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Recovering From — and Avoiding — Disaster (Part 2)

Dry cleaners with a plan can cut down recovery time to get back to work

CHICAGO — If a business operates long enough, odds are there will be some event that could be described as a disaster. If the owner has the proper plans in place, however, these occurrences don’t need to be business-ending events. 

In Part 1 of this series, we examined different plans needed for different types of disasters, and the need to make sure the company’s insurance coverage is adequate and appropriate. Today, we’ll loot at the elements that all good disaster plans need to have. 

Making a Plan

When making a disaster recovery plan, or trying to determine weak points in the business, Kermit Engh, owner of Fashion Cleaners in Omaha, Nebraska, and managing partner of the consulting firm Methods for Management (MfM), believes owners should ask themselves a question that appears simple but is actually very complex: “What if?”

“I would come up with as many different ‘what ifs’ as I could,” he says. “What if this happens? What do we do? That has to come from primarily the owner, but it also needs to involve the management team. It may also require conversations with their attorneys, their CPAs and, probably most importantly, their banker.”

Having a good relationship with a banker, Engh says, is critical when the time comes to need their services.

“I have, for many years, always banked with more than one bank,” Engh says. “I wanted options and versatility. Each bank has its own vibe and its own way of doing things, and that became incredibly apparent during the first series of PPP (Paycheck Protection Program) payments. Those of us who banked at small local or regional banks got our money processed very quickly. Those who were part of big national banks couldn’t even get the phone answered.”

Having a banker who will pick up the phone and is aware of your business can spell the difference between recovery and closing the company, Engh says. 

“Having those relationships with bankers is crucial,” he says. “If it’s a catastrophe, it’s a matter of having an adequate line of credit set up so that you can draw on it in a moment’s notice if that’s what’s called for.”

Who to Call and Who Makes the Call

When disaster strikes, everyone should know their roles, Engh stresses. 

“The first step is to pull your plan off the shelf, open it up, and go step by step,” he says. “Here’s what we’re going to do first, here’s what we’re going to do next, and so on. Get your management team together. Everybody has their assignments. They have their responsibilities and their authorities. And then you get to work. You get on the phone and start prioritizing who you’ll be notifying first. There’s no hesitation. This is the time when leadership cannot panic.”

This not only includes contacting insurance companies but also outlining who will contact suppliers and customers.

“When it comes to suppliers, you’d rather have a supplier work with you than work against you,” Engh says, “so letting them know right out of the gate that you’ve got a problem will provide them the opportunity to work with you. If you just ignore them, pretty soon, they’re going to ignore you — and then you’re going to be in a world of hurt because you don’t have any supplies, and you have no method of getting any. Now you can’t produce. Have open communications with these folks. This requires having a good relationship prior to any type of emergency.”

As for customers, having cloud-stored contacts will save a massive amount of time and energy.

“You can communicate up front that this is what happened,” Engh says. “It’s been my experience that, when you do that, the vast majority of people will understand that things happen, and they’ll work with you. If you get your insurance company involved immediately and know that they are going to process any type of claim, then the customers can feel that they’re going to be made whole.”

Come back Thursday for the conclusion of this series, where we’ll explore ways to keep running during the recovery process, and thoughts on making sure a disaster doesn’t happen at all. For Part 1, click HERE.

Recovering From and Avoiding Disaster

(Image licensed by Ingram Image)

Have a question or comment? E-mail our editor Dave Davis at [email protected].