate charities. Unfortunately, this happens often after natural disasters such as earthquakes and floods.
So before writing a check or giving your credit card number to a charity that you aren’t familiar with, check them out so you can be assured that your donation will end up in the right hands. Follow these tips to make sure that your charitable contributions will actually go to the cause you are supporting:
- Donate to charities that you know and trust. Be alert for charities that seem to have sprung up overnight in connection with current events.
- Ask if a caller is a paid fundraiser, who he/she works for, and what percentages of your donation will go to the charity and to the fundraiser. If you don’t get clear answers—or if you don’t like the answers you get—then consider donating to a different organization.
- Don’t give out personal or financial information – such as your credit card or bank account number – unless you know for sure that the charity is reputable.
- Never send cash. You can’t be sure that the organization will receive your donation, and you won’t have a record for tax purposes.
- Never wire money to someone who claims to be from a charity. Scammers often request donations to be wired because wiring money is like sending cash: once you send it, you can’t get it back.
- If a donation request comes from a charity that claims to be helping a local community group (for example, police or firefighters), ask members of that group if they have heard of the charity and if it is actually providing financial support.
- Check out the charity’s reputation online using Charity Navigator, Charity Watch or other online watchdogs.
- IRS Publication 2194, Disaster Resource Guide for Individuals and Businesses
- IRS Publication 583, Starting a Business and Keeping Records
- Tax Relief in Disaster Situations
- Federal Emergency Management Agency
- Small Business Administration
Recovering and Government Assistance
The following government agencies may provide assistance:
Small Business Administration (SBA): The SBA provides low-interest loans to businesses, homeowners and renters who are victims of a disaster. It even provides loans to replace or repair damaged or destroyed clothing, appliances, furnishings and automobiles. For more information, visit its website at: www.sba.gov.
Federal Emergency Management Agency (FEMA): Disaster assistance is provided in the form of money or direct assistance to individuals, families and businesses in an area whose property has been damaged or destroyed and whose losses are not covered by insurance. It is meant to help with critical expenses that cannot be covered in other ways. For more information, visit its website at: www.fema.gov.
Since many disasters strike without warning, being prepared can help your business and family to recover more quickly from a catastrophic emergency. Take the necessary steps to ensure that both you and your business are well protected.
If you have questions, contact the experts at Henssler Financial: