Emergencies are not a matter of if, they are a matter of when. That’s why business owners need to know how to financially prepare for emergencies.
In the wake of Hurricane Irma, I’ve seen a lot of business owners freaking out. They lost money due to not being open. They are learning that their insurance policies don’t cover certain types of damage. They are realizing what a pain in the behind emergencies can be to a business.
Here are some of the ways business owners can financially prepare for emergencies of all kinds.
Have a hefty savings account.
I’ve made the argument as to why business owners need to have large savings accounts. Seeing what many business owners are going through post-Irma, I’m going to repeat it again.
Business owners can’t rely on a paycheck hitting their bank account every two weeks. If they aren’t working, they aren’t making money. If a hurricane takes you out for a week or longer, you’ve lost a lot of money.
Bills do not stop because of a hurricane. While your mortgage company may give you a short forbearance (and that’s a big maybe), other service providers probably won’t. The truth is we’re often on our own financially after emergencies and that’s where savings can help.
Know what your insurance policy covers.
There are certain types of businesses that require things like commercial insurance or business interruption insurance. Usually, it’s brick and mortar businesses or businesses that require equipment and inventory.
One thing I see happening often is business owners not knowing what their insurance policy covers. One friend found out that the roof damage to her yoga studio isn’t covered by her commercial insurance policy. Other friends have been getting runarounds.
In order to financially prepare for emergencies, business owners need to do two things as it pertains to insurance. First, get the right kind of coverage. Second, know what the process is like after an emergency hits. Many friends are now on the hunt for public adjusters to help them assess damage and file claims.
Set up systems before emergencies strike.
When it comes to the post-Irma business loss lottery, I consider myself pretty lucky. I can work from anywhere so long as there is internet. I don’t need to worry about property damage. I can also pick up right where I left off.
I was pretty conscious of these things as I was building my business. Hurricanes are a fact of life in Florida, and I wanted a business that allowed me to make money as quickly as possible after an emergency.
Additionally, I’ve been working hard this past year to scale my business and implement systems. For the most part, I get paid online. My entire team is also virtual. My group coaching program launch brought in almost five-figures in July. And finally, I’ve built in some forms of passive income over time.
This means I have money coming in even though I may not have been able to physically work for a few days. It also means my rent is covered. Had I been dealing with a hurricane four years ago, I wouldn’t have been so lucky.
Business owners need to financially prepare for emergencies before they happen. This means saving money, getting the proper insurance if necessary and finding ways to make money no matter what.