Philly small businesses are not immune to natural disasters. Are you prepared?

Are Philadelphia-area businesses immune to the natural disasters experienced by their counterparts in Los Angeles, North Carolina, Florida, and other southern states just this past year? Of course not.

In 2021, floods in the Philadelphia region caused significant damage to businesses. Snowstorms have historically created challenges. Hurricanes and nor’easters commonly occur up the coast.

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If you’re running a business in Southeastern Pennsylvania, New Jersey, or Delaware, it’s important to prepare for possible disasters like these. Here’s how to start.

It’s important that you have the right level of insurance.

In addition to commercial property insurance, which generally covers damage from fire, wind, storms, and accidents, make sure you have flood and business interruption insurance.

Many insurance companies that serve small businesses, like the Hartford, the Travelers Cos., and State Farm, provide flood insurance. Some also work with the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA).

According to the Hartford’s website, “most commercial property insurance policies don’t cover flood damage” and “even if your business isn’t in an area prone to flooding, you’ll want commercial flood insurance if you run your business in an area that has cold, snowy winters and warm springs, or you experience moderate rainfall in the spring.” Even in areas not known for flooding, the Hartford says, a nearby stream could overflow due to excessive rainfall, for instance, or construction runoff could cause a basement flood.

Business interruption insurance ensures income during the time your business closed so that you can continue to meet payroll and supplier obligations. Both policies are critical in these days of increased natural disasters.

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“It’s important to talk to multiple insurance providers annually and reassess your coverage,” said Jeremy Hancher, of Widener University’s Small Business Development Center. “Make sure to read the fine print and ask your advisers to offer their thoughts.”

A good disaster plan will include procedures for backing up data; the roles, responsibilities, and contact protocols for employees and stakeholders; and a plan for recovering critical IT systems.

A disaster plan should also take into account the potential injury or death of a key employee or owner.

It’s important to ask, “Who’s going to help lead my business if something happens to me or a partner?” said Nate Schelhaas, head of Principal Financial Group’s business owner segment. “What are the things that I should be doing today to make sure things keep running?”

Bridget Weston, the CEO of business mentorship organization SCORE, acknowledged this can be challenging for entrepreneurs and small business owners.

“They are so busy and so focused on keeping their business going, that sometimes it can be hard to pause and make a plan,” she said. “It’s important to take a step back” and plan for disaster so they can “know what to do right away” if one hits.

Backing up data is critical, including keeping digital records of important documents and photos of valuable items, Hancher said. A backup power source, such as an emergency generator, should also be part of the plan, he said.

“You should also be considering alternative areas to do your business and how your remote employees will continue to do their work,” Hancher added.

Cash reserves, both personally and professionally, are critical in preparing for potential injuries — or even deaths — of key people as a result of a natural disaster.

“Always make sure you have cash on hand so that you can meet payroll and other obligations in the short run before you’re able to put in an insurance claim,” Weston said.

Schelhaas advises clients to invest cash, with professional help, and put life insurance in place for owners and key employees.

“You should also consider disability insurance policies,” he said. “You want to make sure their families are protected, which can also minimize the disruption in your business.”

If a disaster does hit, good insurance companies are prepared. It helps to be familiar with your insurance company’s claim management services in advance.

The Hartford, for example, has a dedicated catastrophe claims organization to identify storm paths and predict which customers will be affected for quicker response.

“Whether it’s windstorms, hail, tornadoes, these storms are year-round now,” said Steve Deane, the Hartford’s chief claims officer, in an online video. When they happen, he said, “It’s the first time for our customers, but it’s not the first time for us.”

If insurance isn’t sufficient, low-interest disaster loans are available from the Small Business Administration. Getting these loans can be complicated for some owners, so it can be helpful to work with consultants like SCORE.

“SCORE mentors are more well-versed in government resources than the average bear,” said Weston. “One of the great things about our organization is that we are members of the community, and have connections and a deeper understanding of local resources.”