Surviving Worst-case Scenario


Do you have adequate cash reserves to see you through the trouble, as well as proper insurance coverage? Do you have an idea of what resources are available for you and what steps you can take to get on your feet and back in business quickly?

Consider an injured hand, a flooded toilet or an arson attempt on a neighboring business. Or, imagine one of the worst hurricanes in US history. You might think you and your business will never experience adversity, but crime and disasters can, and do, happen. So, you need to have products and plans in place that will enable you to continue to do what you do best—whatever the circumstance.

Where to Begin

Massage therapists need to think about insurance coverage before opening their doors. Marie Trudeau, a certified insurance counselor with W.E. Davis Insurance Agency in Columbus, Ohio, explains how different insurance products benefit massage therapists. "Business interruption insurance is like disability coverage for your business," she explains. "If an event forces you to close your practice for any amount of time, business interruption insurance covers ongoing expenses such as rent or mortgage, payroll, utilities and lost profits."

Robin Cunningham Myers, licensed massage therapist and owner of Wholistic Alternatives in Baton Rouge, Louisiana, was hit hard by Hurricane Katrina. She didn' t have business interruption insurance and wasn't given any relief from the Federal Emergency Management Agency or the Small Business Administration. To keep her business open, Myers used her own cash reserves for nearly a year.

On December 12, 2007, the worst ice storm in Oklahoma recorded history occurred. Marcy Matney, licensed massage therapist and owner of Waterstone Spa in Skiatook, didn't plan for such an event. Her practice was without electricity for 10 days. "All I could do was wait," she remembers. "At the event of the outage, the federal government refused to assist with any loss to individuals or businesses."

Property Insurance

Equipment, furniture, office supplies and inventory are covered by property insurance. Trudeau recommends including "replacement coverage" in the policy, which provides the replacement cost of an item, rather than its original value minus depreciation over time. "I would advise massage therapists get as much insurance as they can afford," says certified massage therapist Jeanne Troncao, owner of Bakersfield Bodywork and Massage Supplies in Bakersfield, California.

She should know. Her new practice was closed for three long months after an arsonist targeted an attorney in an adjacent space. Although her property insurance covered the restoration of massage tables, she didn't have any business interruption insurance. She relied on her own cash reserves to carry her through. While the staff applied for unemployment, Troncao oversaw the day-to-day renovation tasks, including the installation of an alarm system, replacing signage, adding exterior lighting and re-covering stairs. Troncao worked with the contractors, got quotes and scheduled all the appointments. Because she didn't want to wait, she paid for the work and was reimbursed by her landlord.

A wise choice, as the fire happened almost a year ago and the rest of the building still isn't restored. Visible smoke damage and boarded windows remain. A dumpster filled with burnt items sits behind the building. "We have not completely recovered," Troncao says. "I took out a loan to pay bills. We reopened in August and business has steadily increased, but I believe the disrepair of the building has deterred some clients."

Since the fire, Troncao increased her property insurance, but hasn't been able to get business interruption insurance. "Be willing to take the initiative," she advises. "My daily presence and communication with the restoration company, landlord and Bakersfield Police Department expedited the restoration process."

Licensed massage therapist Felicia Brown, who owns Spalutions! in Greensboro, North Carolina, shares how an overflowing toilet affected her business. "It flooded locker rooms and a basement, leaving those parts of the building unusable," she remembers. "I contacted the insurance company immediately. Although I still had to pay the deductible, my insurance covered thousands of dollars worth of work to dry out the walls and floors, and replace carpeting and drywall."

Disability Insurance

"Because you rely on the use of your hands for your business, it is important to purchase disability insurance," explains Trudeau. "This insurance replaces your income if you cannot work." Be sure to check the definition of disability, however. The difference between "your occupation" and "any occupation" is important.

"Any occupation" means the policy won't respond if you can perform other work—such as a greeter at WalMart—outside of massage therapy. Alternatively, Trudeau says, "your occupation" refers to the work you've been specifically trained to do. A massage therapist who no longer has the use of her hands, for example, can't effectively perform her job. "A policy with 'your occupation' coverage would pay a claim in this circumstance," Trudeau says.

Brown purchased disability insurance after a kitchen accident. "I sliced open my hand opening a can of cat food," she says. "Within minutes, I was getting stitches at the emergency clinic and wondering how long I would be out of work. I realized I was incredibly vulnerable to future business interruptions due to injury. I bought disability insurance through AMTA and keep it to this day."

Start to Recover

Wondering how your business will recover is common after disaster. The market will take time to rebound, and massage therapists who have just started to grow their customer base will have a more difficult time than well-established businesses. If your business is too damaged, you will need to find another location. Also, think about if your employees are going to continue to work for you.

Small-business owners in particular need to reach out for help. Talk to your accountant, attorney, insurance professional and business counselor to evaluate the damages to your business. You can get estimates on how much you will need to spend to reopen. Factor in the loss of cash flow, and work with your insurance professional to determine what you can expect from the claims you submit. You may need to re-evaluate your customer base, services and pricing, and devise temporary or unconventional marketing strategies.

