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Extreme Weather Blows Ill Wind for Small Businesses
 

By Kathy Gurchiek  7/31/2013
 

Small organizations are particularly vulnerable to climate change and extreme weather, but they can take steps to mitigate those risks, according to a report by the Small Business Majority (SBM) and the American Sustainable Business Council (ASBC) released July 25, 2013.

The report defines small businesses as those with 50 or fewer employees and notes that the Institute for Business and Home Safety estimates that 25 percent of small to midsize organizations do not reopen following a major disaster such as a hurricane or flood.

The National Economic Council estimates about 60 million Americans are employed by small businesses—nearly half of the U.S. workforce.

Unlike large organizations, “small businesses tend to operate out of a single physical location. … [I]n fact, 90 percent of [them] get the majority of their business from within two miles of their front doors,” said Lea Reynolds, report author and senior policy analyst at M.J. Bradley & Associates in Boston.

This makes them more susceptible to economic loss and lasting damage from technological or telecommunications failures, employee absences, power failures, and rising insurance costs, she added.

She noted that a lot of small businesses, many of which consist of only a few people, have not been able to engage in any kind of careful risk management analysis; in fact, 57 percent have no disaster recovery plan. Among those that have continuity or risk management plans, 90 percent spend less than one day a month preparing and maintaining them, according to the report.

Reynolds was among the speakers at a press conference that focused on the following six case studies of small U.S. businesses:

  • A hotel group along the Eastern Seaboard that is concerned with coastal flooding.
  • A cattle ranch on the California coast dealing with drought and water scarcity issues.
  • A Brooklyn, N.Y., manufacturer that was severely impacted by Hurricane Sandy.
  • A landscape architecture firm in Omaha, Neb., responding to increasingly hot temperatures.
  • A Massachusetts roofing business focused on urban storm water management.
  • A Charleston, S.C., retail store planning for sea level rise.

The case studies conducted from October 2012 to July 2013 featured businesses that are ASBC or SBM members.

Weather-Related Strategies

Climate change and extreme weather are beginning to influence business decisions at The Saunders Hotel Group, said Tedd Saunders, chief sustainability officer at the third-generation Boston-based business.

Boston is prone to storm surges and flooding, and he’s concerned that storms will become more frequent and more severe. If that happens, “It’s really going to have a drastic impact on the financial conditions of our company,” he said during the press conference.

When Hurricane Irene hit in August 2011, it cost his company more than $5,000 in guest refunds. Damage from Hurricane Sandy in October 2012 totaled nearly $34,000 in lost revenue, including property damage, cancellations and refunds. These storms caused weeklong power outages and had “major, major impacts, certainly to that month [they occurred] and to the hotel in general,” Saunders said.

His company has had to decide whether to spend time and money retrofitting properties against catastrophic events by installing retaining walls, for example, to protect expensive equipment housed in basements from flooding.

Big Muddy Workshop Inc. in Omaha was hit by record flooding of the Missouri and Platt rivers in 2011 and suffered the onset of a drought in 2012 that continues today.

President and CEO John Royster incorporates storm water management into the company’s climate preparedness plan. He also invests in his employees’ education to better equip them to deal with the aspects of climate change by providing training on how to incorporate infiltration trenches and rain gardens when working with clients.

The report suggests that collective action by small businesses to reduce their vulnerability “could have an enormous impact on insulating the U.S. economy from climate-related risk.” It recommends the following strategies that owners can adopt to minimize losses from extreme weather:

  • Identify a business continuity plan.
  • Partner with local authorities, including public utility commissions, chambers of commerce, city planning commissions and state agencies’ environmental protection departments.
  • Use education and outreach to raise awareness of the potential effects of extreme weather conditions on small businesses.
  • Issue a call for action across local, state and federal levels.

In June 2013, small-business owners addressed the impact of extreme weather and climate change when they, along with the ASBC and the Business for Innovative Climate and Energy Policy, met with lawmakers in Washington, D.C., during Small Business Week. At that time they also signed the Climate Declaration, which calls on U.S. policymakers to address climate change.

Kathy Gurchiek is associate editor for HR News.

Related Article:

Time to Prepare for Hurricane Season, SHRM Online Safety & Security, June 2013

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