Is Your Remodeling Firm Prepared for Disaster?

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When any type of disaster occurs, it can potentially wreak havoc on your business. Experts say that no matter what the cost or effort, it pays to be prepared. Here's how you can get started now.

August 01, 2009

Sidebars:

What does this cost?

Continuity of operations planning

Online disaster management resources

Like a menacing horror movie monster, disaster can morph into many unexpected forms. Hurricanes, tornadoes, terrorism and wildfires have wrought widespread devastation. It’s way too easy to become complacent and believe that a disaster, including even the crash of a critical computer hard drive, could “never happen to us.” As the old saying goes, $#!+ happens.

 

When it happens, it can wreak havoc on your remodeling business. Experts in the field of business continuity and disaster preparedness say that no matter what the cost or effort, it pays to be prepared.

Think about the consequences that a disaster might have on your business technological network. How many pieces of information are generated for each client’s remodeling project? How crucial are those contracts, work orders, schedules, payroll and tax records to your business? Imagine the impact if that information were lost.

Are remodeling firms prepared?

No survey has been done to determine the level of preparedness of remodeling or home building firms, but two recent surveys on business continuity and disaster preparedness indicate that businesses of any size may not be adequately prepared, if prepared at all.

The Ad Council on behalf of the U.S. Department of Homeland Security’s Ready Business group surveyed small businesses in October 2005 and found 92 percent of respondents said they believe it’s very or somewhat important for businesses to take steps to prepare for a catastrophic disaster. However, only 39 percent said their company has a plan in place in the event of such a disaster. Why? While many respondents acknowledge the value of preparedness, time, workforce and money constraints prohibit them from developing a plan.

In March 2008, Aberdeen Group, an information technology consulting agency, surveyed more than 150 end-user organizations, and results prove that Best-in-Class IT organizations have infrastructures that support rapid recovery of data and applications with minimal or no downtime. That assures business continuity even in the face of a severe event. While 62 percent of all the companies surveyed experienced between 1 and 5 business interruption events in the last 12 months, only 49 percent of the companies surveyed have had a business continuity strategy for more than 2 years, and 34 percent of those have yet to implement a solution.

“It’s hard to imagine that a company wouldn’t have a data backup system, but just backing up data alone doesn’t constitute a disaster recovery strategy,” says Jeffrey Hill, senior research analyst in Aberdeen’s Data Management and Storage practice. “In order for a recovery strategy to be effective, it needs to recover the right applications and data in a timely fashion. Put another way, how long an outage can a business tolerate before there is a tangible impact on operations?”

Mark W. Kinsey, president of Kinsey Consulting, based in Doylestown, Pa., is a Certified Remodeling Associate and Construction Risk Insurance specialist. His business focuses on contractors, both large and small. In his years of experience working with remodeling firms, he has found that most “don’t have a clue” when it comes to business continuity and disaster preparedness.

“It is absolutely critical to have a plan in place,” Kinsey maintains. “Think of your customer service, or your employees. What will they do should any type of disaster occur? Look at the volume of work you do on a daily, weekly or yearly basis. Imagine how much you would lose if your computer systems went out and weren’t backed up. What would happen to your plans, your proposals, your jobs completed? How are you going to do your accounting or your ordering? Records are a key component to any business, and they need to be protected.”

For business continuity planning purposes, Kinsey has a crisis planning worksheet that he gives to his clients. “It all starts with the basics. The questions are simple, but the answers can be very complex,” he says. “Each individual business is different, and the answers to these questions will be different for every business. It boils down to the impact that any type of disaster has on business interruption and business expense.”  

Kinsey says business continuity planning is an exercise that the C-suite (senior executives) needs to go through. “It can be fun but difficult,” he says. “It’s an exercise of hard decisions and 'what if’ scenarios that all business owners should go through.”

While having a plan in place might not get you any type of discount on insurance, Kinsey says that having one will put you in a much better light in the eyes of underwriters that provide coverage for businesses. “Having a business continuity plan in place shows underwriters that you are prepared to mitigate any loss should it occur,” he points out. “And that’s a good thing.”

