What's left of a Friendly Floors store in Port Charlotte, Fla. after Hurricane Charley roared up the Florida coast in August 2004.  Within a matter of days, this retailer was back in business, operating out of a trailer and using tents as a showroom.

When I opened my first retail flooring store in 1963, the furthest thing from my mind was a disaster that could cripple my business. Like most of us, I took the basic protective steps: fire extinguishers, smoke alarms, propane stored in a safe place… Doors were locked, access to offices and files was limited and we allowed no crossover of functions such as salespeople allowed to place orders. Each day night deposits were made to the bank.

When thinking disaster one initially pictures fire, flood, wind and earthquakes. When natural disasters strike, there isn’t much you can do to stop them. That doesn’t mean you can’t be proactive. In our little bayside town of Mathews, Va.,  storms frequently flood the streets. The last time this happened, it was obvious that a few sandbags at some store entrances would have prevented the damage. Just as electrical inspections, fire extinguishers and other safety checks can prevent fire, precaution can minimize the impact of a severe storm. Before it hits you should be boarding up windows, removing the most valuable merchandise and generally battening down. A little planning can alleviate an enormous amount of storm damages.

And don’t ever think disaster can’t happen to you. I have seen too many manufacturers burnt out or flooded beyond repair in my time. Sometimes it is unavoidable. When you see a TV news report of an entire town devastated by flood or wind, it is a good bet every flooring store has been wiped out as well. Think of all the Gulf Coast hurricanes two years ago. How many retailers, distributors and manufacturers to you think were destroyed?

For people in flooring, there is a silver lining to most disasters. Everything must be rebuilt. A retailer who had the sense to be prepared beforehand can make lemonade from lemons. Think restoration, insurance payments as well as “Fire Sale” and “Flood Sale.” But that is hard to pull off unless you make certain there are duplicate records (paper or electronic) that are maintained offsite. It would also be a great idea to have a temporary alternative location lined up beforehand. What about un-rented spaces or empty warehouses? Have a communications plan where each of your employees is responsible for calling someone. Have duties assigned if needed.

Theft can also be a disaster for a retailer or small business person. Incidences of thieves breaking into flooring stores are rare, since most thieves want only what they can pick up and carry off. (There was one humorous incidence of a dealer breaking into a local World Carpet warehouse on several occasions. He would steal only what he needed to fill his orders.) 

One real threat comes from theft by “trusted” employees. As my colleague Sam Allman notes in his column this month(Habit:  Theft-proof your business)this can be a major problem. Hundreds of retailers have suffered losses running into six figures and, as Sam points out, one dealer lost millions in a scam that lasted a decade. Have safeguards in place including bonding employees, failsafe inventory systems and paperwork following every movement of inventory. Embezzlement and employee theft are common and insidious-and very preventable.

Another threat of disaster comes when you don’t fully understand tax laws affecting your business. They can be burdensome and confusing, but they are a fact of life. Consider this, for example: A few years back the IRS made the case that outside installers were actually employees. A number of flooring retailers were subsequently billed for current and back withholding taxes. Some were even forced out of business. The Retail Floorcovering Institute ultimately mounted a successful case against the IRS, but it was too late to help for some. And it’s not just taxes. A thorough study of rules and regulations by agencies like OSHA and the EPA is critical.

And then there are the customers. Remember the Korean cleaner who was sued for $14 million because he supposedly misplaced a pair of trousers? This was extreme but it is also a cautionary tale. There are hundreds of less publicized cases involving litigious customers. Some are not happy with a full replacement or even a refund. You can be sued for the customer’s time lost from work or even emotional distress because a flooring job went sour. Judgments worth tens, even hundreds of times the cost of the job aren’t rare. Can you afford this?

The message here is to check your insurance with an expert and err on the side of over-protection. Also check for mistakes in the policy. Just this year a sprinkler went off in my wife’s store. The damage seemed minimal but two huge lessons emerged. The first is to always call in a professional restoration team for any event no matter how minor. This will ease the path of full restitution. They also know the ropes. Unbeknownst to us, over $70,000 worth of inventory was affected by water. We wouldn't have known this without the restorer’s moisture meter.

The second lesson is to make sure you have the right type of insurance policy. My wife’s insurance company was given the figures of $250,000 in inventory coverage and $10,000 in fixtures, but the figures were reversed. Fortunately the insurance company acted honorably and issued the correct payment. Another tip is to shop coverage. She saved over $6,000 in premiums by finding insurance through the World Floor Covering Association. It is also a wise move to initiate a disaster planning conference with your accountant, attorney and banker.

Succession planning is also extremely important. Some stores are governed by one dominating personality with all the critical information locked tightly in his or her brain. Even in more democratically run businesses, an owner, key manager or employee out of the picture could spell disaster. A related matter could involve family breakups. No matter how much love you think there is today, not planning for this is one of the greatest risks of all.

Some will try and keep this information exclusive as a matter of job security. A simple fix is to ensure that everyone cross-trains for the job above them. Make sure they know every aspect of that position. Another part of a succession plan is that everyone knows what their job will be in the event of someone leaving. 

The key word here is “plan.” Make plans to avoid disaster and plan on what to do if it should hit. Make plans that enable you to tap into readily available sources of cash, lines of credit, high limit credit cards, brokerage accounts. Have funds available in a large bank as opposed to a local bank. Make plans to notify suppliers, and any retail groups or trade associations you may belong to. Have contacts in the local and trade press. They can all help in times of crisis and may even save your business. Fortunately, this industry has a history of stepping up and helping each other. It is only prudent to plan for the worst.