Small Businesses Surviving the Storm

For a city where I have never resided I have a lot of loved ones in Houston, TX, and even if I did not, during such a tragedy, it is human nature to want to help.  My initial instinct was to check in and make sure friends and family were safe, then to start researching reputable relief agencies that were seeking donations, and any specific causes where my particular skills could be of service.

During this process, I received an e-mail from a small business in Houston, with whom I’d placed an online order, that read, “It is with great sadness that I have to ask you to cancel your order. My business is in Texas and Hurricane Harvey not only destroyed our home but our store too.”

I was shocked.  The last thing I wanted to do was take away business from a small shop who had just been devastated, while at the same time I didn’t want to complicate the process for the owners any more than necessary.  I did as they requested and sent a response to please let me know when they have reopened so that I can continue my patronage and proudly promote their business as survivors.

We often forget how deep the devastation is that follows such a horrific event.  According to the Federal Emergency Management Agency (“FEMA”) nearly 40 percent of small businesses do not reopen after a natural disaster because of the cost to repair the damage.  They may have had insurance, but there are usually exclusions in policies.  We saw this in Boston following the Marathon Bombing where acts of terrorism were excluded, and it is common that natural disasters and flooding require at least an additional rider, which may not even be available in certain areas.  There will be funds established to assist, insurance payments, and low interest loans to rebuild, but the processes are often cumbersome and unclear; and for some it will be too late (but it does not need to be).  Many of these merchants are not only dealing with their business, but with personal loss and tragedy as well.

If you’re a business who has been affected by the storm what can you do?

1. Call FEMA at (800) 621-FEMA (3362) to learn more about forms of disaster relief assistance for business owners. There will be local centers set-up to assist, but call immediately.
2. Check in with your insurance company as soon as possible. You want to be the “squeaky wheel” and in line early.
3. Call the IRS hotline at (866) 562-5227 for special help with disaster-related tax issues. They will waive the fee if you need a copy of past tax returns or you can obtain a line item lists of the most recent tax return by calling (800) 908-9946 to request a free transcript.  The IRS has also produced this helpful workbook to help you determine business losses in the event of a disaster.
4. Ask your payroll service providers if they have a fiduciary bond in place. The bond could protect you as an employer in the event of default by the payroll service provider.
5. Contact suppliers and put contracts on hold. This is a time to embrace the “force majeure” contract clause which usually provides you with some leave from fulfilling a contract due to unforeseeable circumstances.
6. Connect with customers and let them know what’s happening. Not only will they most likely forgive you, they will support you.  If orders must be cancelled advise accordingly.  If there is anything they can do for you: reorder upon notice, promote the business online, write a review … let them know.  Everyone wants to help!
7. Learn about state, federal and trade association support available. The U.S. Small Business Administration is making disaster loans as low as 3.3% to businesses in and around the Houston area that have been impacted by Hurricane Harvey.  Visit their website or they can be reached at (800) 695-2955.
8. Do not reenter the property until it is declared safe and then work to secure the premises and valuables as best you can. If you can safely shut off gas and power to prevent any additional damage, do so.  Start taking pictures and video immediately before you move anything to record the damage, and make sure to note the date and time.
9. Ask for help. What do you need today?  What will you need in the immediate future?  What will you need down the road?  Ask for it all now.  Are you part of a trade association or industry which may have one?  Reach out.  Contact other businesses nearby and see if you can temporarily use some space, their internet, and power.  Use social media to connect with long lost friends or even strangers and ask them for their support.
10. Make a plan. Write it down.  Take one step at a time.  Do only what you are able to do and if possible assign tasks.  Take time to grieve and accept what you are going through.  It will be a long road but we’re all rooting for you and here to help!

If you want to help with disaster relief efforts, what can you do?

1. Donate $$$: The American Red Cross is the preferred emergency response agency for the U.S. government, but there are innumerable rebuttable organizations collecting funds.  You can text the word HARVEY to 90999 to make a $10 donation to the Red Cross.  The City of Houston has also established the Hurricane Harvey Relief Fund and you can make a donation here.  Here are some other funds.  Share you monthly discretionary cash.  Organize a fundraiser.  Put a collection jar in the office break room.  Survivors will need money for a while to come.  Whatever you can give will be well spent (just make sure you research and confirm that you’re donating to reputable organizations).
2. Give blood. You can find the nearest donation center by entering your zip code here.  The fatality toll has been comparatively low at 14 reported to date, compared to somewhere around 1,836 fatalities following Hurricane Katrina.  However, there is an absolute need for blood so we can hopefully keep these statistics in check.
3. Do you have a service or expertise to share? If you are part of a trade organization come up with a plan to provide assistance to your brothers and sisters in need.  No one knows what will help better than someone in the same industry.  Be creative.
4. If you are an attorney licensed in Texas, the State Bar of Texas has a legal hotline to assist low-income Texans. You can volunteer here.
5. If you are a medical professional, Remote Area Medical is seeking medical personnel and supplies. They can be contacted at volunteers@ramusa.org or (865) 579-1530.
6. If you are a local business owner who was lucky enough to have not been shut down due to the storm, open your doors to you neighbors. Let them use some space, your power and internet.  Share a pot of coffee and a hug.
7. Seek out small shops in the Houston area and give them your business in person and online. If you are an active client be patient and understanding regarding any delays or cancellations.
8. Donate requested physical goods. Organize a drive to replace computers, printers, copiers or other equipment which may have been lost.  Consider adopting a business and help them get back on their feet.
9. If you have a call center offer to route another business’s calls to your operators to deliver a message to their customers.
10. If you are close or willing to travel (once it is recommended), do so; it will take a lot of man power to clean up after the disaster. If you can give employees time off to help or make it a team building effort.  Volunteers can sign up for trips to the affected area through a number of organizations.

How can you prepare your small business for a disaster?

1. Develop an emergency plan and review and update it annually.  Think through the most likely scenarios for your specific area and then consider how they could be applied in more unlikely situations.  Make sure your employees know the plan, to whom they should report and where to go.  Know where the nearest evacuation routes are, and what emergency resources exist so that you can direct employees accordingly.  Also maintain lists of local contacts for schools and other authorities to keep everyone as informed as possible.
2. Document your valuables.  Keep receipts and take videos and photos of your business property.  Keep these in a safe place outside of the office; ideally have a digital back-up in the cloud.  The IRS has created this workbook which can be incredibly helpful if you keep it up-to-date.
3. Use electronic records.  When the option exists to receive financial statements and other records electronically opt in; then make sure you save secure copies.  For paper copies you receive, make sure to scan and save them.  Besides just keeping a copy in the cloud you should save a back-up on a removable drive that is stored somewhere besides your office in a waterproof and fireproof container.
4. Create a disaster supply kit.  This should include at least: non-perishable food, clothing in sealed packaging, drinking water, a battery operated communication device, spare batteries, matches, candles, blankets and ideally a back-up generator.
5. Obtain insurance in advance and understand your policy.
6. BONUS: Review the SBA’s Guide for Emergency Preparedness

Disclaimer: This article is merely for informational purposes.  These lists are not exhaustive and only include recommendations.  None of these organizations have been personally vetted.  Nothing in this article constitutes legal advice or forms an attorney-client relationship.