I spent most of the last day and a half bailing out from nearly five inches of water filling my basement, which also happens to be where my office and studio are.
I’m not sharing this to get sympathy, or even as an excuse for not blogging. Rather, I want this to be a cautionary tale.
I was lucky. I mostly lost paper and cardboard boxes. Well, that and my scanner. But there are people in my area who suffered major flooding and damage. Which got me thinking.
Is your business disaster ready?
If you suffered major damage to your home or studio, would your business be able to recover?
No one wants to think about situations like that, but there are steps you should take to ensure that a disaster doesn’t signal the end of your business.
1. Check your insurance coverage. If you haven’t had a conversation with your insurance company since starting your business, now is the time to do that. If your business is home based, you should see what is or isn’t covered under your home owners or renters insurance. This could also mean upping the amount that is covered under your policy, or adding specific items to your policy. (Such as an expensive tool.) In particular, you’ll want to check on tools, equipment, materials, and of course, finished inventory. If your business isn’t home based, or certain aspects aren’t covered under your policy, you’ll want to find out about separate business insurance as well. (Please note that I am not an insurance expert or an insurance agent, so if you have specific coverage questions, please call your insurance company!)
2. Back up data in the cloud. We all know it’s important to back up our data in case a computer crashes. But if that backup data is stored in the same building as your computer, you run the risk of losing it all. In addition to backing up to an external hard drive, consider backing up data to a cloud server. That way, even if all your equipment is lost, important data – store contact info, orders, vendors, sales data, etc – is still accessible.
3. Put money in savings. I am a huge advocate of putting money into savings when you run your own business. Even a little bit of money in savings can make a difference if you have a slow month. If disaster strikes, you can use your savings to replace items that weren’t covered by insurance (or to make up that deductible) or to help keep you afloat if you aren’t able to work for any length of time.
4. Have systems in place if you can’t work. When we think of disaster proofing our businesses, it’s easy to consider just property damage. Flood, fire, hurricane. But it’s also important to prepare in case you personally can’t work due to injury or illness. As a solopreneur, you can run into big problems if you’re unable to work for any length of time. Which is why you should have systems in place in case you can’t work. Having a virtual assistant or employee (even if they only work a few hours a week) means you have someone familiar with your business you can call in to help pick up an extra workload. Even if you don’t have an employee, having a friend or family member on deck, even if it’s just to make phone calls or answer emails, can be a huge help.
Taking precautionary measures now can really make a difference if your business experiences some hard times. Being prepared can mean having a business to come back to, rather than having to close down for good.
What measures have you taken to disaster proof your business? And if you haven’t, what can you do today?
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There are still a few spots left for Wholesale Academy, which starts on Monday. If you’re looking to take your wholesale business to the next level, don’t wait, register today!
Beth
I finally got liability insurance this year but only because it was required with my new studio lease! I’m glad to have it, though. Did you hear the story of Seibei? His van was stolen with all of his inventory right before Renegade Craft Fair Los Angeles. He regrouped and went through Kickstarter to fund his business again almost from the ground up! Having my inventory stolen before my show would be my biggest nightmare and what do you do – there is no backup plan for that!
kate
Spot on again. We are dealing with the affects of a major flood right now. We have no power phone or internet. Each day we can’t work is a setback. Thankfully our house is fine. Such a timely post. Thanks Megan.
Lee
Definitely check with your homeowner’s insurance for at home studios… we built an addition of a two story garage and studio space; we had originally though the space would be considered under the existing home and we would just need to increase coverage a little; however after talking with our rep we discovered that since this was considered as a “detached” studio space separate to the house it was not the case and would require other paperwork; fortunately we were able to quickly update our insurance policy as well as increased the level/amount appropriately.
saving small amounts in a liquid cash format (not locked into CDs or funds/stocks or roth) can’t be understated; a 6 to 8 month emergency fund is essential these days. Filing insurance paperwork and waiting for things to clear requires time and you need to be able to carry on during the lapse between filing and getting a check – assuming it’s all hassle-free.
in addition to backing up your data offsite be sure to have an adequate inventory count of supplies, tools and equipment – either through paperwork,receipts or video documentation of your studio space.
disaster proofing doesn’t have to be complicated; it can be as simple as getting a working, up-to-date fire extinguisher as well as checking to see if your fire alarm is properly installed and working… I can recall a dozen times when touring or visiting studios that a fire extinguisher wasn’t anywhere in line-of-site of working torches.
Steven Davis
Adding to the cloud backup:
1. Make sure its automatic.
Anytime you’ve got a human procedure, you are likely to get lazy… and at the worst possible time.
2. TEST IT.
Make sure that you can recover your data, that you are saving the correct data. Consider how long it will take to recover in your planning (do you just back up your data and therefore need to reinstall applications? or do you have a clean image that you can reload [cough, onto what?] and start again). Do you have all of your install disks and license info???
