Natural disasters can be devastating. It's important for small businesses to prepare

Natural disasters can be devastating for small and family businesses - either their business is directly damaged or wiped out, or they are an indirect victim who has survived the disaster only to have no customers or no meaningful local economy to service because of the impact on their town or region.

Unfortunately, with so many things on their plate, only one in four small businesses have a current business continuity plan.

Taking simple steps to be better prepared, sensible risk mitigation action and bolstering resilience can help reduce the impact of these adverse events and support small and family businesses to get back on their feet quicker.

Just like the businesses they run, owners are the lifeblood of our communities. They are often the first to volunteer to lead and contribute to local emergency response and business support groups, and give generously of themselves to help make preparations for the community such as laying sandbags, fighting fires and moving stock and people to higher and safer ground.

But often they're not as diligent in getting their own business prepared, so they can be best placed to respond and recover.

It could be a natural disaster, a change in economic circumstances or something happening to themselves. If the owner is the primary income-generator for the business and they have a health episode or an accident, what's the plan look like to navigate through that?

That's where an up-to-date business continuity plan is important so owners can contemplate those things that might knock them off course, including something that might happen to them personally and reduce their capacity to contribute to their business and enable the livelihoods that they and their team rely upon.

There are easy steps that can make so much difference if disaster strikes.

This can be as simple as ensuring your record-keeping is up to date and that critical information is at hand and, where possible, digitised so you can retrieve it if your premises are destroyed.

Small business owners can use the following checklist:

Do you have the contact details for your customers, suppliers, staff, accountant and other important people in a safe place?

Do you have copies of relevant accounts, passwords and backups of important operational data?

Would it be feasible to continue operating from another location?

Can you keep working if the power or communications network goes down?

Are your payments to relevant bodies such as insurers, lenders and the Tax Office up to date?

We conducted a Small Business Natural Disaster Preparedness and Resilience Inquiry and recommended the creation of an opt-in My Business Record to allow a small business to digitally store all relevant government-held and other vital information it might need after a disaster.

It is clear from our work that preparation is key to small and family businesses building resilience and coming through natural disasters in the best possible shape.

It is equally clear the small business community cannot do this on their own and when a natural disaster strikes, certainty of response and support must be provided.

By this we mean small business owners should automatically be engaged in local place-based planning and support services and be elevated and "front of mind" in disaster response, recovery and funding arrangements. This must include indirectly affected businesses.

We believe a business hub should be established to provide a single point from which to seek help from government and non-government agencies. And we strongly recommend a "tell-us-once"' triage system should be adopted to save small business owners the trauma and time associated with repeating their story.

It is also our recommendation that ongoing support should continue in the aftermath of a disaster. When a small business receives an Australian government grant, an additional amount should be made available six to nine months later for a "business health check". Disasters can have long-lasting effects for communities and small businesses.

We also need an integrated response to disaster risk management for identified disaster-prone areas that incorporates priority access to mitigation expenditure, co-ordinated planning across levels of government, infrastructure hardening, interest-free loans for asset and activity protection and relocation schemes, and possible use of a dedicated reinsurance vehicle.

An ongoing problem is that many small businesses are unable to secure appropriate insurance at an affordable price. If they can get insurance, it can come with excesses that would preclude any claim ever being made.

Frustratingly, insurers are also uninterested in the steps individual small and family businesses take to mitigate disaster risk, or dismissive of them.

We have examples of individual businesses doing everything they can possibly do but it has zero impact on the availability and the pricing of their premiums.

We're told this is because the insurance companies look at risk across a broader pool - it is community-wide or industry-wide or neighbourhood-wide analysis. Yet the narrative, amplified through advertising, is often about what individuals might do.

Many small and family businesses are individually doing what's being asked of them in terms of risk management and mitigation but are seeing no upside to pricing premiums and availability and affordability of insurance cover. What might be for some an insurance "gap" is too often a "gorge" for small business that too many can't cross.

The insurance sector needs to do better - and do it now.

Sadly, too often we have seen how natural disasters can cause lasting harm to the enterprising women and men building businesses, employing local community members, and contributing to the Australian economy. Small business creates vitality in our communities, employs two out of every five people with a private sector job and contributes one-third of our GDP, so it is absolutely worth building its resilience.

My office has more detailed checklists and resources to help small business prepare for a disaster and, if needed, to recover after one, which are available at www.asbfeo.gov.au/disaster-preparation