OUR THOUGHTS ON:

Business Interruption Plans: What a Snowstorm Can Teach Us

Business Advisors

By Richard McKenna

When it comes to disaster planning or business interruption planning, we usually think of a natural disaster such as a tornado, fire, or flood as the reason why we need a good plan. Already in 2010, Mother Nature has reminded us on more than one occasion not to forget about a good old-fashioned snowstorm.

Although the recent snowstorms are considered to be relatively average compared to other major storms in history, it does give us a chance to assess the plans we have in place for either minor or major disruptions to the business cycle. Whether your business has been closed for two days or two weeks, it is still useful to have a business interruption plan in place.

While, of course, each situation will be different, there are several fundamental items that you need to consider when developing your business interruption plans:

  • Contact your employees: Once it is clear that your business will not open, it is important to communicate with your employees. Most employees have families to account and care for when big storms arise, and they need to know what the plan is if there is an emergency or an unusual event. Identify which employees can be called in an emergency and which ones cannot. Even when the business is closed, you may need employees to come in and “mind the store”.
  • Involve the IT department: Confirm that your IT department has a plan in place for the business to be closed. In some cases, an extended closure may affect the IT infrastructure. The IT department plan should include procedures to forward email accounts and other relevant tools to management. Make sure that all the critical software systems are backed up and secure. You need to protect your company data and systems.
  • Involve your accounting department: What if the closure happens at the time you normally process payroll? How will you pay your employees? Will you pay the employees? Again, it is important to make provisions for processing payroll if the business were to be closed for an extended period. Another important element of your plan should be ensuring that any banking transactions that need to be processed or completed during the closure are completed. How will customer receipts, incoming checks, wire transfers, account transfers and other banking transactions be processed? 
  • Run the business remotely: In some cases, you may be able to redirect your phone lines and computer lines to employees at home. This will ensure that incoming customer calls and orders can be accepted and processed. With current technology, you can easily access your computer network and conduct a limited amount of business from home. 
  • Contact your customers: It is always wise to alert your customers as soon as possible if your business is going to be unexpectedly closed. Customers never like surprises, and they will appreciate the fact that you called them.
  • Contact your vendors: Your vendors may have material on the way to your business. Alert vendors about your situation and reschedule any pending deliveries. This may help avoid extra charges if the delivery truck makes it to your business and you are not there. If appropriate, have the vendor deliver the material to an alternate location not affected by the storm, and you can transfer the delivered items later.
  • Contact your insurance carriers: Just in case your business suffers substantial damage it is always helpful to keep the insurance company apprised of the situation.

Granted, all these items do not account for every aspect of your potential plan, but they offer a good start in developing your business interruption plans. Although these storms only come along every so often, you never know when you will need a concise and effective plan.

If you would like to learn more about business interruption plans or disaster recovery plans, please contact Rich McKenna at 412-697-5205 or email him at rmckenna@schneiderdowns.com.

Schneider Downs provides accounting, tax , wealth management and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA, and Columbus, OH.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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