In the wake of a disaster, a business is likely to suffer from a reduction of revenue, until the normal business climate returns. In some cases, the normal business climate may take years to return, and the loss of business will be prolonged. The loss of business can be insured against to some degree, but there are also systemic steps that can be taken to mitigate the damage. Having a low debt level can help a business to survive a post-disaster slowdown, because the business will still be able to meet its financial obligations even with reduced revenue streams. Diversification, in particular geographic diversification, can help as well. A small restaurant operator with three restaurants in Miami is more susceptible to business failure post-hurricane than a restauranteur with three locations spread between Miami, Tampa and Orlando, since any given hurricane will only close one restaurant in the group instead of all three.
Within a single small town, there are also steps that can be undertaken. All of the businesses in the town are likely to suffer in the event of a disaster. The businesses or the Chamber of Commerce could, however,...
Even if insurance can cover the damages, and the company has taken steps to mitigate those damages in the first place, a disaster is likely to suppress demand. Small businesses need to have funds set aside, revenue streams from outside the area or insurance to cover a slowdown in business resulting from a natural disaster in order to best survive such an adverse occurrence.
Works Cited:
Accenture. (2010). Business continuity and disaster recovery planning. Accenture. Retrieved November 27, 2010 from http://www.accenture.com/Global/Technology/Technology_Consulting/Security-Solutions/Services/ContinuityDisasterRecover.htm
Momani, N. (2010). Business continuity planning: Are we prepared for future disasters. American Journal of Economics and Business Administration. Vol. 2 (3) 272-279.
