• Disaster can wipe out investment overnight, so it's good to be prepared
Image: GEORGE OWITI
“I had not finished paying the loan for those rental houses,” Brian Mwasimwa, 69, says about his homes that were forcibly demolished soon after the New Year holiday. “What a way to start the year!”
Mwasimwa was among the victims of the January 6 early morning demolitions in Voi town, Taita Taveta county. Though his residence was not affected, the loss of six rental units will bite hard.
Elsewhere, Mzee Saidi Mbagha, a farmer in Taveta subcounty, helplessly watched his entire crop of tomatoes, eggplant and capsicums get washed away by flash floods last November. The long-forecasted El Nino rains he thought would be a blessing ruined his farming business. All the investment in seeds, labour, fertilisers and land preparation were washed away in a single night.
Disaster can strike your business at any time. Risk analysts report that the biggest threats to businesses are from storms, floods, fire, theft, fraud or vandalism. Sudden changes to the laws governing your line of business can also be harmful.
Some types of businesses are at risk from terrorists or protestors because of their products or because of their political links. In the Internet age, cyber attacks are a real and present danger to livelihoods. You might wake up one morning and find your bank accounts cleaned out by a hacker. What if your emails were leaked out to competitors or, worse, to the public?
Here are five ways to minimise potential damage to your business:
1. KNOW YOUR ASSETS: Business owners need a detailed list of their assets, including any buildings, equipment, software, stock and furniture. The inventory can include photos, equipment serial numbers and other information that will easily identify a particular asset. Keep up-to-date copies of documents such as insurance policies and legal papers on a cloud service to access them at any time.
2. COMMUNICATE: If disaster strikes, let your customers know right away what has happened so they will understand if there are delays or other problems in getting your product. If customers can't reach you, they are going to move on and find someone else. Your employees need to be notified quickly. For large companies, it may be necessary to have a designated spokesperson to deal with the media.
3. GET INSURANCE: If insured, contacting your insurer should be done as soon as possible after a disaster to begin the claims process. You should know the value of what you have and what has been lost or damaged and make sure that your business isn't under-insured.
4. WATCH YOUR SPENDING: Protecting your cash flow should be a priority following a disaster since your expenses are likely to go up, while your income could decrease. You may need to extend your line of credit (from banks) to cover expenses. A flexible, short-term loan can also be useful to protect your cash flow while you get back on your feet. Contact your suppliers for an extension in payment terms.
5. MAKE USE OF DISASTER RELIEF: Whether or not you are insured, take advantage of disaster relief offered by the county or national governments.