By Mike DuBose and Blake DuBose
Disasters can happen to anyone at any time. Both organizations and homeowners learned this painful lesson in the first few days of October 2015, when South Carolina was soaked by record-breaking rains. Seventeen inches fell in parts of Columbia, SC, and up to 27 inches drenched other parts of the state over the course of just 24 hours. Meteorologists referred to the weather as a “1,000-year flood,” meaning that there is a 0.001% chance of such an intense storm occurring in any year.
The sheer volume of precipitation in such a short span had devastating results. Tim Flach reported in The State newspaper that the rains necessitated opening the Lake Murray floodgates for the first time since 1969, releasing about 375,000 gallons of water per minute to protect the earthen dam. Eighteen other dams in Richland and Lexington counties broke, resulting in thousands of businesses, homes, vehicles, and farms being flooded—and in some cases, destroyed. Many people were left homeless, and the Federal Emergency Management Agency (FEMA) issued nearly 10,000 rental assistance vouchers for families to find temporary housing. More than 500 roads (including a 70-mile stretch of I-95) and bridges were closed, and 400,000 families were forced to boil their water when Midlands water systems were contaminated. Losses from the excessive rain and flooding exceeded $1.5 billion, with losses to agriculture (the state’s biggest industry) alone numbering $587 million, according to an article in The State by Cassie Cope.
Johnny Johnson of Power Engineering reported that most commercial stormwater systems are built to accommodate “a ten-year frequency 24-hour duration event. Locally, that is approximately a 5.3-inch rainfall in a 24-hour period with a 10 percent chance of occurring in any given year.” However, several areas near Columbia reported receiving more than three times that amount in 24 hours during the flooding!
At our family of companies, we practice drills for all sorts of emergencies—yet we were unprepared for the flood. When we checked the building the morning of Sunday, October 4, 2015, we were stunned to find several inches of water covering the first floor. It took two months before we were finally able to move back in!
Fortunately, we had flood insurance and the assistance of the right professionals and friends to help us return to normalcy. But we were hardly alone in suffering damage to our businesses, and many others weren’t so fortunate. According to FEMA statistics, 40 to 60 percent of small businesses end up closing their doors completely after a crisis, and of those that survive, only 29 percent are still operating after two years.
Following the teachings of Good to Great author Jim Collins, when failures, mistakes, and disasters happen, we dissect them and trace them back to their root causes to prevent them from reoccurring. We met with staff and experts after the flood to determine what went wrong, what we did right, and what we could do to prevent another six-digit financial loss in the future. Here’s what we learned:
Hope for the best and plan for the worst: Every business needs a disaster management plan.Leaders should assemble their staffs; list worst-case scenarios, liabilities, and threats that the organization could face; determine how those events should be handled; and record it in writing. As part of the plan, establish crisis management teams with clearly defined roles. Practice regularly to ensure that all employees are aware of their responsibilities, especially new hires.
Develop communication protocols: When we realized that our facility had flooded, staff who could reach the building acted swiftly and admirably to help mitigate the damage. But we did not have plans in place to communicate the situation to everyone, so there was some confusion as we sorted out our next steps. To keep everyone “on the same page” when a disaster strikes, include communication protocols in your planning. Designate a way for leaders to communicate about the problem and make necessary decisions promptly. Ideally, set up an 800 number for them to conference call (with a security code) at a certain time so that they can analyze the problem, design a strategy to work together, and assign tasks.
Plan ahead: Listen for news, weather reports, and other hints that trouble is coming. In retrospect, we could have prevented (or at least reduced damage from) the flooding in our building by putting up sandbags and sealing the interior and exterior doors with waterproof tape. Floods are one of the most common emergencies you will face if you are located in the south, so if you are in a low or flood-prone area, consider installing commercial submarine doors to add an extra layer of protection.
Buy a generator: When disasters occur, electricity can go out for extended periods of time—but nearly 75% of businesses do not own a backup generator, according to our research. When power is dead, so are your telephones, your computer systems, and your business’s ability to operate. Vigilantly maintain your generator and other supplies. We owned a generator, but when we rolled it out in the flood’s aftermath, the tires were flat, it had not been cranked on a quarterly basis (as prescribed by our crisis management plans), and it did not work!
Obtain the right insurance: Consider a variety of insurance coverage, including comprehensive, liability, directors and officers, flood, and earthquake insurance. Two years before the flood, Mark Hood of Hood Construction advised us to get flood and earthquake insurance, although other engineers at the time thought it was a waste of money. We are so glad we listened: since then, we have experienced both a small earthquake and major flood.
