Skip To The Main Content

When bad weather strikes, this is what business owners need to do

p28_business-continuity_getty-detail

It is a cliché that the British only ever talk about the weather, but when it comes to business we have good reason to do so. When it turns nasty, the weather could put a small company out of business. If you work somewhere that has never been affected by severe weather, you might think this is not your concern. 

But you could be wrong: indirect consequences of severe weather, such as power cuts, staff being unable to get to weather? The work or suppliers being unable to deliver can be just as disruptive as direct damage to your premises. 

Remarkably, two-thirds of the smallest businesses in the UK have been negatively affected by severe weather events during the past three years, according to research published by FSB last year. Even more worryingly, the average cost of these events was £7,000. But 46 per cent of the 1,199 small businesses questioned, most employing no more than 10 people, had taken no action to manage risks related to severe weather; and only 25 per cent of 
microbusinesses have a resilience plan that specifically includes severe weather. 



“Few small businesses have a resilience plan of any kind, let alone one that deals specifically with severe weather,” says Allen Creedy, Chair of the Energy and Environment Committee at FSB. Business owners with no contingency plans will have to hope this winter is not a repeat of 2013-14, the wettest since UK-wide records began, when more than 3,200 commercial properties were damaged by flooding and/or storms. 

Counting the cost

Nor is it just the immediate aftermath of an incident that can be problematic. When storms damaged power lines and telephone lines in Berkshire, ValueMAxess, a consultancy serving the pharmaceutical industry, was left without power for 24 hours, and without Internet or phone services for four weeks. Owner Andreas Guhl had to rent an office during this period, adding to operational expenses.

Once the problem was resolved, he put in a claim for compensation, based on costs incurred and lost earnings. At first the telecoms provider offered him £13, then, after he complained, around £100. 

He then launched legal action. Two days before the hearing, it paid him the full amount claimed. “Don’t be shy,” he says. 

“Take those guys to court.” Mr Guhl has now relocated to Northamptonshire and put arrangements in place to use rented offices in Northampton or Milton Keynes if necessary. 



Are severe weather events becoming more frequent, possibly as a by-product of climate change? In October, Mark Carney, Governor of the Bank of England, in a speech at Lloyds of London, warned climate change poses a huge risk to global stability. He said the number of registered weather-related loss events had tripled in 30 years. But Carney was talking on a global scale. Are severe weather events occurring more frequently in the UK? “I’m not sure they are,” says Andrew Morrish, Claims Operations Director at Aviva, although he says his firm watches such trends closely. “But even if it’s not a catastrophic, wide-ranging event, for any individual business major weather events can be a catastrophe.”

 

Action plan

What can small businesses do to protect themselves? Simply keeping up with weather forecasts can help – the Environment Agency provides a free flooding-alert service for firms (and homes) at risk of flooding, with warnings sent by phone, email or text. According to FSB’s research, more than one in five businesses (22 per cent) based in flood-risk areas were unaware of this service last summer. FSB also recommends that small companies produce a resilience plan covering the potential impacts including on their supply chain, and consider how easily staff could work remotely if necessary.

Resources are available to help a small firm create a continuity plan, but they vary in quality, says Mr Creedy. “We’re trying, with Government, to set up a one-stop shop, where businesses can get a resilience-plan template, good insurance and advice.” 



It’s important to develop a strategy that suits the needs of the company, says Mark Nicholas, Managing Director of Easy Continuity, a business continuity product and service provider. 

“Look at risks that could render your building ineffective. You need recovery options for buildings, staff and IT.” You also need to have a plan in place that will help you communicate with staff, customers and business partners in the event of an incident. “Customers are more likely to react sympathetically to a disrupted service or a closed facility if they know what’s going on,” says Tim Morris, Director of Marketing at emergency communications technology provider Crises Control.

Take cover

The other key precaution is to ensure you have all the insurance you need. In November, the Flood Re initiative, which helps homeowners at risk from flooding find affordable flood insurance, came into force – but there is no equivalent for small businesses. More than half (52 per cent) of small firms based on flood plains do not have flood insurance, with 9 per cent reporting difficulties in finding cover, and 6 per cent having been refused, says FSB. It is asking the Government for measures to ensure small businesses can access affordable flood insurance. 

Meanwhile, firms finding it hard to get cover should contact brokers who specialise in obtaining it even where there have been previous flooding losses, says Martin Bridges, Technical Services Manager at the British Insurance Brokers’ Association (BIBA). “Our members understand the risk associated with an individual business, and the measures they have taken to reduce the effects of flooding,” he says. 

“The broker may also have details about the likelihood of flooding that they can share to obtain better terms.” In addition, business-interruption insurance can compensate businesses for any reductions in profit and increases in operating costs caused by a business interruption. But only 46 per cent of small firms have this type of insurance in place, according to FSB. If you do buy it, check the small print. The 2013-14 floods left Oxford Ironmongery, an architectural ironmongery firm, unable to reach its premises and serve customers for five days, even though the premises themselves were not flooded. Managing Director Julian Newman put in a claim on his business-interruption insurance for five days’ worth of profit – about £2,500 – based on average takings and outgoings over the previous three years.
 

The insurer’s loss adjuster recommended that the insurer offer the firm just £47.
“I got in contact with the local media,” says Mr Newman. “The television interview went out at 6.30pm on a Tuesday evening, and at 6.35pm I was having a phone conversation with the head of the insurance company.” The insurer subsequently improved its offer. No one wants to be forced to put the strength of their insurance policies to the test or end up in lengthy media or legal battles. For most small businesses, the priority should be to take reasonable precautions and think of how any impact can be mitigated, should something unexpected strike. As the old phrase goes, forewarned is forearmed.

 

How to plan for severe weather

Create a resilience plan that covers the potential impacts of severe weather on your business and your supply chain

Investigate the level of flood risk you face and sign up to the Floodline Warnings Direct service (www.gov.uk/sign-up-for-flood-warnings)

Plan for staff to be able to work remotely or from home if necessary

Consider additional continuity arrangements

Make sure you have insurance that is appropriate to the risk you face. You can get free insurance-related advice from FSB Insurance Service (www.fsb-insurance-service.co.uk/)

Case Study - Alight buoyant again after floods 

Amante Witherick runs the Alight Balloon Company, creating decorative products (pictured) for weddings, corporate events and similar occasions, from a large garage workshop next to her house in the Somerset village of Moorlands. 
When the 2013 floods struck, she expected the house and garage to be flooded, so she moved some stock and equipment to higher surfaces. But the floodwaters rose to a height of 1.5 metres and stayed there for weeks, wrecking the family home and the garage workshop. 

Ms Witherick lost thousands of pounds-worth of stock, equipment and personal belongings. She now believes she could have saved more, but at the time felt unable to do so. “It’s so overwhelming – with everything devastated, you go into this sort of numbness,” she says. “I didn’t answer emails for about a fortnight, so I lost a lot of business.” The family home and garage have now been refurbished, and the company is thriving again. A government grant for domestic flood defences has funded the construction of a new wall that should offer the property more protection. If she were flooded again, the main thing Ms Witherick would do differently would be to act more quickly to move items into storage facility, and keep trading from there, she says.