EARTHQUAKE: THE LONG ROAD BACK : Q&A; : Getting Your Firm Back on Its Feet
Many small businesses hurt by this week’s earthquake need help in securing financing, making insurance claims, handling employees and reopening for business. Here are some answers to questions confronting owners victimized by the quake:
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Q. What should I do first?
A. Assess the full extent of damage to your operation. In addition to the obvious structural damage, check the safety and integrity of your business equipment, including computers and sensitive telecommunications systems. And be sure to assess the condition of your employees.
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Q. How do I resume operations?
A. Develop a systematic plan for fixing damage and starting up again. While plans will vary, rank your actions by determining what will get you back in business as quickly as possible, advises Ian Mitroff, director of the Crisis Management Center at USC.
If you can resume operations quickly, do so. But if fixing structural damage will take months, consider moving your operations to a branch office or another location. A trusted real estate professional can help.
In some cases, your most pressing need is to immediately contact key customers to explain how the earthquake has affected your operations. If you have a pizza parlor, put out signs and flyers saying you’re open or available to deliver.
Above all, reach out to the community for support and resources. A study of businesses affected by the riots in 1992 shows that those that pooled resources and worked together reopened more quickly than those that remained isolated, Mitroff says.
For more information on how to cope with disaster, get “How to Survive a Catastrophe: A Guide for Business.” This free pamphlet is available from the Insurance Information Institute by calling (800) 942-4242 or by sending a self-addressed, stamped business envelope to the institute at 110 Williams St., New York, N.Y. 10038.
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Q. How do I make sure my building is safe to work in?
A. A building inspector from your city can check for structural and other problems. (See accompanying list of phone numbers.) If municipal inspectors are not available when you want them, consider hiring a professional architect or structural engineer. Experts caution against relying on your own untrained assessment.
Business associates, neighbors and your employees can help evaluate the condition of your equipment. Be clearheaded and don’t hang on to devices that may never be returned to working condition.
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Q. Is there anything special I should do for my employees?
A. Either you or your top lieutenant should talk to each worker to determine whether he or she faces earthquake-related problems at home. Remember, your employees have lives separate from the office and may be needed at home to deal with worried children and damaged property. In addition, your employees may face lengthy commutes due to freeway closures.
If you have formal employee assistance programs, remind your work force of counseling options or hold on-site seminars dealing with post-earthquake stress. Make workers feel safe by demonstrating that the work site is ready for another shaker. Consider earthquake drills.
Finally, cut your workers some slack. “Be as flexible as possible. Postpone nonessential work. Look at work as an aid to recovery and not just something that adds more stress,” says Janice Stanger, benefits consultant for William M. Mercer Inc.
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Q. Should I pay employees who aren’t coming to work?
A. If workers are idled because your business is temporarily shut down, “it’s smart to pay employees because . . . it builds up a reservoir of goodwill,” Stanger says.
Longer-term business interruptions are trickier. Workers may qualify for unemployment insurance. Consider alternate arrangements, such as telecommuting, for workers with newly nightmarish commutes or other problems getting to the office, Stanger suggests.
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Q. How do I get the money I need to reopen my business?
A. Call your business banker. Even if you don’t have a business loan, the bank that handles your business checking account should be able to help.
Many banks are offering business customers instant lines of credit with no application fees. Many are also offering 90-day loans at interest rates of 4% to 5% to merchants already approved for a federal disaster loan and awaiting arrival of the funds. Finally, many banks are willing to renegotiate terms of loan repayments to businesses affected by the earthquake.
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Q. How do I get federal disaster money?
A. The Federal Emergency Management Agency is setting up disaster centers to take applications for temporary housing funds and other assistance. Small Business Administration representatives will be at those centers offering business loans of up to $1.5 million for economic injury and damages to real estate, inventory, equipment and other assets.
Businesses with no access to other credit pay 4% and others pay 7.7%. You must provide such normal business records as tax returns, income statements, profit and loss statements and balance sheets. FEMA and SBA have set up a toll-free number to start the process: (800) 462-9029.
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Q. What about my business insurance? Am I covered if I can’t do business?
A. The standard business insurance package does not provide earthquake coverage of any sort, according to the Insurance Information Institute. To be covered for earthquake-related business interruption or structural damage, you must purchase additional earthquake insurance. Fewer than 20% of California’s businesses have it.
Help for Small Businesses
* Building inspection: Small-business owners may request building inspections in the following cities by calling these numbers specially set up for merchants.
* Los Angeles: (213) 485-1936, 485-1937, 485-1938
* Santa Monica: (310) 458-8355
* Glendale: (818) 548-3978
* Burbank: (818) 953-9541
* Beverly Hills: (310) 285-1141, 285-1142, 285-1143
* For information about insurance coverage available to small businesses, call the Insurance Information Institute at (800) 942-4242
* Small-business disaster loans: The Federal Emergency Management Agency will open service centers soon, but merchants can start the loan application process by calling (800) 462-9029.
* General disaster information from the federal government: Call the Federal Emergency Management Agency at (800) 525-0321
