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Volume 32, Issue 3

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Monday, 08 December 2014 06:00

Riots: Do You Have a Plan?

Written by  Vicki Thomas

Riots-picA brick through the window. A few toppled over chairs. Garbage cans set on fire. Crowds taking over the street.

At first glance it might not seem like much. But the reality for business owners is that one brick, those chairs, the fires and the crowds in the street do in fact add up to more than people realize. The impacts of riots on business, particularly small business is huge and can have a larger trickle-down impact on an entire community or city’s economy.

In the last few weeks we’ve all seen the images of the riots in Ferguson and read about how store owners have become the secondary targets in this chaos. Ferguson is not alone in this, think back to the G20 Summit in Toronto in 2010, the night the Vancouver Canucks lost the Stanley Cup in 2011, and the riots in Los Angeles in 1992. Each one of these events has had lasting ramifications for business owners in the community.

Not only do business owners have to deal with the immediate impacts to their livelihood, including repairing store damage, replacing stolen or damaged inventory, dealing with vendors and third-party partners, managing staff salaries - there also the long-term impacts of this damage.

Does it makes sense to reopen in this community? Will people want to visit and shop in this neighborhood if the last images they have are of riots? Will my business be destroyed again? What about my employees - do they want to work in this community now?

These are all questions that every business owner has to be prepared to answer. And the bigger questions of insurance, liability, ability to thrive and make a profit, and long-term stability also need to be answered. For businesses that are relying on loans and support from third-party investors, things can get very uneasy and unstable very quickly in the wake of that brick being thrown through the front window.

Let’s think about the employees first. Without employees, the business simply won’t operate. Imagine you’re the owner of a business in an affected riot area - do you want your employees to come to work? Should you expect your employees to put themselves in a potentially dangerous position? What is your plan in the event that your employees can’t or won’t come to work?

Consider what is happening in Ferguson and in the wider area right now:

Businesses outside Ferguson in the broader St. Louis area are also being affected. Gary Jaffe, CEO of St. Louis-based educational literature company GL Group, a recent Inc. 5000 honoree, says a number of employees are temporarily staying home from work. Some who live in Ferguson are scared to leave their houses, while others in St. Louis are scared to use the roads. Parents with children at closed schools are in a childcare bind. (inc.com)

Now let’s think about traffic in the neighborhood. Do you want to go shopping in a neighborhood that has been in the center of a riot? Would you feel safe opening your store in this neighborhood? Who is going to want to drive their delivery truck down the street which just days ago was in the center of chaos? How will your business rebuild and survive in this neighborhood?

When people smash windows, steal things, or set buildings and property on fire, that all has direct economic costs. Moreover, if people are rioting they are not working, and even those who are not involved in the disturbances are affected - they cannot get to work, shop or otherwise carry on with business as usual. Some studies have suggested that the LA riots in 1992 ultimately cost the city nearly $4 billion in taxable sales and over $125 million in direct sales tax revenue - that in addition to $1 billion in property damage and the loss of many lives. (investopedia.com)

Next let’s think about your bank, insurance company and other investors. What kind of coverage does your insurance provide: are you protected for fire, water and other damages? What will your insurance premiums be now that your business has been damaged by a riot? Will your bank and other investors get nervous about loaning you money to rebuild and grow your business? Are you prepared for the impact this will have?

Victor Matheson (College of the Holy Cross) and Robert Baade (Lake Forest College) found that the steps toward recovery are relatively clear after natural disasters: Communities tend to join together to build shelters, clean up, and storm-proof structures against future events. After rioting, by contrast, its much harder rebuild confidence and community trust among frightened business owners, or to convince new employers to move in. Its not as simple to just stamp out violence and anger,Matheson says. And reluctance to rebuild is dangerous because it is self-perpetuating, he adds. (time.com)

We all like to think that we’re safe and that our community won’t be involved in a riot or other disturbance. But as we know, there are no guarantees. What is your plan if your community is impacted? How will your business survive? Do you have a plan that includes steps to take to ensure your employees are safe? Can you survive financially and emotionally?

While it might just seem like one brick or one small fire - we know that it is so much more than this.

To read more about the impact riots have on business and long-term success, read the following articles: