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Disaster Recovery Decision Making for Small Business


Small business is ill equipped for disaster recovery following a major catastrophe. Without the resources of a large corporation, small business owners face tough decisions to close, sell off, or reopen the business. Learn the 9 factors you need to consider when deciding what direction to take your small business following a natural or man-made disaster.

Each form of disaster, whether man-made or natural, has varying degrees of impact on a small business operation. According to a recent NFIB National Small Business Poll, man-made disasters affect 10% of small businesses, whereas natural disasters have impacted more than 30% of all small businesses in the USA.

Hurricanes are by far the most destructive force causing power failure, flooding, customer loss, and the closure of many businesses. Following the devastation of a disaster, a small business has several challenging decisions for disaster recovery to make once essential services are restored along with health and safety are addressed.

Small Business Options for Disaster Recovery

The survival decision a small business must make for disaster recovery is choosing between moving on, reopening, or selling off the business. The effects of this decision can have long-term results in the future.

When a major disaster strikes a community, it often will forever change the area leaving small business owners with few choices but to walk away from the business being grateful human life was preserved. The U.S. Department of Labor estimates over 40% of businesses never reopen following a disaster. Of the remaining companies, at least 25% will close within 2 years. Over 60% of businesses confronted by a major disaster close by two years, according to the Association of Records Managers and Administrators.

These are very sobering statistics. If you decide to walk away from you business, understand you aren't alone and it just might be the best option available.

Preceding a major disaster the rebuilding process can start after human health and safety are restored along with electricity and transportation. Everyone wants life to return to normal following the wake of destruction. It's key to understand your business will no longer be operating in the same market. Conditions have changed and your business must change to succeed in disaster recovery.

Business Decision Making Crippled in Disaster Recovery

Often disasters result in business disorientation and environmental detachment as revealed by the work of Thomas Powell, "Shaken, But Alive: Organizational Behavior in the Wake of Catastrophic Events." This psychological trauma of key decision-makers leads to company inflexibility to deal with the change required to move forward.

Post-traumatic stress disorder can cripple your decision-making ability. But putting off the decision to reopen or close your business can be disabling. A small business has limited cash and resources, starting up the business quickly once the decision is made can help your survival rate. So how can you best decide in a state of disorientation? Reach outside.

It's vital for small business owners involved in disaster recovery to get outside views and help to accurately assess the situation and provide clarity. Take advantage of available small business assistance such as SCORE. SCORE "Counselors to America's Small Business," is a non-profit volunteer small business counseling association. SCORE's 1,200 email counselors can aid in the recovery process.

Don't assume your business will qualify for disaster loan assistance or that insurance will cover all the costs. Small business may have to depend on other forms of financial help such as savings or friends and family. With no guarantee of success following a disaster, the decision to rebuild the business requires answering some tough questions:

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