business power outage

How Your Business Can Survive a Power Outage

Can your business survive a power outage?

No matter what kind of business you have, no modern business can survive without electricity. Whether it’s a short-term issue like a line or a transformer down, or a bigger issue like a hurricane, tornado or winter storm, successful businesses have a back-up plan for a business power outage.

Businesses that successfully weather a power outage have these three things in common:

  1. A business continuity plan
  2. Business interruption insurance
  3. A backup generator, if their business involves goods that can spoil.

All three of these require advance planning. Here’s how to get started.

How to Create a Business Continuity Plan in case of a Power Outage

A business continuity plan is key if you’re to survive an unexpected business power outage. This continuity plan can serve you in any unexpected emergency — like a hurricane or a flood.

Think of a business continuity plan as a big “what if” scenario.

Talk it through with employees. Identify the items that must be covered during an electrical outage or emergency scenario. And then come up with a plan to maintain coverage.

Here are items that should be included when you are creating your business continuity plan:

  • Identify essential tasks. What are the key functions that must be covered to keep your business going?
  • Identify essential personnel. Who are the key people that will staff those key functions?
  • Identify risks to raw materials and goods. If you are a restaurant, grocery store or other business that has spoilage issues with an electrical outage, what are your plans? How long do you have, per health code, before everything must be discarded? And how quickly can you restock?
  • Identify risks to data storage. Is data backed up regularly in an offsite location? Are employees saving data to a central location, or to their individual computers? Can they access their work remotely?
  • What employee coverage is needed? If the issue is a natural disaster employees will be focused on getting their family to safety, which of course is the first priority. Identify which employees are key to operations. Could they continue working from a safe location?
  • Do you need to develop cross-training plans? If certain employees won’t be available during an unexpected emergency, you need to identify that up front. Then make sure others are cross-trained. Document daily tasks that will need to be covered. Include a step-by-step written guide to each process.
  • Do key employees have computer access? If your business depends on data, most of your employees can work from home during an electrical outage. Make sure your key employees have laptops. And make sure you have an off-site back-up of your systems.
  • Will your phone system work? If your small business deals with the public, you’ll want to update your phone system. Document how to update your phone system to forward calls to a different location. Alternately, document how to change the voicemail message to alert customers to your electrical outage.

Most items in your business continuity plan will be dependent on the type of business you have. It’s important to identify which items are deemed “must have coverage” versus optional tasks that are not core to your business function.

Should I Buy Business Interruption Insurance?

In short. Yes.

Business interruption insurance, also known as business income insurance, can be a lifeline for your business and your employees

The following are typically covered under a business interruption insurance policy:

  • Profits. Profits that would have been earned (based on financial statements)
  • Fixed Costs. Operating expenses such as rent and salaries
  • Temporary Location. Your coverage may allow you to set up shop in a new location temporarily.
  • Civil Authority Ingress/Egress. If the government mandates business closure due to a natural disaster, you can collect on lost revenue

Your business interruption coverage period is determined by the details in your policy. It will typically cover you until your business is back in operational.

In addition, you can purchase contingent business interruption coverage. This type of coverage pays out if you are unable to operate due to a natural disaster impacting one of your suppliers.

These are all items that you should discuss with your business insurance provider.

Should I Get a Backup Generator in Case of a Power Outage?

If your business relies on electricity to survive — like a convenience store, dry cleaner, bakery — you should consider getting a backup generator for your business.

This is especially true if your business is in a hurricane-prone area like the Texas Gulf Coast or Florida. Or a blizzard or snow-prone area like Ohio or Connecticut.

What type of generator should I get?

A stationary or standby generator will connect to your electricity line, and turn on automatically if you have a power outage. Portable generators are less expensive, but also typically not capable of powering your business for an extended period.

What size generator will I need for my business?

The size of the generator you buy will depend on how many watts of power you will need to run your business during a power outage. That will vary dramatically depending on the type of business. If you have a small business and just need power to keep office lights, networks and computers running, that’s different from a bakery or machine shop.

Time needed: 5 minutes.

How to determine what size generator you need for your business continuity:

  1. Evaluate electrical bills.

    Pull copies of your electrical bills over the last 12 months.

  2. Determine maximum KW demand.

    Identify your highest wattage usage at any given time, also known as peak demand. This will be on your bill under demand charges

  3. Build in a reserve margin

    To make sure you have enough power when you need it, multiply your peak demand number by 1.25 to build in a 25% margin.

  4. Shop for a backup generator using your peak demand and reserve power demand number.

    Step 2 and 3 will give you a range of wattage you will need for your commercial generator in case of a power outage.

What type of commercial generator should I buy?

When shopping for a commercial generator, make sure to talk to the dealer or electrician about your needs. That way you can confirm that you are buying the right size.

Once you have decided the size of generator you need, you will need to decide the type of fuel. Here are some of the fuel choices for your commercial generator:

  • Natural Gas: Natural gas is our top recommendation. With a natural gas line at your business, you don’t have to worry about storing any fuel on-site. It’s readily available, affordable and convenient.
  • Diesel: The most popular fuel type for commercial generators is diesel. It’s readily available and runs efficiently, and cheap to run and maintain.
  • Combination: Purchasing a commercial generator that is a combo-fuel, with natural gas and diesel, gives you options, and that’s a great plus in a natural disaster or electricity outage.

You can find out more about commercial generators, such as run-time, noise, location and installation by reading this Guide to Buying a Commercial Generator.