Date issued: 13 January 2011
CPA Australia is assisting Queensland businesses to manage the impact of recent severe flooding. The CPA Australia disaster recovery toolkit offers guidance for businesses that have been affected by a natural disaster, both directly and indirectly.
'The overwhelming number of businesses that have been affected by the floods will be trying to make tough decisions about their future. CPA Australia's disaster recovery guidance can help businesses get through this extremely difficult period,' said Pamela Pointon, president, CPA Australia Queensland division.
'It is recognised that businesses are integral to the fabric of local communities and that more work must be done to ensure they get back on their feet as quickly as possible, and not just those businesses that have been flooded but businesses in the surrounding areas.
'CPA Australia will be working with our members and the community in the coming weeks and months to assist in all flood-affected areas.'
CPA Australia's disaster recovery toolkit was developed in response to the devastating Victoria bushfires in 2009 and is useful for any business dealing with the impact of a natural disaster. It includes checklists for re-opening your business and managing during times of financial difficulty as well as tools to help reconstruct your financial records.
CPA Australia's emergency guide to get back to business after a disaster includes the following steps:
- Assess the overall damage. Determine if you can trade from your existing premises and what stock, supplies, equipment and other key assets are recoverable and what is not recoverable.
- Make an insurance claim if you have insurance. The quicker you make a claim, usually the quicker the claim can be processed.
- Determine the government support you can access. Seek assistance if eligible.
- Constantly communicate with and update employees, customers and suppliers.
- Assess the business’s financial position. Take time to do this before making decisions on whether to reopen for business and if so, how to operate in the new environment.
- Consider any substantial outgoings needed before you restart. Reconstruct your accounts, determine your cash position and reconstruct your financial statements, as these statements may be required for insurance claims for business interruption.
- Evaluate your market. In rebuilding a business after a disaster, assess any changes to the market.
- Evaluate how your business was run. This is also a time to look at your businesses strengths and weaknesses.
- Develop a plan to reopen your business in whole or in part. Determine how much it will cost to reopen your business as planned and continue operations at that level.
- Determine how you are going to finance the reopening and redraft the plan to suit.
Information on assistance and advice on what to do under the current circumstances is also available on the Australian Government website and the Queensland Government website.
The information below offers valuable insight to business owners on what to do and consider during the flood disaster.
Key things businesses must do / consider under the current flood disaster circumstances
If you are a small business owner being evacuated, what should you do?
- follow the instructions of the authorities
- collect essential documents including: certificates of currency (for insurance); the contact details of insurers; important legal documents (such as leases and business certificates); copies of prior year financial statements, tax records including BAS statements and tax assessment notices; lists of outstanding debtors; a list of assets; bank statements; cash holdings; cash register; personnel files; and records
- back up the computer system and take the back up with you (remember to back up email accounts and important program files)
- move key items to higher ground or take them with you
- make sure to secure the premises
- ensure all staff evacuate in adequate time and note any business items they take with them
Other things to consider if time permits
- take photos of the premises
- do a stock-take
If you run a business that is, or could potentially be, affected by the floods, what should you do?
Consider the following key issues:
- Overall damage assessment. Can you trade from your existing premises? What stock, supplies and other key assets are recoverable and not recoverable?
- Insurance coverage. How quickly your claim can be assessed and paid?
- Any government assistance you can access?
- Communication with employees, customers and suppliers.
- The financial health of your business.
Evaluate your business’s financial health prior to making any decision as:
- the business may have substantial outgoings to be paid before you can restart the business
- there may be a significant period before the business can restart trading, therefore the business may have to rely on existing sources of cash and government assistance until that time
- the evaluation can assist with making claims for insurance such as business interruption insurance
Things to consider when evaluating the financial health of your business
- possible reconstruction of accounts and documents
- determining your business’s cash position including cash at bank plus any cash flows (from existing debtors that are recoverable, insurance payouts and government assistance) less any cash outflows (such as payments to creditors and loan repayments)
Once financial health is determined, consider developing a business plan for the new environment.
Such a plan should include:
- actions and resources critical to reopening the business
- new objectives for the business
It may be very difficult to make assumptions in a post-disaster environment: past experiences may no longer be relevant and your market may have changed significantly, at least in the short term. You should therefore re-analyse your market.
The period before reopening may also be a good time to reflect on how your business operated before the floods and to identify areas that you would like improved, changed, or to eliminate. You may also want to consider opportunities that you have always wanted to explore but have yet to attempt.