Bushfire and Other Disasters – Be Prepared

· 6 min read

We’ve just survived the first bushfire threat of the season.  We live to fight another day!

Challenges

The biggest challenge was the condition of the property we’d recently taken over.  The garden and surrounding paddocks had not had any maintenance or clearing done for years.  The dry fuel load on the ground – branches, leaves, dry blackberry bush, tea tree and dry grass – was extreme.  Water was not freely available; it took time and effort to transport it to the site.  It was the perfect scenario to bring any fire to the house, and to make access difficult and dangerous to try to save it.  Soon after, there was plenty of water – too much, in fact, which generated a new set of urgent challenges.  But back to the bushfire.

We’d hoped being able to clear and restore the area over a few months, even burn-off when cooler, but we were denied the luxury of time.  We had to get it all done in a few days.  The urgency meant that that we had to take leave from our jobs and income-generating activity.

Economic Bushfire

If that same situation was applied to your business – a significant and urgent threat – how would you fare?

Imagine that after  Christmas the wallets are closed and credit cards locked away.  Consumer spending, retail activity, effectively stops.  There is no demand on wholesalers for restocking, and rapidly decreasing demand for services to support the retail and wholesale industries.  All businesses are likely to be negatively impacted.  It’s the business equivalent of a bushfire roaring through the economy.  Or worse, imagine the Government taking steps to effectively shut down the economy to minimize the impact of a new virus spreading through the population.

Are you ready?  Is your business “shipshape”, with the right people and skills and tools. Have you either the credit standing or the cash resources – the liquidity – needed to be directed to the right spots to survive?

Or would you be taken away from driving the business, at a critical time, because you had to get paperwork sorted out, and help with a long overdue clean-up of the warehouse and inventory to see what you had a for a fire sale to generate cash?  Would you have to call overdue debtors, who take advantage of your relaxed credit terms, asking them to pay “early”, at a time when it is likely their access to cash is evaporating?  Would you have to beg for resources because you needed to bring in extra staff to get vital jobs done quickly?  Basically, would you have to rush around frantically to get things in order to give yourself a fighting chance of survival?  And possibly still not make it.

Don’t Leave it Too Late

An old and well-used saying comes to mind here:  It’s too late to dig a well when you’re thirsty.  Thirst can arrive quickly on a hot day, so if you’re not prepared, or better still, properly hydrated to avoid the thirst, it can be fatal.

Threats such as bushfire, and economic downturn, are going to arrive with little warning, so what can you do to be ready?  The quick answer is to ensure that your business is in good shape at all times, so that it can react quickly to threats that arrive with little warning.  It’s all about planning ahead so you know in advance which way to jump.  Call it your “disaster action plan”.

Be in Good Shape – Be Ready

To have your business in good shape, and ready to react:

  • have a business plan and a primary budget.  Compare your actual results regularly and consistently to ensure you’re heading the right direction and at the speed you want in the current climate
  • have a “disaster management” budget process and identify and document potential risks to cashflow and the extent of their impact – think “very worst case scenario” – and to develop response plans
  • maintain good relationships with suppliers and financiers.  Try to establish multiple, or at least back-up, supply lines, so that you aren’t reliant on a single supplier.
  • maintain good relationships with customers.  Ensuring that no single customer becomes “too important” to your business.
  • maintain the quality of your customers. Every business has the least profitable/too small/most time-consuming customer – they should be culled on a regular basis to free up time and resources to win new sales and work.  (A good relationship should allow you to pass that customer to one of your own customers, or a friendly competitor.)
  • involve staff in the decision-making process; each has a unique perspective of your business and will see things – good and bad – that you won’t. Also, involving them in the development of plans will empower them with ownership and responsibility and a greater desire to see things through.
  • promote your business: advertise where you can and ensure that your disaster management budgets don’t require you to stop promotion activities.
  • network: make you and your business somebody and something that people want to work and deal with.

Being ready will help minimize the impact of a downturn when it threatens, and when it hits.  When it threatens, and you have a plan in place and everybody knows their role, look after your people and let them do their job.  There will be stress, and it’s not a time for confusion.  Letting everybody do their job without interference will ensure calm and help you ride out the storm.  Being prepared, and with everybody knowing and doing their job, will allow you to do yours, which is to coordinate and monitor, and to lead the recovery.  The positive “vibes” you will be giving off will help staff morale significantly.

Recovery

The recovery process – the implementation of the recovery plan – should be a part of the impact management and should commence when the storm threatens. While your staff are implementing the “downturn” plan for your business, you should be contacting suppliers and customers to ensure that they are prepared for the downturn; a good prior working relationship will mean that contact is seen as a normal part of the business process, and as a result they will be more comfortable and more open when talking about their own issues.

If a customer is not prepared and causes concern, you implement procedures to insulate your business as best you can from their looming issues.  Unfortunately, such actions can aggravate their overall situation, but your priority is to protect your business.

Look for the opportunities that arise as the economy first falters, then moves into recovery.  You should see opportunities arising from the instant the downturn hits.

There will be businesses out there whose suppliers will not survive.  They represent potential customers for you, looking for a new supplier relationship.  There will be suppliers whose customers will not survive; they will likely be holding excess stock for which they no longer have the customers they need, and in a nasty twist of fate for them, they have likely lost the money that customer owed them as well, which will put more pressure on them to liquidate the stock to generate cash.  There will be businesses out there where the owners are forced to sell.

Emerge Stronger

If your business is in good shape at all times, with a good solid balance sheet and with good staff, and quality suppliers and customers, it will be able to absorb the impact of an “economic firestorm” and emerge stronger.  Remember, businesses will still be needed after the disaster has passed.  You’ll be able to look back, and say, “That was actually a good thing.”

And all because you had a plan, you were prepared, and your business was ready.

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