5 Key ways businesses are impacted by floods

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Often when we suffer severe flooding the focus is on homes that have been damaged and the residents that suffer as a result. What can get overlooked are the devastating effects that floods can have on businesses too.

Many businesses are directly and indirectly impacted and in some cases never recover from the damage caused as a result of flooding. Although insurance can cover some of the cost there are also the costs that can’t be reclaimed. Unfortunately not all businesses take necessary precautions and are often underinsured.

Here are just 5 of the ways that businesses can be affected by flood damage.

Loss of stock and assets

stock-countFloods can cause huge losses of stock and assets. Company vehicles, fixtures and fittings and saleable stock can all be damaged beyond repair. Whilst many of these items can be replaced the costs can be huge and the claims process can drag on. Businesses may not have the immediate funds to replace these items which results in a loss of business and customers seeking alternative suppliers.

Farmers can lose livestock and crops along with essential equipment. Restaurants have to dispose of food that is contaminated and unusable. Retailers need to get rid of water damaged goods that can no longer be sold. Plant machinery and equipment damaged beyond repair can cause manufacturing to come to a halt. The examples go on and on.

If there is significant warning that floods and storms could occur, then there are preventative measures that can be taken to minimise damage; unfortunately this isn’t always possible. Businesses must ensure that they have adequate insurance and, if they are in a flood risk area, make sure they take precautions to protect their stock and assets.

Closure of business premises

closedWhere flood water has entered a business premises there may be a need to close the business. In some cases staff can work from a temporary location but for some businesses this just isn’t an option. A restaurant or retailer may have to close for an indefinite length of time and customers will be forced to shop elsewhere.

It can take months to dry out and restore a property after a flood. Being forced to evacuate during this period can devastate a business. Wages and bills still have to be paid but if no money is coming in then reserve funds get depleted pretty quickly. Unfortunately many smaller businesses cannot survive loss of business to this level.

Depending on the type of business it can be possible to find alternative measures whilst the flood damaged premises is under repair. If the company has proper insurance then the costs should be covered. Keeping clients, suppliers and employees informed after a flood is vital in keeping a business running.

Loss of power and data

Water and electrics don’t mix and even if a business isn’t directly hit by the flood, surrounding power and telephone lines could be affected. Whilst power and communication lines tend to get restored relatively quickly, there are occasions where delays are experienced. Not having power can have a big impact on a business. Fridges and freezers defrosting in restaurants and shops can cause massive stock loss. Manufacturing equipment and tools can’t be used without power. Computers that can’t be switched on can cause businesses to grind to a halt.

In some instances power surges, or water getting into electrics, can cause damage to server systems and businesses can lose all their data. Businesses that rely heavily on telephony systems can lose hundreds of pounds worth of business if telephone lines are down.

Businesses at risk of flood that rely heavily on electrical equipment should consider back up power or emergency generators as a contingency measure. It is also worth investing in good back up for data in case any servers are affected.

Indirect effects

Whilst a business may have survived physical flooding they may still be affected. Subcontractors and suppliers may have been hit and this can have a knock on effect.

Road closures from floods may also affect trade. People can’t buy from shops and restaurants if they can’t get to them. It can also restrict getting deliveries in and out. Staff can also be affected by road closures as they may not be able to physically get to work if access is limited. This could mean the business doesn’t open at all until the roads are open again.

Although a business premises may have survived floods there could be employees that have been directly affected. They may need time off work or even be unable to get to work if their homes or the area around them has been flooded. Being displaced due to flooding and losing belongings can be an extremely difficult time and employees may have to take long periods of time off. Loss of manpower can invariably translate into reduced efficiency of a business.

Flooding can have a negative effect on the local economy. Even if a business wasn’t directly affected they may still see a drop in revenue. Repairing infrastructure, loss of lives and destruction of properties all impact on the local community and recovering can take a long time.

Long Term Effects

paperworkEven after a business has recovered from the short term effects of flooding it can still continue to incur cost as a result. The time spent clearing up debris, compiling an inventory of lost stock, completing paperwork for insurance claims and dealing with the immediate issues will have taken time away from usual operations. Add to that the back log of orders or the appointments that need rescheduling and trying to recoup the business lost. It can take many months to get business back on track.

There are also potential issues with mould, damp, rot and mildew that the increased humidity and unwanted water may have caused. If this hasn’t been detected and treated then it could result in bigger problems and more cost along the line.

Businesses that are forced to evacuate for long periods can really struggle to win back customers. During closure those customers have had to shop elsewhere and they may be reluctant to switch back again. Just getting the word out that a business is back up and running can take time and customers may be cautious at first.

Flooded businesses will also have to contend with the inevitable increase in insurance premiums which will certainly have an impact on the budget.

What can businesses do?

Unfortunately it isn’t always possible to protect against flooding. Businesses should make sure they understand the level of risk to them and the steps being taken by local authorities to defend against flood. They must invest in adequate insurance and keep the policies in a safe, watertight place.

Taking precautions such as investing in sand bags, keeping stock off the floors and out of basement areas and keeping drains clear and gutters free from debris, can help. Doing risk assessments is a worthwhile task. It won’t prevent floods but at least it can help identify what a business would be up against should the worst happen and what contingencies can be put in place.

How can Arxell help?

Unfortunately we can’t prevent floods nor can we reduce the amount of damage they cause. What we can do is help dry properties out faster so that businesses can get back on their feet sooner.

Our drying system can dry an area up to 75% faster than traditional drying methods plus our units are safe to work on whilst the area below is being dried.

The Arxell drying system can drastically reduce the length of time it takes to restore properties and substantially reduce the costs to businesses and communities affected by flood.

If you’d like to know more about how the Arxell system works and how we are making a difference in the drying industry then get in touch for more information.