It was a snow day that turned Cheryl Obermiller’s life upside down.

The owner of Obermiller Construction went into the office as usual that morning and, by the next day, found that her company had been robbed of hundreds of thousands of dollars.

The accountant who had been working for her for almost a decade had been forging checks and stealing money from payroll and taxes. The only reason Obermiller learned of the theft was because she happened
to open her mail that snowy day (which the accountant usually did) to find a final note of delinquency from the Internal Revenue Service.

She looked in her accountant’s desk and found a folder with similar letters. After checking her records, Obermiller realized that no payments had cleared for her taxes. The next morning, her bank’s branch manager and the police were in her office with thousands of dollars in forged checks.

This began two long and difficult years of litigation, dealing with the IRS and trying to reconstruct the finances of the company she founded in 1993. After the theft, she learned that it could have been avoided with a few simple steps like opening her own mail.

Like many business owners, Obermiller had been more worried about keeping the business running than delving into its small details.

“Small-business owners are thinking about making the next dollar on a shoestring budget,” said Rick Jenkins, supervisory public information officer for the U.S. Small Business Administration. “They are operating on a hope that a disaster doesn’t happen.”

But disasters happen every day. And they aren’t always catastrophic ones like the recent explosion at JJ’s Restaurant on the Country Club Plaza. A minor electrical outage or burst pipes can cause a major business interruption. A business owner can’t always predict or avert disaster, but there are a wide range of steps that can help bring the business back after one.

Make a Plan

Business owners have to have strategies for what to do after a disaster, said Bob Boyd, president of Agility Recovery, a company that offers disaster recovery and business continuity services.

If a disaster occurs, Boyd said, about 40 percent of companies don’t reopen. More than two-thirds aren’t around two years out.

“If you don’t have a plan and don’t know what to do, odds say you will never be the business you were beforehand,” he said.

When there is a major disaster like the Joplin tornado, organizations like the SBA can provide loans to help cover damages. But if a proprietor experiences something like Obermiller did, they are left to their insurance coverage and their own devices.

Every business, Jenkins said, should have a plan that considers three broad areas—dealing with and protecting employees, lessening the financial impact to the company and reopening as quickly as possible. He recommends making a checklist and working on it “a bite at a time,” taking one step each month until it is complete.

Know Your Business

After Obermiller was through the worst of her experience, she began a quest to understand how it had happened—and how to prevent it in the future. Much of what she learned is free and simple to implement.

It is imperative for even busy business owners to know what is going on with the company, she said. Don’t hand all of the accounting and paperwork over to one, or multiple, people. She recommends at the very least glancing through all of the mail that comes in. Control checks, and monitor check stock. And finally, an accountant can do the company’s taxes, but business owners should verify that they have been filed and paid.

“We are all trained to look for electronic fraud, and the two most common forms are simple check forgery and misused electronic transfers, and they are the easiest things in the world to catch,” Obermiller said. “People don’t have to do anything high-level to get your money.”

Prepare for Risk

Aside from keeping tabs of what’s going on in accounting, it is important to know what the company’s risks are and have a plan to work around them.

Boyd said the first thing every company should do is prepare for a loss of power.

“We have helped companies with all kinds of problems, but about 70 percent of the time, we had to bring in a generator when we served a client last year,” he said. “Regardless of what the event is, there is a high likelihood of losing power. … I really stress that they should prepare for that reality.”

He said all companies should know these things about a backup generator: how much power the company would need, how big the generator would be, how much cabling it would need, where they will put it, if they can bring one in if they are renting from a landlord and how long it would take to get one.

Another thing to do is review insurance information. Business owners have to be aware of all of the potential dangers to their organization and protect against them.

Though most companies know to back up data, business owners should ensure they are doing it correctly. Many people, Boyd said, find that data tapes are stretched or corrupted when they need them. Or a business owner thinks the office manager is doing backup daily, but has forgotten.

Records should be available outside of the organization—on a cloud data storage service, for example, where a company’s vital information wouldn’t get destroyed during a fire. Lists of suppliers and customers, financial information, tax returns and profit and loss statements should all be included.

Two other things to diversify are vendors and phone service. It is wise to use some vendors and suppliers who are outside of the immediate area in case there is a natural disaster.

And Boyd said to call the phone company and set up a plan to redirect inbound calls in case of an emergency. Calls can be directed to a voice mail or cell phone should the line go down.

“You don’t want people to call the office to get a dead or busy signal,” he said.

Think of the Employees

One of a company’s most important assets is its staff. Employees will be the first people who need to know what is going on should a disaster strike.

The first challenge can be communication. Boyd said employers need to think of ways to get in touch with staff if phone service is down. This could include a secure Facebook page where workers could report if they aren’t able to make it in or where a proprietor can post status updates.

Employers also need to remember that, during something like a natural disaster, employees will have concerns outside of work.

“While you are worried about your business, they will be thinking about staying home with kids if schools close or getting a tree off of their house or maybe their dog ran away,” Boyd said. “You have to understand the stress that is on that staff—they may have to bring their kids to work or work on a laptop from home.”

Everyone reacts differently to stress, and business owners should understand this. Stress can cause physical pain like stomachaches, and employees may lose connection with others or lash out at coworkers.

After Obermiller’s ordeal, she said she was in a fog and would get dizzy when she stood up. She recommends business owners go into “survival mode” and not worry about things that are not necessary. “I was hysterical and stressed,” she said. “A business is like a living entity, and a business crisis is also an emotional crisis.”

Rising from the Ashes

It’s imperative to get up and running as quickly as possible, Boyd said.

Every day a business is down, it loses revenue. Customers may give someone a break for a few days, but if they have a service that is not being met, they will have to go elsewhere, he said.

“You will lose that customer and probably will never get that customer back,” he said. “The longer a bad experience drags out, the harder it is to retain that customer, and if they don’t have jobs, the staff will find other things.”

One of the first steps to take is finding a new location. When Diane Botwin, general partner of Botwin Family Partners LP, lost one of her buildings to a fire in Kansas City’s Waldo neighborhood, she helped tenants find new space right away. One moved elsewhere quickly, and others relocated to nearby temporary locations. All but one of the tenants are still in business.

“People need to get over the initial shock and terror of what happens and have to get really practical really fast,” Botwin said.

The SBA recommends doing some advance research for alternate locations before it becomes necessary. Business owners can agree to share space with neighboring businesses or get a list of vacant office space from a real estate agent.

If the business moves to a new location, it is wise not to let the building sit vacant as a reminder. Jenkins recommends putting up a sign letting customers know where the business has moved and when it will reopen.

This is part of a broader picture of managing public relations after a disaster. Jenkins recommends heading off rumors that the business will fail by having a spokesperson talk about rebuilding and keeping the
public informed of progress.

Obermiller said it is important to be open with people about what is going on. She was extremely embarrassed about what happened to her company, but decided to be totally upfront with everyone.

“If someone called asking for money, I would say, ‘I have experienced embezzlement, and I’m going to write you on a list and will pay you as quickly as I can,’” she said.

She worked with vendors to pay over time. She told employees they wouldn’t be getting raises that year. And she gave clients her cell phone to call directly if there were any problems.

“I wanted to let them know I wanted to keep their business,” she said. “People do want to help when there has been a problem, and most were very sympathetic and helpful.”