“Ninety-five percent of businesses are underinsured,” said Jim Hill, of A&J Specialty Services, Inc. As the Life safety, Disaster plan, and Response specialist at the (DeForest, Wis.) disaster response company, he has seen more than his fair share of sad stories — from business losses to individual tragedies. “Seeing the faces of people who are unprepared and are really hurt because they were not prepared is the worst,” he said. And though he’d like never to see those faces again, that’s not likely, because accidents happen, and weather happens, and always when you least expect it. As if there wasn’t enough to worry about, Hill reminds us that we are also living above a geological fault line!
Nationally, 43% of businesses that suffer a loss will close for good, according to Hill, so the deck was clearly stacked against a couple of area businesses whose dreams were nearly snuffed out: Community Coordinated Child Care (“4-Cs”), a Madison nonprofit resource and referral agency for early care and education, and Bavaria Sausage Kitchen, a 50-year-old specialty meat and cheese retailer. Thankfully, both will survive, but what has been learned, what lessons can be gained, and what should businesses do to proactively plan for the unthinkable?
A Tale of Two Businesses
August 13, 2008 was Jody Bartnick’s first official day on the job as 4-Cs new executive director. It was also the day the nonprofit’s building burned to the ground, leaving only a smoldering foundation behind.
October’s fire at Bavaria Sausage Kitchen destroyed the business’ retail store and consumed its inventory, offices, shipping department, a storage room, and everything on the loading dock. Only the freezers and some products stored in the basement were, for the most part, spared. Bavaria’s president, Judy Voll-Cottrell, had just received her holiday inventory and was gearing up for its most important holiday season. Instead, five pallets of Christmas inventory, ordered in May, were relegated to a trash dumpster.
Bartnick and Voll-Cottrell survived the unthinkable. And while they may not know each other personally, their message to other business owners is both identical, and emphatic. Know what’s in your insurance policies!
Insurance Assurance
Bavaria was well-prepared, according to its president. “We really stayed on top of that,” she said. “But the most important thing, if I could offer any advice now, is to always meet with your insurance agent. Update your stuff every year. We did that religiously, and we are well-covered. Insurance is expensive, but it’s the most important thing when something like this happens.
Bavaria found its insurance carrier, Society Insurance, through Hausmann-Johnson, an independent insurance agency in Madison. Voll-Cottrell was amazed at the quick response. “The insurance company was here within 15 minutes of the fire call,” she said. “Even my personal State Farm agent was here. It was pretty impressive.”
Any other advice? “Have a good alarm system,” she said. “That’s what called us.”
For Bartnick (4-Cs), who was thrown into the fire, quite literally, it was a learning experience. “You always hear people say you should know and understand your business insurance policy, but it’s one of those things you don’t spend enough time examining. Once a year, a rep comes in, you sign a document and then don’t see that person again for a year.” That has since changed, and 4-Cs underwent what Bartnick calls a crash course in Insurance 101. “Businesses really need to understand what it means to have a loss. A lot of your policies look really big (dollar-wise), but in the long-run, they may not be enough.
“We had enough coverage, but if your policy specifies how many months you have to rebuild, or how much you can spend on rent for a temporary location, you need to know that. You may not be prepared to move that quickly, particularly if you’re a nonprofit.” Bartnick declined to name its insurance company at the time, but said 4-Cs works with a different provider these days.
Since the fire, 4-Cs established a new protocol for securing electronic files. “Make sure you store e-mail addresses and phone numbers off site. Our server was in the same building; our calendars were all on the computer. We pulled phone books back out.” Luckily, because much of the company’s work was Internet-based, files remained accessible to staff and most everything was recovered. “The staff and board of directors really stepped up. We had daily conference calls at 7:30 each morning, even on weekends.”
Over the next year, as the building was being rebuilt, 4-Cs operated out of temporary office space nearby, thanks to the business interruption clause in its policy, and nearly a year-to-the-day of the disaster, the nonprofit moved into its new space.
