Planning for Unexpected Tragedy or Negative Events

Bob Burleson, Express Industries Corporation
May 2006

The following provides an outline consisting of suggestions, ideas and procedures for the warehousing fundraising distributor in dealing with and planning for an unexpected negative event such as fire, hurricane, flood, tornado and other tragic events.  Most of what is offered will not apply to the person or fundraising company that does not take possession of product.

Sound business practice dictates that planning for the unexpected is, in many cases, the only road to survival.  A suggested list of precautionary steps will be provided as well as anecdotal commentary from the experience of Express Industries Corporation.

GOALS AND OBJECTIVES

The goal of this paper is to provide a guide for fellow fundraising distributors to use as a model in planning for the unexpected.  Furthermore, it is hoped that the personal experiences shared will encourage action sooner rather than later.  In other words, plan today for problems that may occur tomorrow. 

1.         ADEQUATE INSURANCE COVERAGE

Many categories of insurance are contained in a business policy.  A business owner must make sure that the coverages in place are the correct ones.  The list below can serve as a starting point.

  • Contents – Equipment, Furniture, Inventory, Personal
  • Building – Exterior or structural/interior
  • Computer and electronics
  • Media and communications
  • Extra expense
  • Loss of business
  • Spoilage
  • Loss of undamaged property
  • Ordinance of Law
  • Demolition
  • Increased Construction Cost
  • Debris Removal

You will need to have a good insurance agent who represents reputable companies and is willing to learn your business.  It’s a pain in the schedule to sit and educate an insurance agent in Fundraising l0l. . . but it must be done in order to put your business into the proper insurance categories.  Pay special attention to the Under-Insured and Co-Insurance codicils.  Remember, no matter how good the insurance company, THEY RESENT EVERY DOLLAR THEY HAVE TO PAY. [Watch the movie “The Rainmaker” with Matt Damon]

2.         BACK UP DATA DAILY

This is like brushing your teeth or turning out lights.  Have somebody “back up data “ every day at 5:00 p.m.  Also have a back up to the backer upper and a back up to the backer upper’s backer upper.  It’s one thing to lose your operating system.  It’s quite another to lose your INFORMATION.

3.         BACK UP OPERATING SYSTEM OFF-SITE

Is the expense of having a back up computer system worth it?  A year prior to our fire we had updated our computer system.  We didn’t throw away the old system. . .so we were up and running – “computer-wise” in a day.  We ran the company on the old system until the new system was delivered -- 2 ½ weeks later.  Think about what it would do to your business to lose the 2nd, 3rd and 4th week of September!  With tweaking, it took a month to get the replacement system operational and de-bugged.

4.         PUBLIC ADJUSTOR – YES OR NO?

A Public Adjustor is a person who will help you “maximize” your insurance policy for a fee (generally 10%).  It is sort of like hiring an attorney but he’s not an attorney.  He may well get you more than you would have gotten, but not without some costs, including alienation of your insurance company and increased premiums or total cancellation of your policy at renewal time.

I took advise from an insurance agent, bankers, outside accounts and a catastrophe relief firm.  Outcome: 4 to 1 against a public adjustor.

5.         HAVE A PLAN FOR TEMPORARY OFFICES AND WAREHOUSE

I didn’t. . .but I was lucky.  We have three warehouses and a l0,000 sq.ft. grassy lot 
between two of them.  We moved in temporary classroom trailers and set up shop in
those.  A fire could cause you to set-up an office in one place and warehouse/pack in another.

6.         BEWARE THE VULTURES

When we had our fire in 2003, I received the call at 4:05 a.m.  I was on site at 4:45 a.m.  By 5:30 a.m. there was a person on site with a clipboard full of forms asking us to sign and hire her company to do the clean-up.  By 8:00 a.m., there were four more companies represented.  Four groups of people, 3 to 6 per group, all asking me for a few minutes of my time to tell me what they can do for me.

Did you ever think about who cleans up after a fire? 

Our fire was contained to l0,000 sq. ft. in a 25,000 sq. ft. building.  Everything that wasn’t burned or soaked was covered in smoke and soot.  So. . .before noon on THE DAY of the fire, I had to listen to the pitches and make a decision as to who gets the job, which leads me to the next topic.

7.         NO SNAP DECISIONS!

A big fire is news.  It’s on the radio, TV and emergency band radios.  These reports are monitored by disaster relief companies.  (Think:  ambulance chaser.)  They’ll show up and they will all want the business.  It’s sort of like a PTA “cattle call.”  The first on the scene will try to “close” before the others arrive.

  • Try to get a reference or two.                                                   
  • Consult with your team.
  • Consult with your insurance agent.
  • Consult with the on-site insurance adjustor.
  • This is a decision that you’ll live with for a while.

There are four major decisions to be made:

  • Clean up
  • Demolition
  • Structural Rebuild
  • Interior Rebuild

You only have to make ONE on DAY ONE, but the demolition comes quick and probably it should be made at the same time.  A lot depends on the nature of the fire.

Call your team together to analyze what was lost to find out what you need immediately.

  • Machinery & Equipment
  • Inventory
  • Supplies & Brochures
  • Building and Office
  • Sq. footage needed?
    • Racks?
    • Tables?
    • Furniture?

And anything else you need to get up and running ASAP.  Make assignments.

8.         THE THREE “S” MESSAGE TO CUSTOMERS

Let your customers know what’s happening as soon as possible and keep it:

  • Short
  • Simple
  • Strong 

9.         EMPLOYEE MORALE

Your people will work A LOT of overtime.  They will work 60-70-80 hours a week.  They will get paid but they will get tired. . .and grouchy. . . and thin-skinned.  You will, too, but you can’t show it and it’s your job to keep them up and keep them going.

  • Have meeting to inform and thank employees.
  • Provide treats.   They need to feel appreciated.  We served:
    • Dilly Bars from DQ
    • Lemonade
    • Cookies

10.       SALESPEOPLE MORALE

Our 30 salespeople are employees.  They share in the same benefit package: W-2, full benefits, including a profit-sharing plan.  This creates loyalty and a sense of ownership.  Even with that going for us we knew that this situation would be tough for them – late deliveries, missing inventory, unhappy customers and other disruptions.  Salespeople will want to know how you plan to fulfill their programs, satisfy their customers and. . .and. . .and. . .and…Do this in person, if possible and in groups, if feasible.  In these meetings you will want to get to the point quickly and give the following information and assurances (if possible).

  • We had a fire.  There is damage.
  • No one was hurt.
  • We don’t know how it started
  • There is some product damage—don’t know extent.
  • All systems are temporarily down.
  • We have a back-up computer system and expect it to be functioning in 24 hours.
  • We don’t know the extent of the damage to the phone and voice mail but we do have a network of communication.  Call-ins should be brief.

Close with assurance of strong resolve—we’ve been knocked to the mat—we’re back up because one punch will never affect us.  Keep doing what they do best and we’ll support their efforts with our best efforts. 

SUMMARY

A well thought out plan for dealing with unexpected tragedy or negative events can sometimes mean the difference between survival or failure of your company.  Document all aspects of the plan from personal to procurement, giving clear instruction and guidance to those who will play such a vital role in the company’s recovery efforts.  Remember. . .plan today for tomorrow’s problems.