Does Kinsey’s firm have a plan in place? “Yes, we do,” he says. “But we’ve been extremely fortunate. In our 35 years in business we’ve never experienced a major disaster.”

Organizations can help

NARI, the NAHB Remodelers Council and the U.S. Department of Homeland Security can help remodelers prepare their businesses.

NARI: The National Association of the Remodeling Industry (NARI) currently has plans to create either a Webinar or podcast program on the topic of disaster preparedness/business continuity that will be added to their substantial and ever-growing collection of educational courses for members, according to Gwen Biasi, NARI Director of Marketing & Communications.

NAHB: The NAHB is currently in the process of developing a Business Continuity/Disaster Recovery toolkit specifically for home-building firms. “It will cover everything from A to Z,” says Ken Ford, NAHB program manager, Mitigation and Disaster Assistance. The toolkit will be available to members of NAHB, including those belonging to the Remodelers Council.

Ford says two of the most important things to consider for business continuity are a communications plan for employees in the event of disaster and the safeguarding of all critical documents related to the business, including bank statements, tax records, contracts and accounts receivables.

“If all the records of a business were destroyed or lost, it would be very difficult for a [business] to obtain a loan for recovery from a bank or even from a governmental assistance agency if they can’t show or prove past business activity,” Ford says.

Department of Homeland Security: The Department of Homeland Security created a Web site dedicated to disaster preparedness for businesses. Ready Business contains a treasure trove of free, in-depth information; guidance; and document templates that can help any size business prepare their firms for the worst. Businesses are advised to:

  • Be informed. Risk assessment is a sophisticated area of expertise that can range from self-assessment to an extensive engineering study. The size and scope of your individual company will determine your organization’s risk assessment needs.
  • Know what kinds of emergencies might affect your company both internally and externally. Find out which natural disasters are most common in the areas where you operate.
  • Learn what to do during a biological, chemical, explosive, nuclear or radiological attack.

The impact of downtime

A white paper, “The Business Case for Disaster Recovery Planning: Calculating the Cost of Downtime” prepared by Iron Mountain, a firm that provides outsourced records and information management services for businesses, warns that virtually every company faces the risk of IT interruptions that can grind business to a halt. The white paper explains:

“One overlooked truth is that downtime costs accelerate. ... If a system fails for five minutes, the costs are fairly low because manual methods of making records or communicating by telephone instead of emails can suffice to conduct business. Over an extended period, however, the volume of work overwhelms the manual process. Business and financial operations increasingly deteriorate, and the rate of dollar losses grows — sometimes to the point of fatally damaging the business.”

Preparing your company to handle a disaster encompasses everything from emergency planning for employees to getting in touch with the right organizations. For more information, visit www.HousingZone.com.

A version of this article originally appeared in our sister publication Housing Giants.

 

 

What does this cost?

The following provides an idea of what it may cost to develop a disaster protection and business continuity plan. Some of what’s recommended can be done at little or no cost. Here’s a sample from a list on Ready Business that you can use to get started.

No Cost

  • Review your current insurance coverage.
  • Create evacuation procedures.
  • Develop an emergency contact list including employee emergency contact information.
  • Put together a list of critical business contractors and others you will use in an emergency.

Under $500

  • Buy a fire extinguisher and smoke alarm.
  • Identify emergency supplies the company can feasibly provide, if any, and talk to your co-workers about what supplies individuals might want to consider keeping in a personal and portable supply kit.
  • Back up your records and critical data. Keep a copy off site.

More than $500

  • Consider additional insurance such as business interruption, flood or earthquake.
  • Purchase, install and pre-wire a generator to the building’s essential electrical circuits. Provide for other utility alternatives and back-up options.
  • Consider using a security professional to evaluate or create your disaster preparedness and business continuity plan.

Continuity of operations planning

This list on the Ready Business Web site consists of essential elements that a company should think about when developing its plan for business continuity. Go to Ready Business for more on each point.

