“Small-business owners should take this El Nino season very seriously,” says Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce, which frequently hears from small businesses during and after climate events.
“The current El Nino pattern and intensity will certainly impact small businesses, both through direct climate regional changes and through supply and demand disruptions,” Dorfman says. “The issues stemming from the effects of El Nino can be very challenging for small businesses, because they frequently have less financial cushions and other resources to withstand sudden shifts.”
Trickle Down Effects of El Nino
The effects of inclement and unpredictable weather on small business can run the gamut and affect entire regions.
“Most firms are reliant upon the Internet for connectivity to customers and suppliers,” Dorfman says. “Prolonged outage of electricity and Internet access can incapacitate basic communications and business activity. Supplies and services may also be delayed, or there may be sudden price spikes. And, if a small business is a vital supplier of goods and services in a region, the entire community may be impacted. These issues can snowball, causing small businesses to lay off personnel and slow their own supply orders.”
The potential repercussions of El Nino are a concern, agrees Susan Schlapkohl, vice president and co-founder of InterVac Design Corp, which manufactures compact central vacuum systems for recreational vehicles, boats and condos.
When weather events like hurricanes and snow and ice storms hit, they disrupt business, Schlapkohl notes. “Businesses can experience a loss of power and trucking comes to a halt, because most gas stations do not have generators, which makes refueling impossible,” she says. “Snow and ice storms also make roads impassable for trucking. The resulting missed deliveries for both incoming raw materials and outgoing finished products create the potential to, at a minimum, increase shipping cost as goods have to be air freighted and, at its worst, cause a loss of customers due to missed deliveries. Loss of crops because of flooding and drought also can drive up food prices and creates headaches for resellers.”
How to Prepare for El Nino
Of course, nature can be difficult to predict, but there are certain tactics you can take to help mitigate problems should weather conditions become disagreeable and disrupt your business:
- Plan ahead for communication interruptions. “Prepare and communicate plans in case of electrical interruptions, Internet interruptions and even evacuation,” Dorfman says. “Back up computer information and have alternative locations from which communications can be made.”
- Build up inventory. Ensure that you have enough key supplies to get the business through a disruption in receiving supplies. Also prepare excess finished goods, in case of a loss of power.
- Talk with suppliers. “We recommend business owners talk with their suppliers now to control costs and leverage their relationships during these times to keep supplies and costs as stable as possible,” Dorfman says. “It can’t hurt to also talk with alternative suppliers now to get an understanding of costs and requirements should your business be forced to secure supplies from another vendor.”
- Come up with a shipping plan. This may be a good time to plan backup shipping routes in case El Nino causes delays with your regular means of transport. Or you could consider shipping early, as you may be able to mitigate delivery delays by sending out product earlier than required due dates.
- Familiarize with assistance sources. The Small Business Administration and FEMA provide assistance during times of trouble, Dorfman advises. “Reach out now to make connections and understand the resources available from these government agencies in the event that you need assistance,” she says. “We also recommend reaching out to Congressional representatives, as these offices frequently have lists of all resources available in a region.”
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