Your goal is to determine the chances of particular threats and then buy insurance around those possibilities. We meet annually with our excellent insurance agent, Scott Moseley of Irmo Insurance Company, for guidance. Since we have multiple companies, he assembles copies of our various policies into several three-ring binders. We keep one binder at our corporate office and others at our homes, which allowed Mike to determine coverage quickly when the flood occurred.
Study your policies very carefully. We were surprised to learn that while our flood insurance covered the building, there was no coverage for its contents, such as computers, furniture, and supplies...and there was a $25,000 deductible! Coverage varies by insurance agency, so if you experience a disaster, read each line item in your coverage to determine if your loss is considered.
Document damages: Mike, the first person on the scene after the flood, was so stunned and busy communicating with other leaders that he did not immediately take photographs, and some of the water receded from the building and surrounding areas before he could capture the evidence. Fortunately, Blake later videotaped the interior flooding, which not only proved the damages, but also was vital in compiling a list of equipment lost due to water damage. We were also able to provide still photographs of the damaged goods to the insurance adjuster. If the power is off in the building, bring flashlights or use a strong flash to obtain high-quality images.
Another strategy we implemented was having a staff member walk through our 40,000 square-foot facility and videotape all the offices, rooms, and furnishings last year. We stored the video on a flash drive in an off-site safe in case of disaster. This was also helpful in listing losses and proving them to the insurance company.
Determine if the loss is worth reporting: Don’t rush to report a loss until you have had time to assess the damage, reread your policy, and talk to your insurance agent. Insurance companies are in business to make a profit, so they view any policy holder who reports a damage claim as a liability. If you make one claim per year, your premiums usually won’t increase significantly, but if you make multiple claims, your premiums may increase substantially and/or your policy might be cancelled.
If you and your insurance agent agree that your loss is worth reporting after the deductible, do so as early as possible. When adjusters are assigned to document losses, it’s “first come, first served.” Because we were able to communicate with Scott Moseley quickly (within two hours of discovering the damage, thanks to his excellent customer service) and we agreed to submit the claim promptly, we were one of the first clients visited by the adjusters.
Know your electrical system: Locate your facility’s electrical room on high ground—ours, situated in the basement, was flooded. Be wary of electrical currents in a flooded facility since they can be deadly, and know how to cut off the power to the building from the outside. Ensure that breaker boxes are labeled so you know which switch controls different parts of the building. There are some circuits you will want to keep on, like the elevator shaft and those that control telephones, computer systems, sump pumps, and food storage.
Keep valuable supplies and documents off of the floor: When water entered our building, everything on the ground was destroyed, including 16 computers and numerous space heaters, speakers, power backups, and surge protectors. Water even seeped into our expensive fireproof safes, ruining important documents. Keep electronics elevated, and back up valuable information electronically. If your facility or home is flooded, move electronic devices (even those that were not touching the ground) to a drier location promptly since the moisture in the air can cause damage.
Salvage whatever items you can: If your office is flooded, move any furniture you plan to save to another location or prop the items up on non-porous elements out of the water so they can dry out. Most office furniture is made from pressed particle board and it acts like a sponge, so act quickly. Take pictures before throwing out damaged items for insurance purposes. Leave more expensive items (like computers) in storage so the adjuster can see them in person. Also, if discarding computers, remove the hard drives, which may contain sensitive information.
Back up your data: According to a New York Times article by Jennifer Walzer, “The most common business disaster is data loss, which can result from a number of causes including human error, hardware failure, natural disaster and theft. Fortunately, data loss is easy to recover from if you have a backup solution in place.” With most companies relying heavily on computers for daily business needs, it’s vital that companies work with competent web and technology companies to assure that, in the event of a disaster, access to data and technology systems can be restored almost immediately. As Ryan Scott reported in Forbes, “Companies that lost their information technology for nine days or more after a disaster can, unfortunately, expect a greater chance of bankruptcy within a year.”
Two years ago, Blake instituted a data backup system that stations all of our companies’ information (e-mails, company files and data, software, telephone infrastructure, etc.) in the Cloud. After finding their offices completely flooded and their computers destroyed, DuBose Web Group team members quickly moved into alternate office locations, purchased new hardware, and retrieved their files and software from the Cloud. Amazingly, they were fully functional the next day after the flood! DuBose Web Group had also developed a triple backup system in multiple locations across the country, so none of the 100+ websites belonging to its clients went down as a result of the flood.
