Startup Businesses - January 05, 2012

When starting a business or franchise, how you're going to prevent your company from going under in the event of a natural disaster is likely the last thing on your mind. However, many things in life are unpredictable, and one of them is Mother Nature. Floods, hurricanes, earthquakes and tornadoes can all have a negative effect on businesses, and some of these disasters are simply impossible to overcome.

In order to avoid losing your entire company to an unexpected disaster, it's important to create a detailed plan on how you will tackle this type of issue if it comes.

While creating your natural disaster plan, don't forget to assess the risk of these types of emergencies based on where your business is located. In other words, you will want to determine the probability of weather-related disasters, such as tornadoes and hurricanes, in your area. This can help you fine-tune your emergency plan and increase its efficiency.

Although it may seem like a tedious task to create a disaster plan, doing so can save you money. If you prepare ahead of time for an unexpected emergency, you can lessen the damage to your business. If you are negatively affected by a natural disaster, you will also be able to recover quicker if you have a plan in place. Taking precautionary measures can be the difference between spending hundreds or thousands of dollars to make repairs.

Even before you launch, start building up a rainy day fund that you can rely on in times of need. You may even want to factor in how much money you would like to save for this purpose in your business plan so you can ask potential investors to provide financial assistance. In the end, their investment will be more profitable if the business succeeds. In order to succeed, your company needs to be able to overcome any hurdles that may come up, ranging from low initial sales to losing inventory in a flood.

By framing a rainy day fund as an asset to investors, you may be more likely to get the help you need. Consider putting this money in a savings account or a risk-free certificate of deposit that will accrue interest while still being available for a quick and unexpected withdrawal.