The terrible floods and storms causing great trauma for parts of the country should be a red alert for small business to be prepared for natural disasters. Unfortunately, only one in four small businesses have a current business continuity plan. Natural disasters can be devastating for small and family businesses – either their business is directly damaged or wiped-out, or they are an indirect victim who has survived the disaster only to have no customers because of the impact on their town or region.
Taking simple steps to be better prepared, sensible risk mitigation action and bolstering resilience can help small and family businesses to get back on their feet quicker. Just like the businesses they run, small business owners are the lifeblood of our communities. They are often the first to volunteer to lead and contribute to local emergency response and business support groups, and to help make preparations for the community such as laying sandbags and moving stock and people to higher and safer ground.
But often they’re not as diligent in getting their own business as prepared as possible, so they can be best placed to respond and recover. It could be a natural disaster, a change in economic circumstances or something happening to themselves. If the owner is the primary breadwinner for the business and they have a health episode or an accident, what’s the plan look like to navigate through that?
That’s where an up-to-date business continuity plan is important so owners can contemplate those things that might knock them off course, including something that might happen to them and reduce their capacity to contribute to their business and enable the livelihood that they and their team rely upon.
Small business owners are time-poor but I urge them to find time to think about what are the possible adverse impacts that might inflict themselves on the business, what they can do to reduce those possibilities and then how to recover from them.
This can be as simple as ensuring your record keeping is up to date and that critical information is at hand and, where possible, digitised so you can retrieve it if your business is destroyed.
Small business owners can use the following checklist:
- Do you have the contact details for your customers, suppliers, staff, accountant and other important people in a safe place?
- Do you have copies of relevant accounts, passwords and backups of important operational data?
- Would it be feasible to continue operating from another location?
- Can you keep working if the power or communications network goes down?
- Are your payments to relevant bodies such as insurers, lenders and the Tax Office up to date?
We conducted a Small Business Natural Disaster Preparedness and Resilience Inquiry and recommended the creation of an opt-in ‘My Business Record’ to allow a small business to digitally store all relevant government-held and other vital information it might need after a disaster.
It is clear from our work that preparation is key to small and family businesses building resilience and coming through natural disasters in the best possible shape. It is equally clear the small business community cannot do this on their own and when a natural disaster strikes, certainty of response and certainty of support must be provided. By this we mean small business owners should automatically be engaged in local place-based planning and support services and be elevated and ‘front of mind’ in disaster response, recovery and funding arrangements. This must include indirectly affected businesses.
We believe a business hub should be established to provide a single point from which to seek help from government and non-government agencies. And we strongly recommend a “tell-us-once” triage system should be adopted to save small business owners the trauma and time associated with repeating their story.
It is also our recommendation that ongoing support should also continue in the aftermath of a disaster. When a small business receives an Australian Government grant, an additional amount should be made available six to nine months later for a ‘business health check’.
We also need an integrated response to disaster risk management for identified disaster prone areas that incorporates priority access to mitigation expenditure, co-ordinated planning across levels of government, infrastructure hardening, interest-free loans for asset and activity protection and relocation schemes, and possible use of a dedicated reinsurance vehicle.
An ongoing problem is that many small businesses are unable to secure appropriate insurance at an affordable price. If they can get insurance, it can come with excesses that would preclude any claim ever being made. Frustratingly, insurers are also uninterested in the steps individual small and family businesses take to mitigate disaster risk, or dismissive of them. We have examples of individual businesses doing everything they can possibly do but it has zero impact on the availability and the pricing of their premiums.
We’re told this is because the insurance companies look at risk across a broader pool – it is community-wide or industry-wide or neighbourhood-wide analysis. Yet the narrative, amplified through advertising, is often about what individuals might do. Many small and family businesses are individually doing what’s being asked of them but are seeing no upside to pricing premiums and availability and affordability of insurance cover. What might be for some an insurance ‘gap’ is too often a ‘gorge’ for small business that too many can’t cross.
The insurance sector needs to do better – and do it now. Sadly, too often we have seen how natural disasters can cause lasting harm to the enterprising women and men building businesses, employing local community members, and contributing to the Australian economy. Small business creates vitality in our communities, employs two out of every five people with a private sector job and contributes one-third of our GDP, so it is absolutely worth building its resilience.
My office has more detailed checklists and resources to help small business prepare for a disaster and, if needed, to recover after one, which are available at www.asbfeo.gov.au/disaster-preparation
Bruce Billson is the Australian Small Business and Family Enterprise Ombudsman
Bruce Billson commenced his role as Australian Small Business and Family Enterprise Ombudsman (ASBFEO) in March 2021. The Ombudsman is an independent advocate for small and family businesses. Bruce brings three decades of experience, knowledge, commitment and an understanding of the issues facing small business. Bruce was the Australian Government Cabinet Minister for Small Business from 2013-2015, a founding Director of Judo Bank and has held various board appointments, including the Franchise Council of Australia, Deakin University Business School and Australian Property Institute. He has also owned and operated a number of small businesses, and knows first-hand the joys and challenges this involves.