These core stakeholders are flanked by small business owners who could be affected by disaster and by emergency managers who provide preparedness and response leadership for the community. Coordination among them is essential for stabilizing and preserving the local economy before, during and after a natural disaster.
Without an economic recovery strategy, a disaster incident will cause economic distress which could negatively affect your community for years. Studies demonstrate that the greater the delay in community recovery, the longer the negative economic impacts remain. A good strategy maximizes responsiveness and recovery.
This means that steps taken by local leaders in the first critical hours, days and weeks can make a significant difference in offsetting the detrimental side effect of an already unfortunate situation.
Provided here is a framework of discussion for local business and community leaders to develop an economic recovery strategy for their own community. This manual connects disaster management functions with economic principles to identify key issues and suggested actions to prepare and recover from a disaster.
Identifies key stakeholders and demonstrates how they work together in each phase. A diversity of stakeholders represent important partners in continuity planning so that companies, and workforce challenges are minimized.
Provides mechanisms for key stakeholders to communicate and coordinate other efforts in the community before, during, and after a disaster.
Identifies sources of funding or innovative financing for disasters. It also looks for long term implications and future risk reduction strategies.
Describes a plan, identifying resources and anticipating how they will change in each emergency phase.
How to use this guide:
The color-coded sections are designed to guide your community to economic stability before, during and after major disaster events such as floods, earthquakes and tornadoes. Each section correlates to a phase in the standard emergency management (EM) disaster cycle. As you move though the time line, this guidebook provides specific economic tips and insights for each phase.
The disaster cycle is a tool used by emergency management professionals that applies to the health, safety and welfare of the general public in response to natural or man-made disasters. Community recovery after a disaster includes maintaining a healthy economy, and this requires prioritizing elements that are not always as obvious as those aimed at preserving safety and health. Therefore, disaster cycle terminology is used here to frame key business sector recovery strategies and improve economic resilience. Why? The frequency and cost of natural disasters has increased significantly. The cost of thunderstorms alone has increased three-fold in just ten years. Stabilizing local businesses is an important but often overlooked aspect of preserving and serving human interest needs. When people are able to work, they have a better chance of putting their homes and lives back together after a disaster.
In many communities, no plan exists to prepare the private sector (businesses, trade associations, manufacturers and retailers) for disaster. According to the IRS, between 40 percent and 60 percent of businesses affected by disaster may ultimately close. A well-constructed recovery plan will help prevent that from happening in your community.
Preparedness is a continuous cycle of planning, organizing, training, equipping, exercising, evaluating and taking corrective action to ensure effective coordination in the event of a disaster.
Community economic preparedness is the responsibility of both business owners and the Local Economic Advisory Recovery Network (LEARN) to ensure plans are in place to most effectively respond to and work through a disaster event.
Response encompasses the activities that address the short-term, direct effects of a catastrophic event, including immediate actions to save lives, protect property and meet basic human needs. Response includes execution of emergency operations plans and mitigation activities to limit unfavorable outcomes. Immediate response typically lasts up to 72 hours.
Community economic response starts after activation of the LEARN to establish a Business Recovery Center (BRC) and communicate directly with impacted businesses.
After a disaster, it is crucial to restore government, individual/household and economic functions in the community. Recovery involves the development, coordination and implementation of operations, services, infrastructure, facilities and programs. Immediate recovery is typically measured in weeks or months, while long-term recovery is measured in the years following an incident.
Community economic recovery focuses on continued efforts to stabilize and enhance individual businesses as well as the community’s overall economic climate following a disaster.
Hazard mitigation actions are designed to reduce the long-term risk to human life and property from hazards. These preventive actions can be simple, such as elevating a furnace in a basement that floods, or can involve a comprehensive approach that includes relocating buildings out of the floodplain or retrofitting critical facilities to provide stronger shelter. Mitigation also includes efforts to reduce the risk of damage to the environment during a disaster, such as planting lines of trees to reduce the impact of dust storms, installing breakwaters to protect a harbor, or devising sound land-use ordinances and building codes. The long-term actions are undertaken during periods of calm and stability.
