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Your Small Business: How to Survive a Natural Disaster

5 Mins read

It’s no secret that running a business requires perseverance, resilience, and more than a bit of grit. Along with keeping up with never-ending day-to-day responsibilities, business owners have to contend with additional stressors like inflation, economic uncertainty, and finding and retaining a dedicated team of people. Now, let’s add an element that is becoming increasingly more prevalent, but that isn’t often talked about or planned for: the damage done to a small business by a natural disaster.

As most of us know, severe weather events are on the rise. In the 1980s, the U.S. averaged just three billion-dollar storms annually. In the past few years, these occurrences have increased fivefold.

In 2021, tornadoes, hurricanes, flooding, and wildfires financially affected 1 in 10 small businesses. And according to the Federal Emergency Management Agency (FEMA), 40% of small businesses will close permanently after a natural disaster strikes, while 25% that reopen fail within a year.

As a business advisor, I’ve seen first-hand the impact catastrophic disasters can have on small businesses while advising entrepreneurs who were affected to varying degrees by covid and the early and widespread lockdowns and, more recently, while navigating the aftermath of Hurricane Ian. This near Category 5 storm decimated Southwest Florida and many of its businesses on Sept. 28, 2022, including those in my home community on Sanibel Island.

Through these experiences, I’ve learned that as business owners, we cannot operate at 100% when our livelihoods, our homes, our communities, and those of our employees are on the line. The stress and trauma make it nearly impossible to focus, problem-solve, make effective decisions, and move forward while simultaneously dealing with an assortment of circumstances, such as being displaced from your home, a lack of electricity or running water, and children out of school.

This is why it’s crucial to proactively develop a game plan before a disaster strikes – when you have a clear head and time to work through all the variables. While you cannot predict the future, you can (and should) take the time to understand your risks and create contingency plans that will help increase the odds of your business surviving a catastrophic event.

Here is a checklist of ways to prepare in advance of and respond after a disaster to help you keep your business afloat:


Ensure You Have a Cash Cushion and Access to Capital

The first and most crucial step in the planning process is to ensure you have sufficient savings and access to working capital and a line of credit. Before the pandemic, I recommended having two to three months of operating expenses in the bank. But now, I have individualized conversations with my clients about their savings and cash goals based on their specific business and financial needs. It’s vital that you have sufficient cash in the bank and access to working capital to carry you through if you cannot run the business or have no money coming in for an extended period of time.

Assess Insurance Needs and Policies 

Change is rapid and constant when it comes to insurance policies, and because of that, it’s essential to take the time to review your policies annually with a trusted broker. Are you sufficiently insured? Are there any gaps? Although it may be a challenge to justify spending more, think about what would happen if you weren’t covered in a specific area or for a particular amount and ended up having damage or a claim in that area. Would you have the funds to cover that cost out of pocket, or would you be looking back, wishing you had spent the money on more coverage?

Prepare for the Worst-Case Scenario 

It’s important to consider all the different scenarios your business could face and what you would need to do in each one. For example, what would you do if your brick-and-mortar business was physically destroyed? If your tourism business suddenly had no tourists to serve? If business or revenue dropped by 50%, 75%, or 100%? Gather your team and brainstorm ways you could get creative and reinvent the business. How would you adapt the business model to keep revenue coming in? Are there things you should be doing now to diversify operations and mitigate your risk? Think outside the box – as if your future depended on it, and draw on examples from what thousands of businesses did during covid.

Be Ready to Scale Rapidly 

Not all businesses are impacted negatively in a natural disaster. Many see a sudden and explosive increase in demand. Think of mitigation/remediation companies, roofers, and general contractors. If you run a business in those trades, how could you prepare to scale operations two- or three-fold literally overnight? How do you recruit enough skilled team members? What happens to your cash in the bank? Do you have enough working capital to pay your employees and yourself while also fronting the cost of supplies and funding operations for 30, 60, 90 days, or longer while waiting to get paid by property owners and insurance companies? Run multiple scenarios to plan accordingly.

In addition, think through how you will communicate with your existing loyal customers without alienating them and what you have to do to streamline operations.


Continually Monitor Cash Flow

With or without an emergency, as an owner, you should always have a grasp on your financial numbers. But never is this more important than in the middle of an emergency. Stay on top of your cash flow, knowing intimately what is going out and what is coming in daily or weekly. Determine your cash threshold and pledge to always stay within that amount. Start stress-testing the cash in the bank with different scenarios. Creating a spreadsheet, even a simple one, for the next six to 12 weeks or months will allow you to see patterns in accounts receivable and accounts payable that can be adjusted to make the money last. 

Adapt, Pivot, and Be Creative

If the past few years have taught us anything, it’s that the small businesses that adapt, pivot, and get creative are the ones most likely to succeed. If you’re suddenly unable to operate after a natural disaster, what can you do to transform, reposition, and repurpose your product or services temporarily or even in the long term? During covid, think of the restaurants that transformed from sit-down only to takeout and delivery overnight, the distilleries that converted from making beverages to hand sanitizer, and the brick-and-mortar retailers that moved to e-commerce. On Sanibel, restaurants that couldn’t reopen immediately invested in food trucks, while retailers leaned into e-commerce, set up pop-up and outdoor markets, and opened new locations off island.

Research and Apply for Disaster Relief Loans and Programs

Explore and understand what additional resources are available to support you and your business during this time. During Covid, we saw PPP and EIDL loans. After natural disasters, low-interest rate loans are available federally through the SBA, and typically, there are additional resources available at the state level. Start by contacting your local Small Business Development Center (SBDC) or economic development center. They operate in conjunction with the SBA and can provide one-on-one advice based on your specific situation. Know that there is help out there, but be prepared to stay on top of it if you hit unexpected delays or roadblocks.

Throughout all of this, keep your eye on the why and remember what is important to you. You’ve worked too hard to lose your business in a natural disaster. You owe it to yourself, your employees, and your family to do the work and have a comprehensive plan ready to truly weather any storm.

Angi Semler Welch is a partner and business advisor at Cultivate Advisors, one of North America’s largest small business advising firms. She is also director of 3X, a 6-week business boot camp that equips entrepreneurs under $250,000 in revenue with the knowledge and know-how they need to set their businesses up for scale. Over the years, Cultivate has helped thousands of entrepreneurs in 160+ industries grow through core business skill development and advising. Many of their clients can be found on the Inc. 5000, an accomplishment Cultivate itself has achieved four years in a row. Connect with Cultivate on LinkedIn and Angi on LinkedIn or through email at

Natural disaster stock image by Paul Harrison/Shutterstock

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