Quiet Disasters
While these two scenarios may be extreme, Jim Hill (A&J Specialty Services), cautions businesses not to assume they’ll never fall victim to an emergency or disaster. In fact, he said, floods and water damage are this area’s biggest nemesis, and to that, he offers this advice: “Every business should understand that by storing or keeping important documents and computer towers two-inches off the ground, [particularly when stored in lower levels], the chances of saving things are greatly increased.” Remember, too, that cardboard boxes offer no protection from water damage.
Hill said 90% of business-related disasters are “quiet disasters,” that is, situations that may not make the evening news, but can devastate a business. It could be something as simple as water damage caused when a sprinkler head pops off a wall after unwittingly being used as a coat hook; or, a cheese company with a mold problem; or bed bugs, to a hospital or hotel. “It’s not always a big tornado coming at you.” He said. Companies should ask, “What would stop my business from being a business?” then work on putting a simple plan together by identifying the basics. “But don’t get down in the weeds,” he cautioned, “because you’ll get overwhelmed.”
Steve Schulze, a local business continuity planning resource, and member of the public-private partnership of Dane County, said business owners need to assess the critical components of their business. What are the revenue-generating aspects that must continue? Who is the best person on staff to lead in an emergency situation? “Know your staff,” he said. “Someone in a management position may perform great on a daily basis, but might fall apart in a major crisis. Not everyone may perform the way you think they would. Sometimes, non-management performs better than management.”
And don’t always assume top management will be around to make critical decisions, he cautioned, morosely.
Hill (A & J), offers some tips and questions to ponder to help businesses prepare for the unexpected:
- Keep a list of contact information that includes: employee names, phone numbers, cell phone numbers, emergency contacts, vendors, and a disaster response company at a neutral site where it can be located by anyone in the company. Keep the cell phone provider contact as well. A cell provider might be able to set up a temporary number employees could call for vital company updates and information.
- Define the roles and responsibilities of staff members. If the computers go down, who’s responsible? Who will disseminate information?
- Have a relocation plan, including vital records and data backups. How accessible is it to the key people? Where would you go if you needed to function somewhere else? Would your property management company have space you could temporarily occupy? Will your technology vendor immediately provide you with computers while you regroup?
- Assign a media spokesperson, and a backup. “Small and medium-sized businesses can be most vulnerable during an emergency,” Hill said, adding that the media can also be an excellent ally when letting the public know that the company is still in business.
- Institute a written plan that doesn’t have to be complicated. Revisit it frequently, and be sure everyone knows where to find it.
On a more personal note, Hill suggests people utilize the ICE (In Case of Emergency) feature on their cell phones. In an emergency, he explained, first responders often utilize this information to gather blood type, allergy, or emergency contact information.
Survive and Thrive
Luckily, and in large part because of their business insurance coverage, both 4-Cs and Bavaria Sausage Kitchen have been granted a second chance, and their stories are nothing short of inspirational.
“Our home visits were still being conducted the day of the fire,” said Bartnick of 4-Cs. “Within 24 hours, we had a staff meeting. Within two days, we processed a claim for our child and adult care food program for over 600 providers — in excess of $190,000 — from a remote location. We’re very proud of that.” The nonprofit now occupies a more functional space, has rebranded itself, redesigned its logo, and has added staff.
At the Bavaria Sausage Kitchen, Voll-Cottrell currently works out of a construction trailer on the property. The company continues to offer a limited inventory of product, but continues to produce sausages and brats. “We’re plugging along and doing things right,” she said. “A home fire would be 20-times worse — losing your pets or personal belongings…. But we’ve been here since 1960. Our customers needed us to reopen!”
Voll-Cottrell, who expects the new-improved Bavaria Sausage chalet to be completed in early 2011, is especially proud of the fact that the company was able to retain its staff throughout the ordeal. “We all got dirty and breathed a lot of dirty air,” she said, “but we’re making lemonade — and lemon pie — out of lemons, and we’re moving forward.”
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