Community economic mitigation efforts incorporate many efforts to lessen the impacts of disaster events on businesses and the overall economy in the event of a disaster.
Formation of a Local Economic Advisory Recovery Network (LEARN) group that will lead the economic response in a disaster is essential. The LEARN group should be formed in the preparedness phase to ensure that the lines of communication among key players are established well before the disaster. When a disaster is unfolding, it is essential to have an accurate roster of critical entities that need to be involved in communication and outreach to business. The diagram below identifies potential stakeholders and resource providers in your community that should be part of the LEARN group.
The listed structure represents a roster of potential participants.
Communities should customize rosters to establish a balance between committee size and efficiency.
The chief elected official is responsible for ensuring the health and safety of residents and the economic stability of the community. Economic development leaders are responsible for forming strong relationships among stakeholders by convening meetings of the LEARN group to develop and update economic disaster response plans and to execute training opportunities and exercises.
Individual businesses should take an active interest in their communities by getting to know their neighboring businesses, industry sector groups, economic development leaders and elected officials to ensure open lines of communication at all times, particularly during a disaster. Likewise, communities need to be aware of the needs and vulnerabilities, especially from a human resource perspective, of the companies that provide economic value to their region.
- Invite stakeholders to participate in a meeting to discuss your community’s current level of economic disaster response preparedness and create a formal LEARN group.
- Create a public-private partnership focused solely on business disaster preparedness education, situational awareness and relationship development.
- Develop and continually update your economic disaster response plan. Consider the following elements:
Businesses of all sizes are expected to have the capacity to protect their employees, infrastructure and facilities in case of a disaster. Business continuity planning, along with protecting information and being able to access it remotely, is essential. Chambers of commerce and economic development organizations are key partners in expanding private sector understanding of disaster management.
Using communication channels already in place can speed up response capabilities. Often communication threads within companies are kept updated, but communication channels with other regional partners are not. It is important to recognize that collective communication can enhance the deployment of best practices between partners.
Regular use of messaging through these channels assures that the information remains updated. Just as regular emergency broadcast messages assure that people will have access to critical announcements, regional communication channels should practice regular tests of the effectiveness of the tool to deliver information.
- Establish a plan to work with local businesses to put business continuity plans in place.
- Recruit a local leader who will champion the need for, and importance of, business continuity planning.
- Offer business workshops on a variety of preparedness topics such as insurance, information technology and risk reduction.
- Designate a sub-committee of the LEARN group to take the lead in coordinating business communication in a post-disaster situation.
- Publish your economic disaster response plan along with your body of work related to business disaster preparedness and continuity planning. This helps build relationships and gives partners a single place to go for information and updates.
Optimally, disaster financing programs will be designed and in place before a disaster. Because loan funds from the U.S. Small Business Administration (SBA) are available only for officially declared disasters, those funds can take longer to obtain.
Access to local sources of emergency working capital is vital. A proven national best practice is to provide small, very low-interest emergency microloans quickly.
Small amounts, low-interest rates, simple collateral requirements and quick lending decisions are vital for emergency microloans.
Having these tools in place is an important part of a communities preparedness, but making sure that businesses are aware and have access to bilingual information on programs is also important. Recognize that when a disaster strikes is not the optimal time for businesses to review complicated documents. Consider having advanced ‘pre-qualification’ events for businesses to register as a planning tool.
- Create a disaster emergency microloan program that can be quickly deployed following a disaster to provide small amounts of operating cash for immediate recovery.
- Amend your community’s revolving loan fund manual to allow for quick processing of post-disaster loan applications.
- Provide education to the business community on insurance issues. Local agents and business owners frequently misunderstand flood insurance.
- Create a list of additional post-disaster financing resources.
- Develop a plan to work with the emergency management director to gather loss data for a possible SBA declaration, which will provide access to additional loan funds.
- Research creative, successful financing options used in other areas and customize these to your local needs and fund availability.
What would happen if a large employer suddenly shifted jobs to another location or if half of a community’s Main Street businesses failed within a few months? Job losses and business failures after a disaster drag down a community’s economy long after debris is cleared away.
An estimated 25 percent of all flood damage happens outside the floodplain.
- Identify the businesses and infrastructure that are most vulnerable to disaster.
