2nd March, 2020
As seen in Australia recently, with the devastating 2019-2020 summer season bushfires, natural disasters can have a horrendous impact on the lives of people and animals and the environment. Here’s a simple response plan for business owners.
Unseen events can wipe out whole communities and have a severe effect on business owners and such events seem to becoming more common across Australia and New Zealand.
Massive financial losses often result from damage to premises and stock. Plus, there’s the resulting loss of trade during and after an event, with low sales becoming an issue for months or even years afterward.
Those running retail and hospitality businesses can find themselves particularly impacted, but a natural disaster doesn’t have to ruin your livelihood – there are plenty of things you can do to stay afloat.
Entrepreneurs working in retail and hospitality sectors should undertake these key steps to deal with the situation when disaster strikes.
Firstly, stay safe by keeping yourself, your employees, customers, and others well clear of premises that could be dangerous due to a natural disaster.
It’s natural to want to try to save as many business items as possible, but don’t do anything that could risk your life or anyone else’s. Safety is more important.
Once the immediate disaster has passed, avoid rushing into your premises, too.
Don’t enter your place of work until it’s safe to do so, as natural disasters can cause a range of health and safety issues.
There’s the risk of exposure to bacteria, toxins, asbestos, and falling debris, amongst other things.
Always wait for emergency services or your local council to declare premises safe to re-enter.
Next, assess the impact on your business. Once you can return to your premises, try to determine the degree of impact.
Look at this both from a physical perspective (buildings, fittings, fixtures, inventory) and also from a sales point of view.
You’ll want to start cleaning up as soon as possible, but before you do, take note of the damage and losses.
Document as much as you can, recording photographic or video evidence you can provide to insurance companies of how and where the damage occurred.
Don’t forget to collate evidence of any precautions you took to prevent damage, where possible.
On their website, the National Retail Association (NRA) even suggests business owners keep copies of relevant newspaper articles.
These can show insurance firms the impact of the event on your firm’s area.
As you clean up, keep receipts for everything. For instance, obtain a receipt for debris removal, garbage disposal, cleaning equipment, and the like.
The more details you have to forward on to insurance providers, the better it will make your claims progress.
Get in touch with numerous people as soon as you can.
This list includes your landlord, insurance company, employees, suppliers, and key customers.
In particular, start a claim with your insurance company straight away.
Find out what you must do to have your claim processed, and determine your cover.
Learn how the damage is being classified, for example, an ‘Act of God’ or ‘Natural Disaster’.
Insurance covers some classifications and not others.
The sooner you know your position, the sooner you can take the next steps.
Always claim all future losses, too, for the time it will take you to return to pre-disaster trading conditions.
You’ll have to show your revenue before the natural disaster to claim this.
Your accountant should be able to put this information in the necessary format for the insurance company.
If you’re leasing your business premises, read over the contract to find out your rights and the responsibilities of the landlord or centre management.
Leases usually have a section that indemnifies landlords against actions or demands arising from situations such as natural disasters.
Yet, there are usually also other clauses about the continuity of the lease you need to consider.
READ: Contract management 101
For instance, in many cases, if your tenancy has been damaged or destroyed and you can’t use or access it, you may be able to terminate your lease within a short timeframe, such as a few days.
This is usually only possible if the landlord doesn’t start to rebuild within a reasonable period.
Talk to your landlord ASAP about their expected timeframes for repairs or rebuilds so you know how long it might take before you can re-open, if that’s what you want to do.
Also, building leases usually contain clauses about things like compensation, reductions in base rent, and other factors.
With so much legal jargon involved, it pays to talk to a specialist lease negotiator or even have them represent you to ensure you get the best outcome possible.
These are the key steps to take immediately after a natural disaster strikes your business premises and surrounds, but keep in mind there’s plenty more work to do in the months ahead.