Calamities and catastrophes can happen at any time—and may result in your business closing, even temporarily. Creating a support network of business and community members, as well as knowing what resources are available, can help you better protect your practice.

General & Professional Liability

General liability covers any accidents or injuries that occur where you are working, such as a client falling or a massage table collapsing. These types of insurance may be required by law, so you should be sure to check with your state. General and professional liability insurance are a part of your AMTA membership. AMTA also offers optional insurance in many areas.

Where to look

When disaster strikes, taking action quickly can make you feel you are one step closer to regaining control of the practice you worked hard to build. The following websites offer valuable information on dealing with a number of emergencies. To better prepare, print a few of the key pages from each resource and keep them filed away in a safe place for easy access should you ever need help.

  • The Federal Emergency Management Agency provides a step-by-step guide for business owners called "Emergency Management Guide for Business & Industry." You can download this information at www.fema.gov/business/guide.
  • To get a general overview of emergency planning, as well as detailed information on a variety of man-made and natural disasters, visit www.ready.gov/business/plan.
  • The American Red Cross provides an action plan for a variety of emergency situations, as well as educational resources for disaster planning. For more information, visit www.redcross.org.
  • To gather information on dealing with various emergencies and read firsthand accounts of how average citizens and business owners successfully prepared for the unexpected, visit www.disastersafety.org.

Making a Comeback

The Institute for Business & Home Safety (IBHS) has outlined key steps to help residents and business owners work toward recovery. Protect yourself. Always be careful when entering a damaged building. If there is serious structural damage, contact local officials before entering. Report downed power lines or gas leaks. Keep electricity turned off if the building has been flooded.

Protect your Property. Take reasonable steps to protect your property from further damage. This could mean boarding up windows and salvaging undamaged items. Your insurance company can tell you what they will pay for in terms of protection. Also, report the loss as soon as possible.

Contact your insurance agent or insurer as soon as you can. Provide a general description of the damage and have your policy number handy if possible. Write down the adjuster's name, phone number and work schedule as soon as you have them. Prepare a list. Keep damaged items or portions of them until the claim adjuster has visited, and consider photographing or videotaping the damage to document your claim. Prepare a list of damaged or lost items for your adjuster.

Keep receipts. If you need to relocate, keep records and receipts for all additional expenses. Most insurance policies cover emergency living arrangements.

Return claim forms. After your insurance company has been notified of your claim, it must send you the necessary claim forms within a certain number of days (time period varies by state). Fill out and return the forms as soon as possible. If you do not understand the process, be sure to ask questions and write down the explanation.

Cleanup. When starting the cleanup process, be careful, and use protective eyewear and gloves if available. Adjusters may tell business owners to hire a professional cleaning service.

Build stronger next time. When you're ready to start repairs or rebuild, work with your contractor to make the new structure disaster-resistant.

This information was taken from the IBHS publications "You Can Go Home Again" and "Getting Back to Business." For more recovery and rebuilding information, visit the IBHS website at www.disastersafety.org. The IBHS works to reduce the social and economic effects of natural disasters and other property losses by conducting research and advocating improved construction, maintenance and preparation practices.

Insurance Policy Checklist

Whether you own a business or work for someone else, you need to pay attention to insurance. Below is a very basic list of some of the different insurance options available. Be sure you speak with a qualified professional before purchasing a policy so you are certain your specific needs can be met.

Property Insurance: Ensures you will be reimbursed for any property that is lost during a covered event, such as fire or theft. Be sure you understand what events are covered before purchasing.

Business Interruption: Your ongoing business expenses will be reimbursed if you are forced to shut down. Again, be sure you understand what events are covered.

Disability Insurance: Covers lost income if you can't work due to illness or injury.

Life Insurance: This product is important if you have a business loan. A life insurance policy will provide financial protection for your family should something happen to you.

Open for Business Self-Assessment

  • Are you concerned that your normal business operations might be interrupted by a natural or human-caused disaster?
  • Have you determined what parts of your business need to be operational as soon as possible following a disaster, and planned how to resume those operations?
  • Do you have a disaster response plan in place to help ensure your employees safety and take care of yourselves until help can arrive?
  • Could you communicate with your employees if a disaster happened during work hours or after work hours?
  • Can your building withstand the impact of a natural disaster, and are your contents and inventory sufficiently protected so they will not be damaged?
  • Are your vital records protected from the harm that could be caused by a disaster?
  • Are you prepared to stay open for business if your suppliers cannot deliver, your markets are inaccessible, or basic needs, such as water, sewer, electricity and transportation, are unavailable?
  • Do you have plans to stay open for business, even if you cannot stay in or reach your primary place of business?
  • Have you worked with your community, including public officials and other businesses, to promote disaster preparedness and plan for community recovery?
  • Have you consulted with an insurance professional to determine if your insurance coverage is adequate to help you get back in business following a disaster?

Self-assessment results

7-10 yes: You are well on your way
4-6 yes: You have lots of work to do
1-3 yes: You should get started immediately
This information was reprinted with the permission of The Institute of Business & Home Safety. For more information and other valuable tools, visit www.disastersafety.org. Your score indicates how well-prepared you are for the disruption caused by a natural or human-caused disaster.

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