- The floodsmart.gov website has a free address-based risk assessment tool to help businesses and home owners know what to expect in the event of a flood.
- Encourage your community to look into the FEMA Community Rating System.
- Encourage businesses to develop a continuity plan
- Encourage them to discuss possible private sector mutual aid agreements and how they might be enacted.
- As a part of the county hazard mitigation plan, consider using GIS analysis to show vulnerabilities for key economy driver enterprises.
- Integrate emergency management into the community’s comprehensive plan.
- Ensure economic development considerations are included in the emergency response plan.
- Inventory major facilities and spaces within your community that could be used as a business recovery center. To avoid confusion, establish a location separate from the FEMA disaster recovery centers.
Emergency service providers focus first on health and safety, followed by critical infrastructure and services. When an Emergency Operations Center (EOC) is activated, a single point of contact from the LEARN group relays regular status updates and information needed by emergency service providers, and crisis status reports are delivered back in return.
Having this defined structure assures maximized efficiency and the reduction of duplicated services. This allows for the appropriate delegation of tasks to the entity most capable of responding, and relieve emergency workers from relaying status updates to multiple entities.
The LEARN group is also responsible for providing economic considerations to discussions at the response stage, influencing the immediate recovery decisions that are made. It is important to note, that often the long-term economic distress exceeds the immediate challenges by creating negative consequences for large populations over extended periods of time.
- Convene a meeting of the LEARN group. Identify any contacts who should be part of the group but have not yet been part of the conversation.
- Evaluate, adjust and begin making plans to deploy your disaster response plan. Clarify the needs and make staff assignments so the organizations are ready to start recovery assistance actions as soon as possible.
- Develop a disaster-specific list of frequently asked questions and make it readily available to businesses.
- Establish safe and stable facilities where response actions can be coordinated.
- Provide up-to-date communication via a single point of contact to the emergency point of contact members. Make sure emergency service providers are aware of compelling business distress and provide useful information on physical damage and projected impacts.
- Determine what damage assessment tools are best suited to the anticipated recovery situations. Consider, discuss and confirm how implementation will work.
- Plan on frequent meetings immediately following the disaster to update stakeholders. Demonstrate willingness to listen and integrate new information into emerging strategies.
- Click here for resources and disaster-specific information.
When the immediate danger has passed, and safety is secured, emergency managers begin preliminary damage assessments. Data collection is limited to the minimal information needed in determining if a formal disaster declaration is warranted. The business community is responsible for communicating a comprehensive assessment of economic damages for potential recovery assistance.
Until approved by authorities, business owners or employees should not attempt to return to their facilities. Dangerous conditions can persist and must be addressed before access is granted. Examples include downed power lines, water traps, weakened walls and hazardous material spills.
Using communication channels already in place can accelerate response activities and information sharing. It is critical that these channels include all employees and displaced workforce populations through means that are disaster resistant. Providing business and economic updates and status reports to shelters and relief agencies helps both the companies and workers understand current status and future implications of the economic repercussions.
- Designate a LEARN group member to attend briefing sessions. Use this opportunity to learn more about the situation and to communicate regarding the response and recovery resources offered by the LEARN group.
- Coordinate with the assigned public information officer on business sector messaging.
- Use existing member lists of organizations and businesses to communicate regarding the response and recovery resources offered by the LEARN group.
- Prepare media messages so business sector information can be distributed and collected through identified channels. Confirm information sharing protocols.
- Conduct door-to-door business outreach if necessary to reach specific businesses.
- Assist local businesses in implementing their business continuity plans.
- Include general population messaging for the available workforce impacted.
- Identify immediate and projected workforce challenges that will result from relocations.
Recognize many small businesses lack adequate business continuity planning and do not have significant operating reserves. Having an accurate picture of operating capital needs is critical for the recovery period. Business owners need cash flow to cover uninsured damages and lost production, sales and other revenues. Saving and accessing financial records will be important. The way the community responds to this need can significantly impact the cost and duration of recovery.
Often during a crisis, local lending organizations are also impacted in their operations. It is important to have a clear assessment of local capacity, and to understand external resources that might provide additional support. Active national emergency declarations can trigger waivers of proximity rules for Community Reinvestment Act (CRA) fund utilization.
