Fast recovery essential after a catastrophe

Succeeding in small business

March 25, 1991|By Jane Applegate | Jane Applegate,1991 Los Angeles Times Syndicate Times Mirror Square Los Angeles, Calif. 90053

Around 9 p.m. on Aug. 17, Wade Pope was reading the newspaper when his wife called him to the telephone. It was someone from the Bossier City, La., Police Department asking Pope to return to his upscale clothing store immediately.

The store was on fire.

"I figured they'd have the fire out by the time I got there," recalled Pope. "But when I pulled off the interstate and saw the smoke billowing out the roof, I was just sick over it."

The fire, believed to be caused by an electrical short in a tailor's sewing machine, destroyed the two-story, antique-filled building. The blaze not only caused about $1.5 million in damage, but jeopardized Pope's traditionally busy Christmas shopping season.

A veteran retailer, Pope knew he had to get his doors open again -- and fast.

His instincts were right. Forty-three percent of businesses closed down by a catastrophe never reopen and 28 percent of those that do face financial problems within three to five years of reopening, according to insurance industry studies.

"Within about three weeks after a business catastrophe, customers have to go elsewhere," said Nelson Bean, president of Evans American Corp., a Houston-based construction company that has rebuilt oil refineries, grocery stores and a host of other businesses. "There is a whole series of hidden costs, including the layoff costs of employees."

A fast recovery is essential to save your company from certain death. That's why catastrophe specialists like Evans American and Quality Construction/Inrecon in Dearborn, Mich., work 24 hours a day, cutting construction time to days and weeks instead of months and years.

"The key is for the business owner to be properly insured; don't be penny-wise and pound-foolish," said Randy Fenton, president Quality Construction.

Fenton and other catastrophe specialists said many small-business owners, still in shock over the disaster, make the mistake of trying to handle everything themselves. After calling your insurance agent and dealing with the immediate safety issues, they suggest devoting your time to calling customers and vendors to assure them you have a plan to get back in business as soon as possible.

Crisis management experts say every business owner should have a written plan for dealing with disaster. The plan should designate a spokesperson responsible for dealing with city officials, law enforcement officers, the press, customers and vendors.

Pope learned that fire is the No. 1 U.S. business catastrophe. Storm damage, explosions, collapses and earthquakes follow fire the list.

Although the fire that devastated Pope's business caused a personal and financial trauma, he said many customers expressed their support and hoped that the store would reopen in time for their Christmas shopping.

Evans American won the bid to rebuild Pope's building even though it was a bit higher than competitors. Why? Because it promised to rebuild the structure faster.

"About 12 days after the fire, they turned the building back over to us to finish things up," said Pope, who appreciated the workers who labored steadily 24 hours a day to complete the job.

Pope's reopened for business around Halloween. Pope and his employees scrambled to redecorate and restock the merchandise. Their efforts paid off in a record Christmas season.

Pope had to lay off a few workers, but put many others to work in different jobs, including taking inventory of new merchandise, handling accounts payable and restocking the shelves.

A few final points:

* If possible, try to keep your employees busy during the reconstruction period. Paying unemployment benefits is costly, and your recovery will be delayed if you have to hire and train new workers.

* If your building is destroyed, rent or borrow temporary office space and get your computers and phone lines up and running as soon as possible.

Dealing with disaster

No matter how small, no business is immune to disaster. According to insurance estimates, 1989 business losses due to catastrophes topped $10.3 billion, up from $8.6 billion in 1988.

* If your business is damaged or destroyed, take care of safety issues first. Make sure the gas and electricity are shut off and rope off the building to keep the public away.

* Hire a company to board up any damaged windows, walls or the roof.

* Remove excess water and humidity as soon as possible.

* Don't hide from the public. Be available to officials, reporters and customers.

* If you can't answer a question, promise to get the information and call back.

* Draft a crisis management plan before you need one. Include a chain of command and set some ground rules.

* Make sure your insurance coverage is adequate and up to date.

* Consider advertising to let your customers know what happened and what you are doing to bring the business back to life.

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