Ask an Expert: Sandy's lessons for entrepreneurs

• Question isn't whether bad things happen, but rather: Are you ready?
• You have to pick carefully among different kinds of insurance
• Plan for the worst while you hope for the best

Q: Steve -- My brother's business in N.Y. suffered a devastating loss in Superstorm Sandy, but the good news is that he is fully insured for the loss and he has been backing up his data offsite for the past couple of years, so he will be able to rebuild. Many of his cohorts will not. Remember, people -- be prepared! -- Sheldon

A: As I am based on the west coast, I did not personally feel the effects of Hurricane Sandy (although my mom's name was Sandy, but let's not go there). That said, we have had our own set of problems out here that have been equally destructive to small business: Earthquakes, drought and riots to name a few.

If you think about it, the list of things that can kill a business is almost frightening in length:

> Natural disasters like tornados, tsunamis, fires, volcanoes, storms, etc.
> Man-made calamities like theft, burglary, arson, vandalism, stupidity
> War, terrorism, civil unrest, riots . . .

So the question is not whether bad things happen, because they do, instead the question should be: Are you ready? There is no good that comes from an event like Superstorm Sandy or the tsunami we saw in Japan not long ago, except to remind us that bad things happen to good people. Sheldon, you said it best: Like the Boy Scouts, Be Prepared.

Any smart small business will have the following:

Insurance: I was once lamenting a fender bender I got into (not my fault, I swear!) and my brother gave me this pearl of wisdom: "That's why they call it an accident, Steve." Right, accidents happen. So do natural disasters. As such, being properly insured is not only good business, it can be the difference between the life and death of your enterprise.

That said, it is also true that it is, in practical terms, essentially impossible for a small business to be insured against all of the possible things that may befall it, so you have to pick and choose wisely. The types of insurance you should have include some or all of these:

> Property
> Liability
> Business interruption
> Auto
> Errors and omissions (E&O)
> Life

Often, you can get a package that covers the majority of these under the heading of a Business Owner's Policy (BOP).

Remote data backups: Backing up your data regularly is all well and good, but if your backup hard-drive is located in the same place as your computer, little good it will do you in the sorts of situations we are discussing here. Backing up locally is only helpful if you have a hard-drive crash on your main system. It does not help you if your building is destroyed.

That is why I am a big believer in storing your data in the cloud. There are all sorts of systems and companies that allow you to do this regularly, easily, seamlessly (say, every night at 3 a.m.) and affordably. Personally, I like Symantec, but there are other good ones as well.

'UPS' and/or a generator: A few years ago, I did a TV show from a grocery store in Cleveland that had been the lifeline to its community during the Great Blackout of 2003. The market had installed a backup power system and so when the blackout occurred, it was the only place around whose food did not spoil.

Similarly, if yours is an office, then consider getting an Uninterruptible Power Supply (UPS) for your computers. This is essentially a giant battery that gives you about 10 minutes of power so that, in the event of a power outage (or surge of whatever), you can safely shut down your computers without losing data at the point of impact.

Supply kit: If for some reason you get stuck at your business, you will want to have at least three day's worth of food and water in storage, as well as a first aid kit, duct tape, batteries, battery powered radio, etc.

The important thing to remember is that bad stuff happens. That's why we need to plan for the worst and hope for the best.

Today's tip: If you would like to donate to help the victims of Hurricane Sandy, go to redcross.org.

Ask an Expert appears Mondays. E-mail Steven D. Strauss at: sstrauss@mrallbiz.com.An index of his columns is here. Strauss is a lawyer, writer and speaker specializing in small business and entrepreneurship. The latest of his 17 books isThe Small Business Bible, now in its third edition, and he does a weekly podcast, "Small Business Success Powered by Greatland." Website: TheSelfEmployed.com; also on Facebook. Follow him: Twitter@stevestrauss.