- Assess the impact on the business community and tailor the response to needs based on the disaster type, damage and severity. Gather and update information that will be needed for the emergency microloan program.
- Market and deploy your disaster emergency microloan program. If one does not exist, quickly work to create one.
- Ensure that the “financial dashboard” of information (recovery funds available, business impacted, cost of damages) is included in outbound communications.
- Educate impacted businesses on other recovery funding sources, such as SBA loans, which may be available to them in the future.
- Encourage businesses to take lots of photos and save receipts. SBA loans have strict requirements about duplication of benefits, so keep good records of recovery expenditures.
- Coordinate distribution of free clean-up kits (available through the Red Cross or public health departments) to businesses.
FEMA and SBA damage assessments are designed to collect minimum qualifying data to determine if a formal disaster declaration is warranted. A separate business damage assessment tool coordinated by the LEARN group must be deployed quickly to ensure that economic considerations are included in the decision- making process and for potential future recovery assistance.
There must be clarity to business constituents that the data collected will enhance the eventual resources available to them, but that economic surveys DO NOT automatically interface with other federal and local disaster efforts. It must also be clear that data collected from individual businesses will not be released publicly, and that all data will be represented in an aggregated form. For this reason, survey documents should have a method for deterring duplication of reporting from individual businesses, if multiple agents are deploying surveys.
Business and economic data, when properly collected, can serve to put the scope and scale of the disaster into context, both in terms of moderating exaggerated impacts that can damage public perception, and in maximizing the understanding of where unmet needs exist.
- Establish a business operations center in a safe and stable facility where response actions can be coordinated.
- Reach out to area businesses as quickly as possible. Frustration is more likely to occur when citizens and businesses perceive a lack of action and preparedness on the part of municipal, economic and emergency management professionals.
- Implement the chosen damage assessment tool after evaluating resources that may be able to assist in outreach and data collection.
- Use the damage assessment data to gauge business impact. The data will help in further developing recovery programs and can simplify later grant-writing.
- Keep track of recovery assistance amounts and efforts. Plan for transparency in reporting.
- Adapt existing organizations to meet needs instead of starting from scratch (e.g., SBDC, technical colleges, etc.).
- If applicable, provide information on available commercial or industrial space in the community. Encourage business owners to relocate equipment temporarily to ensure that critical production line equipment is protected.
- Facilitate business-to-business assistance. For example, in a recent disaster, a trucking company sent unused trucks to rescue thousands
of dollars in inventory from encroaching flood waters.
- Consider personal losses that business owners may be facing at the same time their businesses are suffering. Connect these individuals with resources and organizations that may help them with personal losses, such as Volunteer Organizations Active in Disasters (VOAD).
Response and short-term recovery can overlap. Streets may be cleaned up and everything may look fine on the surface, but small businesses may still be extremely fragile. Elected officials and economic stakeholders should encourage dialogue in the business sector to proactively identify and address economic challenges using a case management system and put “boots on the ground.” Businesses need to adjust their strategies on finance, marketing, human resources and operations, so a variety of expertise is required.
Often businesses are not aware of programs or resources that can assist them in developing solutions and new strategies. It is important to keep businesses engaged in recovery activities. Companies with remote corporate headquarters are particularly vulnerable to retention risk if the leadership is not engaged in active problem solving and resource delivery on the Island. This can often translate to the perception within an industry that the business climate is not hospitable.
- Recognize that short-term recovery usually takes six to twelve months, and long-term recovery is generally considered to take three years. Rebuilding can take even longer.
- Accept new members in the LEARN group and continue to meet regularly.
- Connect with state and federal partners. Collaborate locally to tap into new funding sources. Recognize the need for perseverance when seeking assistance from county, state or federal resources. Become knowledgeable about economic issues; the impact on jobs and wages can be a compelling argument when requesting aid.
- Tap into resources like the International Economic Development Council (IEDC) and restoreyoureconomy.org, which have current information and best practice expertise from across the country.
- Adapt local economic plans and strategies to reflect new realities and opportunities available during recovery.