On a parallel security point, get a dedicated machine for money matters. Computers are cheap and having a dedicated computer for both local and online finances means you are less vulnerable to being hacked.
REMEMBER, if you have a business account, you don’t have ANY of the consumer protections you are used to for your personal financial information or money!!!!! There has been a VERY disturbing trend of small businesses getting hacked and looted. And you have no recourse and your bank just doesn’t care!!!
Craig Nutt, Director of Programs-CERF+
A homeowners policy generally excludes liability for business-related activities such as studio visits or an injury in your booth at a craft fair. Also, homeowners insurance policies generally only cover around $2,500 in business property (intended for home offices). Also, most homeowners policies exclude detached structures that are used for business purposes.
Certain risks such as flood (rising water) and earthquake are excluded by both homeowners and business policies and must be insured for separately. Flood insurance is through the National Flood Insurance program, currently before Congress for reauthorization. Yes, you can purchase this insurance even if you are renting.
For more information on business insurance, how to purchase it, and listings of policies for artists and other insurance-related resources check out this section of CERF+’s Studio Protector web site: http://studioprotector.org/OnlineGuide/Safeguarding/GettingtheRightInsuranceCoverage.aspx and for more information on emergency preparedness and recovery for artists see http://www.studioprotector.org and http://www.craftemergency.org .
Amy Crawley
A very informative & timely post, Megan. I was also going to recommend that artists check out CERF, as mentioned in an earlier comment. And if you’re not comfortable putting a back up “in the cloud” another option is to put the back up on a separate disk and put the disk in a safe deposit box. Actually, keeping important papers & other valuables in a safe deposit box is another option for anyone, small business owner or not.
Thanks for all your informative posts. I really enjoy them.
Marcos
As long as you are on your fathers plcioy he will get all the info. You need to get your own plcioy then it will be illegal for them to disclose your information with out your consent
Craig Nutt, Director of Programs-CERF+
Glad to see this thread! It is not a bad idea to have both a physical copy offsite and a copy in the cloud – belt AND suspenders!
Don’t forget to put copies of your images (slides and digital) and process notes like glaze formulas in an SOL (Safe Offsite Location). Your SOL should be far enough away from where you live (50-100 miles) that it is unlikely to be affected by the same emergency. Banks on the Gulf Coast were washed to sea by the Katrina storm surge. Here is a blog about what I did to store copies of my critical slides, negatives, and transparencies: http://studioprotector.org/Blog/tabid/70/EntryId/2/Save-Our-Slides.aspx
and more information on this topic on the Studio Protector web site:
http://studioprotector.org/OnlineGuide/Safeguarding/SafekeepingYourBusinessandArtisticRecords.aspx
Karen
ooohh — I feel your pain Megan! We had 16 inches in the basement (my studio!) from Irene and then another 7 from dang Lee. and no power for 4 days on top of all that. a note to all those with sump pumps – your pump WILL fail at the most inconvenient hour, and your back up pump will die two hours later. and Home Depot opens at 6am! (who knew?) It’s really thrown me for a loop and made me feel very vulnerable.
Thanks for all these tips, we’re on a mission to be more prepared for everything and anything in the future!
Hope you are drying out and getting back to normal!
Rose
Great post, I’ve been meaning to write a similarly themed one myself. Over the last year, our city of Christchurch has suffered three major earthquakes, the most devasting being on February 22nd, when 181 people lost their lives.
Many more lost their businesses, or access to their businesses, as the CBD was cordoned off for safety reasons. The only reason I didn’t lose any files or stock was due to good luck rather than good management. Friends of mine lost their office, and have only been able to get a few things back since then.
So some lessons I’ve learnt from what they’ve had to deal with. Firstly, as you mention, an automated online backup is a very good idea, as not being able to access any of your files is very stressful. Another interesting point from this is to register all software you have purchased. They tried to get replacement Creative Suite software from Adobe, who would have given them a copy of the latest version if they had proof of purchase. Which of course they didn’t, as it was in the same building as the software. They weren’t able to find any record of them having registered the software, but if they had, I believe they would have then offered them a replacement.
Then there is getting as much insurance as you can afford – stock and plant, and business interruption insurance would also be useful, but probably not affordable for many small business owners. One hook that many retailers suffered from was that their policies didn’t cover them for ‘de-population’, or a significant loss in patronage. So businesses that were unable to open were the only ones that benefitted – if you could open, this wasn’t much help. Another thing to note though is you may have to wait sometime to be paid out, as insurance companies like to wait until they are absolutely sure items can’t be recovered, ie until the building is actually demolished before paying out. So having some money stashed away for a rainy day is also good advice.
The great thing to come out of all this is the ingenuity displayed by business owners to keep trading, despite losing their premises, and in some cases their whole careers worth of work. It is quite inspiring.