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October 28, 2007

Small Businesses Are Finding It Difficult To Recover

Written by  Janette Ballman
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During the Loma Preita earthquake which struck the San Francisco bay area on October 17, 1989, more than nine billion dollars in damage occurred. Four billion was from property damage, while business interruption damage caused $5 billion in damage.

Much of the damage occurred in areas populated by small businesses. And many of those businesses have found it difficult to recover.

In Santa Cruz, much of a six-block stretch along Front Street and Pacific Avenue was reduced to rubble. A year later, 50-year-old storefronts were propped up with braces, but there were no stores behind them. Damage in the city was estimated at $155 million.

By 1990, only a handful of stores had reopened in the Pacific Garden Mall, which suffered extensive damage.
In San Francisco, the 7.1 earthquake forced numerous businesses to close. Even those which didn't suffer extreme physical damage were closed while officials conducted safety inspections. Many business owners were not allowed in to retrieve paperwork, equipment or anything for several days.

This may have been a contributing factor to the number of small businesses which were forced to close. A San Francisco newspaper estimated that in stricken areas up to 25% of the smaller companies would be forced to close their doors.

A year after the earthquake struck, hundreds of small businesses in the San Francisco area remained boarded up. The plywood storefronts were covered with graffiti.

Though federal and state aid was provided to the area, reconstruction was slowed by bureaucratic delays and seemingly endless feasibility studies. Many small companies could not withstand the delays.

Other factors may have also contributed to small businesses' inability to recover. Most larger businesses have the staff and resources to prepare and recover from disasters.

However, for most small businesses, it's a different story. Many smaller companies do not have the ability to support a fully operational backup site. Therefore, many do not make the attempt even to follow the simplest backup procedures.

Others may implement some type of disaster recovery plan, but lack the manpower to successfully test it.
In addition, if a disaster such as the San Francisco earthquake does occur, there are fewer people employed in smaller businesses to carry out the untested plan. And with fewer employees, there's more likelihood that the employees' personal properties will have suffered damage, causing them to be distracted from the company's needs.

Smaller businesses also are vulnerable to greater damage from business interruption. A large corporation may withstand losses of several days with minimal impact, but for smaller firms this can be devastating, especially if they are competing with larger firms who market similar products.

Small business owners face the incredible task of rebuilding their company as quickly as possible, with fewer resources and manpower. For many, this is an impossible task.

Proper planning can offset the handicap many small business owners face. A good contingency plan pared to the company's needs can be the greatest tool when disaster strikes and can help even the smallest firm recover fully.


Janette Ballman is an editor for Disaster Recovery Journal.

Read 1794 times Last modified on October 11, 2012