It has certainly been a year of unusually challenging weather throughout the country. Between incredible snowstorms, severe tornadoes, and excessive amounts of rainfall, many businesses have been impacted in unprecedented ways. HSN just reported that their first quarter earnings were down partially due to the severe weather. Several of my Vistage members in Florida also faced unanticipated demand reductions this winter due to the snowstorms up north. Weather issues impacted transportation, and many of their customers were unable to ship their products up north, causing delays and reduced demand for my members’ products and services. Additionally, people were snowed in for days at a time, reducing purchases and productivity since they could not get to work.
Just this week, one of my Vistage members reported that they had to shut down one of their offices for a day due to the severe flooding and road closures in the Florida Panhandle. Business may be impacted for several more days as damage is assessed. Thankfully none of my members’ employees were harmed in any of the severe weather events. However, business cash flow and profitability have been negatively impacted due to weird weather. What is a leader to do?
First, make sure you have the appropriate insurance policies in place. Talk to your insurance agent to make sure to have business interruption insurance in addition to coverage for property damage or loss. While it will not cover the indirect reduction in demand for some of my members, if your business is directly impacted it can provide a valuable safety net. Second, you should build contingencies into your business plan. Make sure your net profit margin isn’t razor thin in the first place so that you can handle unexpected downturns. And make sure you have appropriate lines of credit available to help you manage cash flow through unanticipated situations. Third, a disaster preparedness plan is crucial for longer, more severe disruptions. Do your employees know what to do? How to communicate with you and one another in case phone lines are down and electricity is unavailable? How often do you revisit and update the plan?
As a leader, it’s our job to deal with unanticipated situation. The best leaders plan for the unexpected.