So last month I shared about 3 things to consider when working to build your business from a disaster. And I almost feel like I put the horse in front of the cart. But not really. Once you have considered what items you need, you can figure out how much money you need to pay for it...and where that money will come from.
Create a Budget
I'm sure you already have a budget for the day-to-day operations of the business, but now that you know what you need to get working again, you can create a budget for replacing your items and getting back off the ground. Things to consider including in your budget or plan:
- Recurring Normal Monthly Expenses (phone, internet, backup, etc)
- Payroll (reduced or normal, depending on projected needs)
- Physical Office Equipment (computers, phones, and more)
- Inventory Replacement (depending on type of business)
- Production Equipment
Now that you know how much you will need, you can start considering how you will pay for it. Are you cash only? Do you have any cash in reserves? I think Dave Ramsey would insist on having a 3-6 month emergency fund for your business as well as your personal income. Does your business have enough reserves to run for 3-6 months while you rebuild? Most businesses are run on a shoestring or on credit. Is yours? If so, a disaster might just put you under! Consider working toward having a 1 month emergency fund for your business and then work to pay off your debts. If you are debt-free (way to go!), make sure you have enough money in the bank to cover your business in case you need to rebuild.
Business Interruption Insurance
Until I started writing this series, I didn't even know that business interruption insurance existed. If you are running lean and cannot get an emergency fund together quickly enough for your liking, you may want to consider business interruption insurance. It does not replace income, but it DOES cover many expenses associated with running your business. Not cheap stuff, but could be the difference between closing your doors or not. This article from Entrepreneur does a great job of sharing what business continuity insurance will and will NOT cover. Are you financially prepared for a disaster in your business? Read all the posts in this series at our Disaster Planning & Business Continuity Post.