  1. Assess how your company functions, both internally and externally, to determine which staff, materials, procedures and equipment are absolutely necessary to keep the business operating.
  2. Identify your suppliers, shippers, resources and other businesses you must interact with on a daily basis.
  3. Plan what you will do if your building, plant or store is not accessible. This type of planning is often referred to as a continuity of operations plan, or COOP, and includes all facets of your business.
  4. Plan for payroll continuity.
  5. Decide who should participate in putting together your emergency plan.
  6. Define crisis management procedures and individual responsibilities ahead of time.
  7. Coordinate with others, including businesses in your building, emergency managers, suppliers, shippers and others you do business with.
  8. Review your emergency plans annually. Just as your business changes over time, so do your emergency-situation needs.

 




 

Disaster Management and Related Resources Online

This list of online resources are set up to assist businesses before, during or after disaster occurrences.



Ready Business (FEMA)



Business.gov



Disaster Recovery Institute 

www.drii.org/



American Red Cross

www.redcross.org



Small Business Administration

www.sba.gov



Disaster Preparedness and Emergency Response Association

www.disasters.org



FEMA/Emergency Management Institute

www.fema.gov



International Association of Emergency Managers

www.iaem.com



National Emergency Management Association

www.nemaweb.org



National Safety Council 

www.nsc.org  

Business Continuity/Disaster Recovery Planning Service Providers

These are some of the organizations that remodeling firms can engage to assist in developing a comprehensive business continuity and disaster recovery program.



Kinsey Consulting

www.comperaser.com

Kinsey Consulting is headed up by Mark Kinsey who was interviewed for this article and provided his "Establishing an Emergency Response Program" guidelines and worksheet. Kinsey works exclusively with remodeling firms.



Aberdeen Group 

www.aberdeen.com/

Aberdeen Group is a research and consulting firm that serves the technology needs of businesses.



Simply Continuous

www.simplycontinuous.net/

Simply Continuous enables business enterprises to enhance their data protection and disaster recovery capabilities.



Grant Thornton

Grant Thornton is a consulting firm that can assist businesses in a wide variety of operational needs, including business continuity and disaster preparedness.



MIR3

www.mir3.com/

MIR3 provides communication platforms for business enterprises. Its products and services are used for IT alerts; business continuity and disaster recovery messages; emergency management; and contact center outbound notifications.



Iron Mountain 

www.ironmountain.com

Iron Mountain outsources records and information management services for both physical and digital media; disaster recovery support services; and consulting.



VMWare

www.vmware.com

VMware provides virtualization solutions from the desktop to the datacenter for businesses. VMware is used to reduce capital and operating expenses, ensure business continuity, strengthen security for the business enterprise.



Datotel

Datotel provides data “hotels,” or colocation facilities, that give businesses a place to store data off-site. They also provide disaster recovery services, network redundancy and connection options in case of network outages.



Disaster-Resource.com

www.disaster-resource.com/

Disaster-Resource.com serves as an online guide to help businesses find information, vendors, organizations that can assist in preparing for or recovering from any type of natural or other type of disaster.



Cisco (White Paper from ZD net)

Cisco is a supplier of networking equipment and network management for the Internet.



Helpful Webcasts, White Papers and Videos:



This Webcast from Simply Continuous and Data Domain covers common IT disaster recovery challenges including deduplication storage basics, secure back-up and data recovery best practices through real world customer examples. View Webcast

 

Videos: Products that Might Help Your Preparation for Business Continuity



1.) Amir Moussavian, CEO of MIR3, discusses his company’s communications systems builders can purchase and their ability to save lives. View Video



2) MIR3 Senior Account Executive Tom King talks about mass emergency notification that uses a variety of modalities.



MIR3 White Papers

View White Paper



MIR3 Webcasts

Client Case Study Three: MIR3 and COOP Systems

Learn about notification systems and software.



Disaster Preparedness Best Practices Webinar

A 10-minute presentation on disaster preparedness best practices  

 

 

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