Most of the 2019 California wildfires got extinguished or mostly contained recently. But the damage and impact of those fires will be felt by Californians for years.
And among the many people particularly hurt by the wildfires are California’s small businesses.
According to a Fox Business News report, wildfires this year put California’s prosperous wine country in their cross-hairs. In fact, more than 40,000 small business jobs are tied to the wine and tourism industry, many of them small business. They’re not the only ones, of course.
The question now is, will those small businesses be able to re-open once some sense of normal gets restored.
See, most small businesses, according to one expert we contacted, says small businesses are unprepared for disaster like wildfires.
Business Impact of California Wildfires
Small Business Trends contacted Dallin Hatch, Senior Manager of Marketing Communications at Womply, to learn more about the business impact of California wildfires.
Insurance for Natural Disasters
“Top threats to U.S. small businesses” is the name of the research. Hatch started by focusing on the lack of SMB insurance for natural disasters they found.
“Turns out, small business owners aren’t insuring themselves sufficiently against the threats they consider most damaging,” he writes.
In fact, over half (67%) of small business owners with less than a month of reserves understand natural disasters like fires and floods are “extremely damaging.” Still only 21% have disaster insurance.
Business Interruption Insurance
“And only 14% have business interruption insurance to maintain cash flow during a stoppage,” Hatch says.
One of the biggest issues during a natural disaster is the cash flow stops. The study found 1 in 5 small businesses would shut down in 30 days if sales stopped.
“So, your physical property needs to be secure,” Hatch writes. ‘Then your biggest concern should be having enough financial flexibility to survive several weeks without any revenue. We recommend having a rainy-day fund equivalent to at least 3-4 weeks of revenue to be safe.”
Socking Away Cash
And business interruption insurance can take care of that if you anticipate having trouble socking away cash. There’s more to consider if your business is in an area where there could be a fire, flood or other disaster. Finding a way to stay in touch with clients is important. Especially after the event is over.
“When the dust settles, floodwaters recede, and/or power returns, people will be looking for the goods and services provided by small businesses,” Hatch says.
Up and Running
Small business owners need to let their customers know they are up and running. Hatch suggests being proactive and using tech to full advantage.
“Planning ahead of a disaster is critical, especially when it comes to collecting customer contact information. So, if you don’t have a database with contact info for your customers, start building one now. Use email, SMS texting, and social media channels to tell your customers you’re back up and running.”
Haven’t started any disaster planning yet? Hatch says there’s no time like the present to get started.
“Just start from wherever you are,” he says. “If you don’t have a customer database, start collecting contact info. Don’t have an emergency fund? Start putting away a little money now.”
Three Steps
Getting some business interruption insurance quotes is a good idea too.
“Every little bit helps,” Hatch says. “Even taking these three steps will put you well ahead of the majority of businesses that are wholly unprepared for the storms ahead.”
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