Southwest Coaches began recovery before the fire was out
by Joanne Cleaver
December 2018 was cruel for brothers Tom and Jim Hey, who own Southwest Coaches, Inc., in Marshall, Minnesota.
Fire engulfed the company’s shed, business offices and two buses. All the computers were gone. Tools. Equipment. Personal mementos. All gone.
“You don’t ever really plan for that kind of disaster happening to your business,” said Tom Hey in October 2019, just a few days before Southwest was about to christen its new facility.
What happened? The firefighters’ best guess was that a chimney was damaged in a late spring snowstorm… damage that was irrelevant and unnoticed until the following winter set in and the chimney couldn’t handle the output of the connected oil burner.
Drills and disaster exercises had prepared staff to escape. Nobody was hurt in the midday conflagration. “But it’s nothing like what it takes to get back to what you had,” said Hey. “You have to get past the ‘woe is me’ stage and focus on preserving the business, then make it grow again and continue.”
Even as the flames were being beaten back, Hey and his staff were putting Plan D–“D” for disaster–into action.
Physical disaster, data breaches and supply chain interruption are three categories of overwhelming problems that can sink a company if it has done little more than the basics to prepare. While it’s impossible–and counter-productive–to try to micromanage in advance recovery from every conceivable disaster, experts say it’s smart to sketch in broad strokes how you’d bounce back from the big three.
Destruction of equipment and property from fire, hurricane, tornado, earthquakes and the like at least evokes sympathy from survivors and observers. Insurers have the longest history, too, of managing this kind of risk. After all, if you know about it, you can fix it… and your insurer expects you to.
Life safety is the overriding priority for physical disasters. That means drills, going beyond regulatory requirements for egress and safety equipment that is confirmed to always be in working order.
Data breaches are one of the biggest fears for many companies. It’s embarrassing to discover that your computers were infiltrated by thieves and terrifying to contemplate what they might have done with the information they stole.
Dale Shulmistra, a business continuity specialist with data consulting firm Invenio IT, said the first step to protecting data is understanding what really is lost in a breach. Usually, the bad news is contained in the number of customer files exposed, but the even bigger consequence is how the compromised data, and fix-up, cascades through operations.
“What’s your threshold for down time? That’s one of our first questions when we work with new clients,” Shulmistra said. Invenio also uses a proprietary calculator for estimating the total lost time and inflicted costs of cleaning up a breach.
“Think about all the related functions. Can you go without sales for a week? How will you pay staff after a week of no operations?” he said. “You can’t just buy a piece of hardware and install the backup and be recovered.”
Similarly, disasters that affect supply chain can be as devastating as they are slow-moving. Each link of the chain must be repaired, then the links restored, for gas to again be delivered, internet to work reliably and staff to stay on schedule. One key recovery component is having enough cash in the bank to bridge gaps. Another is building goodwill with business partners and within the industry.
The Heys faced all of these factors.
They got their insurer to the site immediately. They had off-site data backups. They quickly figured out where they could set up a temporary office. Then, they diagnosed the data situation to figure out what information had to be re-created from the files of helpful customers and suppliers.
An emergency fund proved prescient, as the family had to not only replace the building with a new, more expensive one that was compliant with current building codes, but also bridge glitchy cash flow as operations sputtered back into gear. Hey said that business partners and others in the motorcoach industry were quick to help. “We had very little business interruption; we’re not a startup. We have those relationships,” he said.
“The day the fire was happening, both the local community and the bus industry, the offers started pouring in. Bus operators offered buses. An operator in Duluth sent down a shop truck. Local electricians asked what we needed. The phone and internet people transferred our system the same day and our radios were back up in short order,” he relates. “You don’t know how much you need those relationships until you need them.”
Recovery resources
The Insurance Information Institute offers checklists and articles for diagnosing the need for business interruption insurance that can be found at https://www.iii.org/insurance-basics/business-insurance/coverage-questions-2.
From active shooters to wildfires, ready.gov offers an array of lists, guides and tactics for heading off and dealing with threats.
Though a bit dated, the guide for disaster recovery for public transit agencies at htttp://disability.law.uiowa.edu/dpn_hi/777.pdf yields useful nuggets.
