Septembers and Octobers
Volume 11, Number 40
Issue 536
Septembers and Octobers have been difficult for at least three out of the last four years.
In September/October 1999, most entrepreneurs were finally starting to get “psyched-up” about Y2k. September/October 2001 are a blur for most of all of us because of September 11th. Here in Virginia, October 2002 presented the fact that there were snipers roaming the interstates in Maryland and Virginia and that came very close to home over the days of October 18th to 20th when they came to the Richmond area. Now, central Virginia is still getting over the effects of Hurricane Isabel where, at one point on September 18th, 94% of people and businesses had their electrical service interrupted--most for days.
For years I have advocated that entrepreneurs should constantly play the “what if” game as an approach to disaster planning. What if there was a national security threat that could cause your customers and employees great alarm? What if there was local criminal activity that could cause your employees to be severely distracted from their day-to-day routines for a period of a week--or more? What if there was an environmental catastrophe that disrupted electrical service for over a week for most people and closed the schools and many roads for days? What if _______ (you fill in)?
An interesting e-mail arrived the Thursday afternoon of the Hurricane that I read just before my own power went out at about 3:00 p.m. Ward and Patti at Chop Suey Books in Richmond were announcing a “Hurricane” promotion stating that they would be at the store as long as possible no matter what. In the nautically-themed e-mail, they gave funny titles to each employee such as Captain, First Mate and Mascot. I caught up with Ward and Patti ten days after the storm and although they still didn’t have power at their own house, the store was open and had never missed any of the posted store hours. Ward and Patti realized that people would want to buy books in the power outage. They were right.
A few streets away at Black Swan Books, Nick and Ellen Cook never missed a beat either. They knew that their employees, Mike, Rebecca and Melody, depended on them for their livelihoods and that they must be open. Even though Nick and Ellen suffered some great personal losses in the storm, they were there for both their walk-in and mailorder customers. Nick and Ellen realized that the hurricane was a local event and not really an international event. Orders would still come in over the Internet for their rare and collectible books and that they couldn’t get behind in filling and shipping orders. Often unshowered and unshaven (like the rest of us), they kept their store and shipping department open--no matter what--just like successful entrepreneurs would do.
It has been very interesting recently watching the entrepreneurial activity surrounding our massive power outages. Some restaurants let their food spoil in the freezers and while the successful ones cooked it on grills in the street as soon as the storm was over and sold meals for $2 to $4. When our water systems failed because of the lack of electricity, some restaurants closed while the successful ones served canned and bottled drinks after the managers had frantically searched the stores and discount clubs. A story appeared in the newspaper that related a story about how the managers of some adjacent downtown restaurants met in the street about noontime and pooled their resources to locate paper plates and paper cups and napkins so that dinner that night could be served. In short, the successful restaurants realized that with or without their own power that there was a significant market to be captured of about 1,500,000 people who didn’t have power at their own homes who would get in the car and go out in search of a hot meal.
When I went out at 7:00 a.m. the Friday morning after the storm to make it to our headquarters building to see if it was still there (no surrounding buildings or trees to buffer the wind--we are completely isolated), I saw other business owners doing the same thing. As I drove, I wondered if I would need to open the back-up facilities that I had put in place years ago in preparation for a fire or other disaster. I had leased office space miles away and have been storing the “second class” furniture and computer equipment there in case my main offices would ever get destroyed. I had done this because I had a colleague lose everything in an office fire--he never did get his business re-established. Fortunately Ivymont was okay; basement flooded, but okay considering what might have been.
But what if my offices had been destroyed? I would have instituted the disaster plan. I had a copy with me during the storm--a little book of names and phone numbers and codes. Rob and I had backed-up our computer systems and I had the disks with me. What was left of the paper files would have been secured immediately and moved to the back-up office 20 miles away--it’s there waiting to be entered, sort of like the Government’s complex at the Greenbrier. I’ve taken the time to set-up a back-up office that is gathering dust just in case I ever need it. As a professional, I shouldn’t miss a beat. I can burp and hic-up, but I can’t be down and out for long.
Early that morning, I checked in with each employee and made sure that they were safe--one had left town and another made sure to have a phone that worked; they were okay. The employee that I couldn’t get in touch with got a visit from me personally--I found them fixing breakfast in their front yard on the gas grill. Then the calls started from the clients and I realized how devastating and traumatic Hurricane Isabel was. I have fielded many, many, many calls from my individual clients about whether or whether not storm damage is deductible on tax returns. Business owners wonder if storm repairs are deductible and if equipment to prepare for the “next time” is deductible.
Entrepreneurs need to play the “what if” game often. Entrepreneurs need to visualize the need for a disaster plan. Yes, “back-up plan” expenses are almost always deductible as long as they are reasonable. If you are an entrepreneur who wants to “win” and be ready for whatever September/October 2004 (or even tomorrow) brings us, visualize and write a disaster plan now and buy and/or put in-place whatever equipment you need.
David B. Robinson, CPA
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