Although extreme weather events like Hurricane Sandy and Winter Storm Nemo, the massive blizzard that recently paralyzed the northeast U.S., appear to be occurring more frequently, small retailers and e-tailers say they are unprepared for natural disasters—even though repercussions such as lengthy power outages could sink their businesses.
Nearly three out of four small business owners do not have disaster recovery plans, and 84 percent do not carry natural disaster insurance, according to a survey of SMEs conducted by e-commerce companies Alibaba.com, Vendio and Auctiva.
Carried out in December in the wake of Hurricane Sandy, the survey polled 600 small retailers, most of them selling goods and services online.
Because they depend upon computers and Internet access, e-commerce companies are seen as particularly vulnerable to power cuts and network service disruptions. More than 8 million homes and businesses lost power during Hurricane Sandy, recently determined to be the second-costliest storm in U.S. history.
Yet 71% of survey respondents said their businesses lacked a back-up generator that could be used in case of electrical outage. Some said they would be forced to close down if storm damage was “severe.”
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Survey participants were not asked why they had no contingency plans for coping with natural disasters. It’s reasonable to assume not all are fatalists. A more likely explanation is that most small businesses are hard pressed to shoulder the costs of maintaining back-up systems or paying for insurance. Many of the respondents were home-based companies with fewer than five employees, although small companies running warehouses and small bricks-and-mortar shops also participated.
Lack of awareness could also account for complacency. Slightly more than three out of four respondents said their businesses had never been affected by a natural disaster.
Still, 15% of businesses surveyed said they were in the process of drawing up disaster recovery plans. Many others clearly had given it some thought. About two out of three respondents said that even if disaster strikes, they believed they could run their businesses from mobile devices such as a tablet computers as long as area cellphone service or wi-fi is available. About 30 percent said they expected to be unaffected because their business information is stored in the cloud, meaning mission-critical functions were managed on remote servers that would likely be beyond the reach of regional disruptions.
Other findings from the Alibaba 2013 Small Business Disaster Preparedness Survey:
- 70 percent of respondents said they felt vulnerable to natural disasters.
- 23 percent said their IT systems/assets are onsite.
- If hit by a natural disaster, 42 percent would try to rescue products, inventory or office materials.
- 37 percent of respondents are not sure how long it would take them to return to “business as usual” if disaster struck. One-third said one week, while 16 percent said two weeks.
- Asked how they would communicate with customers during a disaster, 86 percent said by e-mail; 42 percent said phone and text messages; 27 percent said through their website; 22 percent said they would use Facebook (Twitter 8 percent; Google+ 5 percent, and LinkedIn 4 percent).
- Asked what creative tactics they would use to maintain sales and preserve relationships during a disaster, the top 5 responses were: 1) Communicate closely with customers on the status of the business and product deliveries. 2) Start an online disaster discussion group to provide help and advice. 3) Give discounts or free items for those affected. 4) Eliminate shipping costs. 5) Donate a percentage of sales to disaster relief efforts.
Has your business been hit by a natural disaster? Tell us about it by commenting on this article.