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Plan for disaster can carry business through recovery

OCEAN SPRINGS — The Learning Depot Child Development Center didn’t just have major wind damage resulting from Hurricane Katrina. Due to disruption with people losing their homes and jobs, most of the children enrolled didn’t return when the child care center reopened September 12, 2005.

“On September 12, we reopened the business with 10 children and one staff member,” said Karla Owens, owner and director of the center. “They were devastated. People were hysterical, some were leaving, and kids didn’t know where they were going to live. But I didn’t charge the parents for full child care on a normal basis, because we needed to help our community. Of the 40 parents who were clients pre-Katrina, 30 either didn’t have a house or didn’t have a house and a job. In the end, only two of the 30 children returned.”

Owens wanted to do what was right to help parents who were having a difficult time, so she gave them discounted rates. But a lot of debt accumulated. Owens took out an $81,600 SBA disaster loan in November to cover the physical damage to her building and the playground equipment. The SBA loan also covered her lost revenue, which allowed her to catch up on those overdue payments and get back in good standing with her creditors.

“I couldn’t have done it without the SBA,” she said. “There is no doubt that I would have had to shut my building down. We are still in the recovery process thanks to SBA.”
Owens operates differently now, having learned lessons to prepare better for future disasters.

“I have all my bills paid off where if something happens, I don’t have that holding over my head,” she said. “I try not to use a credit card. I try not to have any monthly bills other than those that are necessary.”

In the event of another hurricane, parents have been informed that unless the center is closed for an indefinite period of time, parents have to keep paying their fee to help the school survive.

“A lot of daycare centers went under because losing a month’s worth of income could put a business under forever,” said Owens, whose school quickly filled again with children after reopening. “I know a lot of local businesses had to close their doors because they couldn’t catch up being out that month without tuition.”

Owens also recommends business interruption insurance. Her insurance company didn’t offer it. But she realizes another situation like Katrina could be devastating. She has a mortgage and a SBA loan now, and couldn’t afford yet another recovery loan.

“If you do have the option to buy business interruption insurance, that is something I would recommend so your business won’t go under,” Owens said.

It takes years to build a business and perhaps only a few hours to have it destroyed. Planning for a disaster can be vital to your business surviving a disaster, said Richard Daigle, public information officer for the SBA Office of Disaster Assistance in Atlanta. When a business is prepared, it stands a much better chance of rebounding after a disaster.

“Developing a disaster plan in advance really positions a business to bounce back after a disaster,” Daigle said. “Number one, know how to contact your employees and how you can help them prepare for a disaster personally. When they are taken care of, they can come back to work and help you. Taking care of your people in that respect is important. Put telephone contact numbers for employees in your plan so when it hits, you have some preparation.”

Businesses can start preparing by looking at physical improvement such as armoring. Putting plywood over windows is a big chore. But it can pay off big time by preventing breaches of the building that can lead to water damage from the storm. If there is widespread damage, it can be months before repairs are made. The business owner and employees could be without income during that time.

“If you look at making disaster plans, there is an investment that is involved, but that is small compared to the benefits you will have to be able to rebound quickly,” Daigle said. “In addition to facilities, another area to look at is operations. For instance, consider investing in a backup generator. You need advance communication with vendors and shippers to have a plan in effect in the event of a disaster.
“And guarding your data is huge. That could be as easy as buying CDs or a USB Flash Drive. The prices of those are coming down. The point is, however you do it, store your important data that contains critical records offsite in a safe location, and then back up your files regularly, of course.”

An important question business owners should ask themselves is: What would happen if our facility were closed for several days or damaged? Would the business survive if that were to happen?

Business owners should also scrutinize their insurance policies.

“A business owner should review their current insurance coverage,” Daigle said. “That is an important aspect of preparing for disaster. Is the insurance enough to get your business back in operation? Your contents insurance has to cover all of your equipment. Examine your current policy.

Does it have flood coverage? If not, investigate alternatives. An analogy for business interruption insurance is gap insurance for a new car. If a disaster hit and you had that insurance, it could take up the slack and make up for what you lose in operations. That is something a business owner should investigate and consider.”

SBA provides a Small Business Disaster Planning Tool Kit at www.sba.gov/disaster_recov/prepared/getready.html. It lists tips for business critical areas such as facilities/buildings/equipment, business operations, information communication and insurance in preparation for a natural disaster. There is also a FAQ (frequently asked questions) section available online at www.sba.gov/npm2006/faq.html.

Businesses may also want to be prepared to bid on contracts that are part of the recovery efforts by registering the business in the Central Contractor Registration (CCR) database.

“CCR is a free online business portal that helps small businesses market their goods and services to the federal government and prime contractors,” said Gary Reed, public information officer for the SBA in Biloxi. “Register the firm’s profile in the CCR database at http://www.ccr.gov. The CCR database also houses the SBA’s Dynamic Small Business Search function, an interactive database that permits small firms registered in CCR to post their profiles and capabilities for prospective buyers such as federal procurement officers or purchasing agents of prime contractors.”

Reed also suggests contacting the nearest Procurement and Technical Assistance Center (PTAC). It helps small businesses prepare themselves to market to the government by matching a firm’s capability with procurement opportunities. A list of Mississippi PTAC’s is available online at www.mscpc.com/index.asp.

Another tip is taking a free SBA online procurement training course on how to access government contracts and subcontracts to assist small businesses. This course can be taken online by visiting http://www.sba.gov/gcbd/accessing_contracts/.

“Seek SBA procurement certification programs such as HUBZone and 8(a) NOW!,” Reed said. “Both HUBZone and 8(a) enhance a business’ chance of being selected for a government contract. Unfortunately, many Mississippi businesses didn’t seek these SBA certification programs until after Katrina and were excluded from set-aside opportunities because only businesses certified pre-Katrina were eligible. Visit SBA’s 8(a) and HUBZone Web sites www.sba.gov/8abd and www.sba.gov/hubzone respectively for more information and to apply electronically.”

It is also helpful to frequently access the federal procurement opportunities. Go to the Web site www.fedbizopps.gov/ to find contract solicitations or the Federal Acquisition Jumpstation at http://prod.nais.nasa.gov/pub/fedproc/home.html to find other federal agencies that buy products and services.
Last, but not least, small business owners should realize thatin lieu of prime contracts, subcontracting is a good option.

“Large prime contractors have small business liaison officers listed in the Subcontracting Opportunities Directory for companies wishing to sell to them,” Reed said. “This directory can be found at http://www.sba.gov/GC/indexcontacts-sbsd.html. This site also has a listing for SBA’s Commercial Market Representatives (CMRs) who assist small businesses with marketing to federal prime contractors. Small businesses also can search the SBA’s SUB-Net Program for subcontracting opportunities at http://web.sba.gov/subnet/.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.


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