Protect Your Business Credit in a Crisis

A potential Category 3 hurricane heads for the Gulf of Mexico on a trajectory that could mean it hits land in the region devastated by Katrina in 2005.  During Katrina, many businesses and individuals in the cities that populate the Gulf Coast lost essential, irreplaceable financial documents and records. 

With losses from hurricanes, earthquakes, wildfires, floods and tornadoes rising, it is important for any small business owner to consider what you need to re-build your business as quickly as possible after a disaster. 

First and foremost you need cash and access to cash to be able to buy the supplies you need.
In addition, you need:

• A list of your monthly bills with a contact phone number for each company.
• Your insurance papers -- personal, business, auto, etc.
• Customer and supplier names and contact information.  In some cases, you may need whole files.
• Bank account information.  Since your bank branch, where everyone knows you, might not be accessible you must know your account numbers and be able to accurately estimate balances.
• Your social security number (SSN) and employer identification number (EIN).
• Investment account information.

Ideally, before any emergency shakes up your world you've created a plan for how you can stay in business if disaster strikes.  It doesn't need to be a complex business treatise.  It does need to consider what you need to do to get your business running again after a disaster.  Crisis management folks call this business continuity.  While it seems that nothing ever happens according to a plan, if you think through business issues ahead of time your plan can serve as an outline to help you get your business producing income again as soon as possible. 

With today's technology, it's easy to scan documents into your computer and save them onto a CD.  When you reconcile your books every month, if you update your customer, supplier, creditor, financial, and any other key information on a CD and burn a back-up copy, the time required to keep your data current will be minimal.  If you have a bookkeeper who handles your monthly reports, he or she will be able to easily update the records' disk each month.

Next, your back-up copy needs to be stored in a place that is not close to your business.  If you work at home, keep the back-up copy in a safe deposit box at your bank, at your parents' home in the next town, or some place where it will be safe.  If you have an office or store away from your home, keep the back-up copy in a secure place in your home. 

Because you may not have power immediately after a disaster, know you must use a battery-powered laptop to copy information off your disk since you will not have electricity to run a printer.  Each month, you could also print one or two summary sheets with essential information in case there is a problem accessing your computer right away.

It is important to contact suppliers and other creditors as soon as possible after an emergency, to let them know what has happened.  If your business has been flattened or seriously damaged, you definitely don't want a credit hit because you have no way to stop suppliers from delivering and you don't know how to reach creditors.

Assess your cash flow situation as quickly as possible.  If you have adequate reserve funds to cover expenses until you can begin producing income, let your suppliers and creditors know that.  If you need to extend account terms while you get back up to speed, talk to each business about your situation.  With a strong payment history, they are likely to work with you in any way they can to help you restore your business.

When we see all that we've worked for smashed to smithereens around us, it is emotionally painful.  However, knowing you're as prepared as you can be for a disaster -- before it happens -- can make it much easier to overcome the adversity and thrive again.