At the 2005 Florida Jewelers Association convention in October, speaker Jeff Mills, vice president of claims for Jewelers Mutual Insurance, asked how many attendees had a living will. Almost 80 percent raised their hands. When he asked how many have business continuity plans, less than 10 percent did—despite that state’s high risk for hurricanes.
Yet such a plan, Mills told his audience, is a “living will” for a business and just as important as one for an individual, as many Jewelers Mutual policyholders who filed claims after hurricanes Katrina and Rita now realize. “The biggest lesson they learned, they said, is to be prepared and develop a formal plan for all types of disasters,” Mills says.
Here’s what experts at Jewelers’ Security Alliance and Jewelers Mutual Insurance recommend you do to plan for recovery from a disaster.
Save documents. Keep copies of vital business records, including computer disks, in a safe place, away from work. “This can be done digitally,” notes John Kennedy, president of Jewelers’ Security Alliance. “Today it’s possible to store information at a remote site by computer. You don’t have to physically carry paper copies there.”
“It’s not so important how jewelers back up their computer records, but that they actually do it and can access the data if a disaster occurs,” adds Mills. “They can back up files using floppy disks, CDs [which requires a CD burner], memory sticks, or photocopies. With enough notice for a disaster, some jewelers have even taken their hard drives with them in addition to having backups.”
The storage site should be far from the current location, not the bank next door. If disaster strikes, it might be impossible to reach your store. “A jeweler can lose access to his business or his neighborhood, or the entire neighborhood and business might be destroyed, as with Katrina or 9/11,” notes Kennedy.
What are essential documents? “Records with important information for the insurance company, to help settle the claim, and documentation to get a business running again, such as vendor and customer lists and employee payroll,” says Mills. Basically, explains Kennedy, the criterion is “what information will you need to conduct business from a remote location if all records at your current location are destroyed?”
Such documents include employee, vendor, and customer lists (phones, addresses, e-mail); information on customers who left items for repair, consignment, or on layaway; merchandise on memo; the latest physical inventories and year-to-date printouts of sales and purchases; accounts receivable; current tax records; a copy of the lease; insurance policies, agent, and company (phone, address, e-mail); service providers (accountant, lawyer, payroll vendor, banker); inventory of business property (showcases, desks, computers); a video or photos of your store, inside and out; security vendors (alarm service, safes); and backup disks of everything on your computer.
Also useful, says Jewelers Mutual, is information about cleaning services, contractors, and realtors (for repairs or relocation), as well as shipping companies that serve your business.
Recovery. Before a crisis arises, evaluate your business functions to determine which staffers, materials, procedures, and equipment are essential to renew operations. Consider financial questions, like how you’ll handle payroll (do you have an emergency payroll plan), replace damaged or destroyed inventory (your arrangements with vendors), and how you’ll contact customers.
After a disaster, have a system to account for all employees. (Use those contact lists!) Stay informed about road conditions. Wait until an area is declared safe before returning.
Survey damage to the store. Look for downed power lines. If there’s significant damage, don’t try to turn electricity back on but have a certified electrician check everything and make repairs. Test fire and security alarms.
Make immediate temporary repairs so employees and customers can safely enter the store. Immediately cover damaged doors, windows, and skylights, says Jewelers Mutual, and “assume coverings will be in place four to six months. They should be substantial enough to resist wind and rain and prevent moisture penetration.”
Restore utilities as soon as possible. If necessary, install a temporary generator. Don’t use candles or other open flames indoors. Discard damaged furnishings, including carpets, upholstery, and ceiling tiles.
Get estimates for repairs, which should include a detailed description of work to be done and the cost of each task. Work only with licensed, insured, and bonded contractors. Get references and check with the Better Business Bureau. Avoid contractors who go door to door after a disaster.
Insurance. Contact your insurer or agent as soon as possible. “Preserve, and be prepared to provide, your historical sales records and income and expense information, as shown in recent profit and loss statements or income tax forms,” say Jewelers Mutual documents. “Maintain other business records that may assist in projecting what your profits would have been had your business not been interrupted.
“Close out books as of the date of loss, and maintain a separate record of any sales or operating expenses (such as payroll and payroll taxes, rent, and utilities).”
Take photos of damage to assist the adjuster, before discarding any inventory or equipment. Separate damaged and undamaged items, and draw up separate lists for inventory and/or business property that is lost or damaged beyond repair; damaged, but repairable; or only needs cleaning. Divide the list of damaged inventory into owned, consignment, memo, and customer goods. Describe damage to each item, such as “14k Y/G necklace damaged from showcase collapse” or “water damaged back leather chairs.”
Keep records, including receipts, for extra expenses incurred in resuming operations. Save any paperwork that can help later in claims to document the cost of damaged property, as well as receipts for expenses incurred and items purchased to clean up and resume operations.