HispanicBusiness

During the federal fiscal year 2000, the SBA made more than $1 billion in disaster loans to more than 28,000 homeowners, residents, and businesses. So far, in the aftermath of the attacks, the SBA has issued more than 564 disaster loans for $56 million in the areas surrounding the World Trade Center and the Pentagon.

Like other small-business owners struggling after the September 11 disaster, Paulo and Karina Flores applied for the Economic Injury Disaster Loan for their cigar shop, Quisqueyana Cigars, in Manhattan. Located just four blocks from the World Trade Center, the shop did not suffer any physical damage, but it lost its clientele.

“We lost about 60 to 65 percent of our business in one day. Nobody was expecting that,” says Mr. Flores. “In front of my store, every day, we used to have 100,000 people walking by. Now there’s not even 25,000 people walking through there.”

Karina Flores adds, “It’s like people don’t know we’re here anymore.”

The shop, which had been open for three years, was closed down for three weeks after the attack. The telephone lines were down even longer. Looking for financial help, the couple contacted the SBA through FEMA after an announcement on the evening news.

“The loan will help us as soon as we get it – help us for a month or a month and a half,” Mr. Flores says. “Then, hopefully, things will pick up.”

Mr. Flores admits that he and his wife had no disaster plan in place. They express a common view – that planning for a natural disaster in New York was the last thing on their minds.

Dolores Cordova, owner of Tajin Restaurant on Greenwich Street in Manhattan, seconds that perception. She never thought of planning for a disaster and, like many others, was caught completely by surprise. Without the clientele or capital to sustain the restaurant, she and her husband, Misael Cordova, applied for an SBA loan.

Even though disasters are rare, Mr. Byrne of FEMA says, small-business owners, like the Floreses and the Cordovas, must plan for them. “It would be good if people start to take some prudent steps to be prepared for something like what happened here in New York,” he cautions.

Unfortunately, many small-business owners never think about disaster planning until one has already occurred, according to Herb Mitchell, associate administrator for the SBA’s Disaster Assistance Program. “A lot of times, people operate under the assumption that it simply won’t happen to them,” he says.

He believes that business owners should start a disaster readiness plan the same way they prepare a marketing plan or a financial plan. Mr. Mitchell suggests that they begin by asking “what if” questions. What if the business is not physically damaged but customers are not able to access it? What if the supply chain is disrupted?

Mr. Mitchell admits that planning for an emergency is a big challenge for small businesses with limited resources, but he says they cannot afford to ignore it. Preparing to protect a small business from the economic devastation caused by a disaster should be part of every business plan. The booklet Open for Business: A Disaster Planning Toolkit for the Small Business Owner, published by the SBA and the Institute for Business and Home Safety (IBHS), covers the major points. Managers can access the Disaster Planning Toolkit at the IBHS Web site (www.ibhs.org).

As a primer, the Disaster Planning Toolkit outlines the following keys to reducing damage and subsequent loss during a disaster: •Have a contingency plan. Know what to do when business interruption and power outages occur. What will you need to do if roads or bridges are closed, your product cannot get to market, or your employees cannot get to work? •Have a back-up data system. Make copies of important information such as point-of-sale data. Back it up often, and take a duplicate offsite when you leave. •Have a plan for all your facilities. If you have off-site warehousing or manufacturing operations, have a contingency plan in case they are damaged or your access is cut off. •Have duplicates of archived data. Single copies could be lost in a disaster, or your access to them could be limited. •Use suppliers who have business continuity plans. If your suppliers have their own contingency plans, it makes you less vulnerable when disaster strikes. This is particularly true in the era of “just-in-time” supply management. Most important, have a contractual supplier agreement for disruptions. •Carry adequate insurance. Along with flood, fire, and wind damage insurance, consider business interruption insurance. Whether you own your facility or are a tenant, consider what you would do without a cash flow for weeks or months. •If you are in a flood zone, plan accordingly. Minimize potential damage by elevating heating, air-conditioning, and other expensive equipment to a roof or a second floor. Design flood-prone building components to be replaceable. •Evaluate your equipment in light of its replaceability. A small PC and printer could easily be replaced and loaded with your back-up files. Do you have special equipment that would be difficult to replace? How would you replace or repair it if your business depended on it? The IBHS site features other helpful information, including Getting Back to Business: A Guide for the Small Business Owner Following Disaster. This brochure, designed to help business owners such as Paulo Flores and Dolores Cordova, offers a checklist for personal safety and property security, cleanup, and insurance procedures to get the business running again.

According to IBHS, at least 25 percent of businesses never re-open following a local disaster. Through advance planning – along with assistance from the IBHS, the SBA, and other federal agencies – that survival rate can be raised. “The SBA, FEMA, state, and city really make a tremendous effort to get assistance to business owners. But the bottom line is that disasters still have significant impact. And if the businesses don’t start acting on contingency planning for themselves and getting themselves ready, a number of small businesses end up not surviving, despite all the help we can bring,” says Mr. Byrne. “We don’t want to see that happen.”