Small Business -Big Risk
By Joanne R. Piersall
As corporate America continues down-sizing, the proliferation of small
and mid-size firms increases proportionately. If corporations remain the
primary target of contingency planning professionals, whole segments of
the evolving business world could be left vulnerable to disruptions.
In an increasingly competitive marketplace, small and mid-size firms need to be as prepared to survive the unexpected as their corporate clients and competitors. In the Chicago flood and the Los Angeles riots, small businesses were severely impacted, and many did not survive.
Entrepreneurial training is becoming a widely accepted means for laying a good foundation for a new business or improving an existing one. Yet course content rarely includes contingency planning, and its often not easy for those designing the programs to understand its importance. Furthermore, new and prospective business owners don’t want to hear about potential disasters, and their mentors prefer to be encouraging, avoiding anything which seems negative.
Nevertheless, recording critical recovery information can be made palatable by approaching it from the standpoint of effective office management. A manual of procedures, vendors, inventories, etc. becomes a positive tool for consistency in personnel training, maintenance of equipment and supplies, reduction of errors and omissions and productive day-to-day management. Once a business owner has a head start on setting up an organized and efficient office, it’s a short leap to the realization that having a copy of a well-constructed office manual off site will also help them recover from a disaster.
Information is Vital, Hi-tech or Not
With or without computers, both new and established firms contain valuable equipment, furnishings, supplies and critical information. Many small businesses, particularly professional offices (e.g. physicians, attorneys), could not operate without the principals. Still others have fluctuating staff needs which require periodically supplementing regular staff with temporary help.
The single practitioner functioning without
computers is no less at risk than a fully computerized firm with a dozen
professionals. Certainly if it’s your dentist, physician or attorney
you’d like to know that your records are protected, regardless of
their format. Patient records were the most devastating loss when a complex
of 40 health care offices was totally destroyed by arson in rural Carmel,
New York in July 1990. Not only were entire health histories lost along
with the tangible property, most of the offices were also under insured.
The types of records important to small businesses may differ from those
valued by their corporate counterparts, but they require the same kind
of attention, with some modification. In general, smaller firms are not
in a position to support a fully operational backup site. Creative solutions,
such as reciprocal emergency space assignments or a shared backup site
can provide more suitable alternatives.
Off site backup storage may be a self-storage facility, a branch office or a staff members home. Many business owners already carry their computer disks between office and home. If the office is in the home, a safe deposit box or someone else’s in-home office could serve for off site storage.
Personnel changes are a special concern for small and mid-size firms where fewer people are available for promotion, transfer or temporary replacement. Vacations, resignations, discharges, jury duty, illness, accidents and other emergencies happen daily. If there is only one person filling each role, the resulting gap may have a serious impact on productivity.
A small firm can ill afford extensive training periods. Well documented office procedures and job descriptions can accelerate the process without taking valuable time from other firm members. A sole practitioner unable to maintain office hours for any reason is vulnerable to losing the practice altogether if there is no plan for temporary referrals to a trusted associate.
Well defined procedures and job descriptions can simplify training and increase office efficiency. Permanent and temporary help can be utilized more consistently and effectively with less direct supervision. The documented operating information provides specific criteria for periodic performance and productivity reviews. Disputes over authority, expectations or responsibilities can be avoided.
More Variety, More Risk
Small and mid-size firms are found in all types of locations from skyscrapers to small buildings, above stores and inside shopping malls, in apartment buildings, converted residences and private homes. They cover an unlimited range of products and services utilizing all types of equipment, furnishings and supplies. The common denominator is that all are vulnerable to severe losses when they can’t open for business.
In-home businesses may seem too small to warrant the time-consuming process of completing a contingency plan. But if personal possessions are worth documenting, business assets are no less valuable. In fact, the personal risk is far greater when both the residence and business can be affected by the same disaster.
While corporations may be similar to each other in structure, small and mid-size firms are formed in a variety of business categories; e.g. sole proprietorship, formal or informal partnership, or corporation governed by a corresponding variety of regulations and principles.
Similarly, liabilities also vary, with malpractice concerns high on the list for legal and health care professionals. Record keeping and strict adherence to procedures take on a special significance for these firms, as does the ability to recover or reconstruct critical information.
The volume of confidential patient/client information maintained in computerized professional offices is astounding. In many cases the procedures for protection, storage and disposal have not kept pace with the technology available for creating it.
Even worse, too many offices don't follow
the simplest backup procedures, much less take serious steps toward disaster
prevention.
The general lack of awareness of contingency planning among small and
mid-size business owners contributes to vulnerability by the omission
of simple remedies. Unless they were part of an MIS, facilities, operations
or other department concerned with disaster recovery, corporate transplants
are no better informed than other business owners.
While they'll invest in insurance and security systems, particularly for older, converted residences, little thought is given to more general concerns related to failures of equipment, utilities, services or even personnel.
Carelessness is not necessarily more prevalent in small and mid-size firms, but there is often a more casual atmosphere which can increase the potential for disruption. For example, people may be more likely to have food and beverages near electronic equipment. If there is only one work station, telephone, etc. a spilled beverage could halt work flow because no alternative equipment is readily available.
A large corporation may withstand loss of a portion of its operations for several days with minimal impact. Small and mid-size firms can be devastated by any interruption. Not only is there the potential for significant financial loss, but for many firms their reputation for dependability is vital to their successful operation.
Any time lost can have long term effects,
especially for those competing with larger firms offering similar products
or services. Loss of any critical business component can bury a small
or mid-size firm operating on a very low margin.
No business is immune to the unexpected, regardless of size or location.
Small and mid-size firms often don't survive major disasters.
Some suffer slow deterioration from minor disruptions which go unrecognized and/or without remedy. Good office management can serve as the foundation for effective contingency planning for those as yet unaware of its importance in mitigating their risks.
Joanne R. Piersall is President and owner of J R Piersall Consulting, Inc., an office management consulting firm which provides solutions for streamlining office procedures and records management systems. Since establishing her consultancy in 1988, Piersall has helped a wide range of clients fine-tune their use of software and equipment, formalize office procedures and job descriptions, and create work-flow management forms.
This article adapted from Vol. 5 #3.
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