Contact disaster mitigation companies quickly: Most disasters, especially flooding, require the expertise of experienced professionals to safely repair the damage. Create a list of emergency contacts in the event of damage to your facility so you can get in touch with them immediately. Most of these companies operate on a “first come, first-served” basis, so you want to get in line as soon as possible. We promptly communicated with Chip Huggins of Duraclean, and his crews (who did a first-class job) were on our site within hours.
Line up contractors as soon as possible: After the disaster mitigation company works on your building, you may still need additional renovations to restore it to working condition. Unfortunately, there are many “fly-by-night” companies and con artists from other states who will swoop in after a disaster and charge exorbitant prices to make repairs. If time permits, obtain bids from multiple providers. Develop a payment plan with your chosen vendor based on milestones; never pay everything up front.
Demand will be high, so it may be hard to locate quality companies that charge reasonable prices to make needed repairs. Try to develop relationships with reliable contractors before you need them, so you can contact them as soon as disaster strikes. We were fortunate to work with Bryan Clifton of Clifton Custom Homes, who did a professional job in sheetrock repair and painting, and Chip Bagnal with Carpet One, who provided excellent carpet and flooring repairs. Both individuals went the extra mile to provide us with invaluable guidance based on their experience in construction and disaster repairs.
Apply to FEMA: If located in a federal disaster area, your home and business may be eligible for FEMA assistance. Unfortunately, FEMA could not help many Columbia businesses financially except through low-interest loans. Those who need loans, however, can enroll in the FEMA program online and receive help from the Small Business Administration.
Centralize expenses: Designate one person to collect and coordinate bills, which will be coming in over the course of months. This will help you stay organized and provide a total picture of the damage that can be used for insurance claims.
Prepare for your insurance adjuster’s visit: If you report a loss, your independent agent will communicate with your insurance company, which will dispatch a third-party, certified independent adjuster (often from another state) to assess the damage and file a report. Their job is to not tell you if the items are covered or how the insurance company will treat the situation, but to give the insurance company their professional opinion of the cause of the disaster and the value of the losses. Be sure to obtain a business card from the adjuster and begin a disaster file with all communications, etc.
Prior to the adjuster’s visit, make a table in Excel or Word that includes estimated date of purchase, original cost, manufacturer, model number, and replacement cost for each damaged item. If you have purchased replacements, include the receipts. Present the list and color photographs of all the items at once to the adjuster in both hard copy and electronic formats. We also gave the adjuster building plans of the damaged area with dimensions of each room and hallway. If you have multiple policies, study them carefully since some may have limits of coverage (you don’t want to claim too much on one policy and not enough on another one) and avoid duplication.
Truthfully describe what happened, but avoid analyzing how the loss occurred unless it supports the policy language. Use only the exact language from the policy to describe the event. One person should serve as the point of contact with adjusters; tell other staff to avoid communicating with them since differing accounts may void a claim.
Remember that the adjuster is human and treat him or her with respect, courtesy, and friendliness. Respond promptly when they ask for additional information (we suggest that you both fax and e-mail the information) or try to schedule an on-site visit. Because adjusters are swamped with cases, most will not respond promptly; your insurance agent can help you communicate with them. Making their job as painless as possible with good documentation will help expedite the process. It usually takes 60 to 90 days before the claim is paid, so don’t wait on the payment before beginning repairs.
The bottom line: Weather experts say it’s unlikely we’ll experience another flood of this magnitude in our lifetimes, but who knows when a different disaster will strike? Earthquakes, fires, computer hackers, lightning strikes, winter storms, thieves, and tornadoes are all within the realm of possibility, so it’s smart to “hope for the best and plan for the worst.” As Ben Franklin once said, “An ounce of prevention is worth a pound of cure!”
About the Authors: Our corporate and personal purpose is to “create opportunities to improve lives” by sharing our knowledge, research, experiences, successes, and mistakes. You can e-mail us at [email protected].
Mike DuBose, a University of South Carolina graduate, is the author of The Art of Building a Great Business. He has been in business since 1981 and is the owner of Research Associates, The Evaluation Group, Columbia Conference Center, and DuBose Fitness Center. Visit his nonprofit website www.mikedubose.com for a free copy of his book and additional business, travel, health, and personal published articles.
Blake DuBose graduated from Newberry College’s Schools of Business and Psychology and is president of DuBose Web Group (www.duboseweb.com).
Katie Beck serves as Director of Communications for the DuBose family of companies. She graduated from the USC School of Journalism and Honors College.
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