Hurricane Katrina: Finding Out What 'Worst-Case' Really Means
After Hurricane Katrina, New Orleans solution providers including Tony Romanos, senior vice president at Louisiana Technology Group, were among those who would find out what "worst case" actually meant.
Louisiana Technology Group was a $5 million company prior to Hurricane Katrina, but revenue dropped to just a couple of hundred thousand dollars a year after the storm, Romanos said.
"2006 and 2007 was a learning curve for us," he said. "We had good employees but, especially after Katrina, we could not guarantee jobs to anybody, not even ourselves."
Louisiana Technology Group was wholly unprepared for the devastation wrought by Hurricane Katrina, as was almost every other business in New Orleans.
In the years since Hurricane Katrina, many businesses still aren't prepared. According to a Wells Fargo/Gallup Small Business Index survey, only 31 percent of small-business owners believe their companies are "extremely prepared" or "very prepared" for a disaster. Just as troubling, up to 40 percent of businesses that experience a natural or manmade disaster will not reopen their doors, according to the Insurance Information Institute.
Both numbers draw the same unsettling conclusion: Businesses are at risk if they aren't prepared to handle an emergency situation.
According to Agility Recovery Solutions, 90 percent of small companies spend less than one day per month preparing and maintaining their business continuity plans. Here are the third and fourth tips to make sure your business is prepared for any disaster.
NEXT: Safeguard Your Supply Chain No. 3. Safeguard Your Supply Chain
All businesses should calculate the cost of business interruptions in varying degrees: a day, a week, a month, six months, according to the Small Business Administration. Knowing that information can help a company identify an appropriate business continuity policy.
In that regard, Louisiana Technology Group did not calculate the cost of losing business and suffered more than physical damage when it also lost some of its own suppliers, including its ISP and e-mail provider.
The provider's building had partially collapsed and water had destroyed the first-floor data center, leaving Romanos without a website or a way to communicate.
"Techwise, we were a small business. We had to start from scratch. Whatever we had on laptops, that was the only thing left," he said.
Louisiana Technology Group rented a virtual server and slowly started to pick up and assemble the pieces.
"We kept everything centralized. We started copying over documents, QuickBooks, contracts, everything we had," Romanos said.
But contracts weren't worth the paper they were written on because the customers were gone.
The key to survival, Romanos said, was leveraging the skills that had gotten it this far and evolving the business to meet the new market dynamics.
Romanos' wife bought most of the shares belonging to his former partner, who had left the business after Hurricane Katrina, and became president. Leveraging its status as a woman-owned small business, Louisiana Technology Group acquired a GSA schedule and went to work with Oracle, Hewlett-Packard and EMC to target federal customers and prime contractors.
Romanos also hired an office manager who became director of operations and had some government contracts. The company expanded its reach into Maryland and Mississippi as well, where more business was available.
It took about three years, but the solution provider started winning deals with federal agencies and in 2009, Louisiana Technology Group reached $10 million in revenue, double its peak before Hurricane Katrina.
"It's going to sound like a stupid cliche, but we never stopped believing. We just pulled it together, even while everything was crumbling," Romanos said.
Solution providers should at least be wired for two ISPs should something happen to one, said Mike Semel, vice president and chief security officer at Business Continuity Technologies, a Las Vegas-based solution provider.
"Get firewalls that have the WAN ports and get two providers. In Vegas, we have CenturyLink and Cox. It's unlikely something would take both of them is out. Wherever you can, have redundancies," said Semel, who holds several industry business continuity and security specialist certifications and speaks to more than 100 solution providers annually regarding business continuity.
Safeguarding your supply chain means making sure there are no single points of failure, Semel said. "Those are things you have some control over," he said.
In addition to two ISPs, solution providers -- and all businesses, really -- should have multiple supplier relationships to ensure continuity, he said.
"It makes sense from a business standpoint and that extends to business continuity to have multiple relationships," Semel said. "Some of the issues people run into are with certain products that you kind of marry yourself to in this business, like firewalls. Most businesses take a firewall and stick with it. Even PC and server [vendors] are more interchangeable than firewalls."
NEXT: No. 4. Create A Crisis Communications Plan NEXT: No. 4. Create A Crisis Communications Plan
As a crisis unfolds, it's important to have a strong communications plan for employees, customers, vendors and contractors to know what's going on, according to the SBA.
It's wise to keep a current phone tree handy and create a password-protected Web page to update the public about your company's status both in the midst of the emergency and during the recovery phase.
Also, business owners should have access to primary and secondary e-mail addresses for employees, customers and suppliers. In addition, social media can be a critical component of a communications plan. Solution providers should create a Facebook page and use Twitter to provide realtime updates to the community. Companies should appoint and train an employee to be responsible for managing an internal and external media communications plan.
That's a lesson CMA Technology Solutions, a Baton Rouge, La.-based solution provider, learned during Hurricane Katrina. Even though the solution provider only lost power for four hours after the hurricane, it still couldn't connect with many employees and customers for days because much of the infrastructure for its area code was decimated for days, said Chad LeMaire, CMA's owner.
Three years later, when Hurricane Gustav belted the Gulf Coast, CMA lost power for a week, as did many customers. This time, however, CMA was much better prepared and used a strong communications plan to seize the opportunity to add services such as payroll and other critical applications for more than 20 customers, LaMaire said.
"We couldn't work for a while but we had servers [at a data center] in Dallas and a communication plan by then. Anything critical we needed, we did it through Dallas," LaMaire said. "That was huge."
A communications plan is vital to getting through an emergency situation, yet it's something many solution providers don't have, said Semel.
"When you talk communication, you'd be surprised how few resellers [answer yes] when I ask if they have the personal e-mail for their employees, not the e-mail that goes through a company server. They look at each other and laugh," Semel said. "They didn't think about their Exchange server may be down and your dot-com may not be able to communicate."
In addition to employees' personal e-mails, businesses should keep e-mails and phone numbers for insurance agents, landlords and utilities, Semel said. "Do you know your power company's phone number? Is it in your phone? Create contacts in Outlook or whatever you use and include your account numbers," Semel said.
Other contact numbers that should be accessible are for alarm companies, contractors and handymen, he said.
In addition, if events force a solution provider to move to another building, make sure there are complete change-of-address forms for FedEx, UPS and the post office, he said.
