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Many businesses unprepared for weather disruptions


May 13, 2014
By Canadian Garden Centre & Nursery

May 14, 2014, Toronto — More than one-third of all small business owners
don't have contingency plans to help their businesses weather whatever
storms Mother Nature sends their way.

Despite the rash of severe weather incidents that have shut down
Canadian businesses for anywhere from a few days to several weeks, 35
per cent of small business owners are unprepared to deal with
weather-related work stoppages, according to a survey from CIBC.

The
survey found that one in 10 small business owners have experienced a
business interruption in the past 12 months. These owners cited weather
as the main culprit for the disruption, followed by illness or personal
reasons of the owner.

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Entrepreneurs in two provinces hard hit by major storms – last
summer's floods in Alberta and ice storms in Ontario this past winter –
are now rethinking their financial preparedness. Approximately 38 per
cent of small business owners in Alberta and 23 per cent in Ontario are
re-evaluating their business interruption plans.

But unlike those
in Alberta and Ontario, just five per cent of small business owners in
Quebec say they are rethinking how they'd cope if a natural disaster
impacted their business.

"While more small business owners are thinking about contingency plans,
the reality is most need a plan in place to ensure they can withstand
business interruptions without draining their personal savings," said
Shelley Swanlund, vice-president of business banking and head of small
business for CIBC. "It is important to have options such as access to a
line of credit, or savings within the business, to tide you over during
any interruptions."

Overall, 26 per cent of business owners plan
to use cash reserves, lines of credit or loads, or personal savings to
help them get through times of business interruptions, while 20 per cent
plan to use credit cards or insurance.

"We recommend small
business owners speak with their advisors and build flexibility into
their plans to help them see through any cash flow interruptions," said
Swanlund.

To help businesses prepare for interruptions, CIBC offered up the following tips:

  • Have a business interruption plan:
    Small business owners should assess the impact of potential business
    interruptions. Review risks such as the length of time you can operate
    without revenue, then build a plan to manage the risk. Your bank can
    help, working with owners to help them plan for challenging times and
    explore the options available, such as access to a line of credit with a
    sufficient limit to address any impact to cash flow.
  • Build flexibility into your plan:
    Natural disasters and other unexpected impacts can catch small business
    owners off guard. Be sure your business can withstand these impacts by
    having a flexible and forward-looking contingency plan to ensure your
    cash flow, sales, service and savings are protected. Work with your
    advisor to explore options, such as routinely setting aside a small
    amount of cash towards a savings account.
  • Monitor your plan on an ongoing basis: If
    any business interruptions could have a significant impact on your
    business, be sure to continuously monitor the environment and make
    adjustments based on changes in your business needs. In the event that a
    business interruption occurs, be sure to keep your business advisors
    informed. Many financial institutions are prepared to work with their
    clients during unexpected interruptions, particularly if they are
    engaged in understanding the impact.


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