- Reach out to nonprofits that are helping in recovery efforts, and coordinate with them wherever possible to minimize duplication of effort.
- Help businesses feel less isolated by hosting outreach sessions led by the LEARN group.
The bigger the disaster, the more critical it is for a community to have a shared vision of how a successful recovery will look. Future economic strength will depend on how well the vision and opportunities for recovery assistance are communicated and pursued. Maintain communications over the entire course of recovery, however long it may last. Communication priorities should focus on letting community residents and visitors know that businesses are still open. This is especially true for tourism-dependent areas or when general access to businesses is affected.
External messaging is also critical to minimize negative branding related to disasters. Stories of business continuity success and resiliency improvements need to be actively gathered and reported.
- Continue to use a “one-stop shop” business recovery center approach to link all agencies and organizations providing resources for business recovery. Establish a hotline and web presence and post hours for walk-in assistance.
- Use all available communication channels to get the word out regarding the business recovery center resources. Promote the availability of business counseling and recovery financing options.
- Hold informational sessions for businesses to learn first-hand about the technical and financial resources available to them in the recovery and rebuilding process.
- Ensure that individual businesses manage their messaging to employees, customers, suppliers and other partners. Regular updates should be relayed to these groups about recovery efforts and progress.
- Continually assess business recovery progress and needs via relationships between members of the LEARN group and local businesses.
- Continue to communicate regularly, even as media attention wanes and the community seemingly returns to normal.
- Schedule interviews with local journalists and media contacts three, six, nine and twelve months after the disaster.
- Document techniques that are successful for future reference and best practice sharing.
Maintain an understanding of the economic conditions of businesses and advocate for programs that might offer solutions. Federal or state disaster recovery assistance is provided through loans. Local resources will need to fill the gap before Small Business Administration loans become available. FEMA does not offer business assistance.
Long term financing solutions will rely on the comprehensiveness of the economic data collected during the response stage. Many federal funding sources require data validation for grant applications, and scale award values accordingly.
This is also a time to create collaborations within industries for business entities suffering similar challenges. Some federal funding sources cannot provide assistance to individual companies, but can engage consortia with aggregated needs defined. Not for profit organizations, units of government, and academic entities should band together to create strategies that represent industry needs, local capacity, and defined positive job outcomes. Creating a pool of skilled bilingual grant writers is an often overlooked resources that provides significant value.
- Continue publicizing the availability of recovery loan resources.
- Enlist SBDC offices, technical colleges and other business support organizations in providing disaster recovery finance counseling for affected businesses.
- Engage the EDA, USDA Rural Development and the SBA in discussion about the longer-term financial recovery plan.
- Encourage businesses to re-evaluate their business plans and redefine themselves and their markets. Recovery steps can present opportunities to change or grow, which may help shorten payback times.
- Urge businesses to avoid relying on credit cards to offset losses. Such strategies unfortunately mask the cost of recovery and create a larger financial burden in the future.
- Monitor the progress of businesses who utilize micro loans, and publicize progress when they are repaid.
- Keep good documentation: SBA funding requires financial statements and tax returns. Keep receipts for everything purchased during recovery. It’s especially important to document these if more than one loan source is use, to avoid duplication of benefits.
The economic multiplier for locally owned businesses is relatively high. More of the money spent in locally owned business stays in the community versus money spent in non-locally owned businesses. Therefore, targeting specific programming assistance to locally owned firms may be beneficial.
Re-evaluate existing economic development plans and adjust priorities to better match the scope of the disaster and the entirety of regional needs. This is an important time to reinforce the importance of all facets of a regional economic ecosystem. As all partners understand the interconnected value of other entities within their ecosystem, they are better equipped to support balancing available funding cooperatively rather than competitively.
Be clear that recovery activities create a story about the effectiveness of a regions ability to support industry partners. New businesses interested in locating in a region will evaluate previous resiliency and response profiles of a community as they decide whether it aligns to their anticipated needs. Most corporate annual reports specifically detail business continuity and risk mitigation strategies as they report to shareholders on the strength of the company.
- Provide emergency managers with a list of the business resources available through the LEARN group so they can distribute this information as they continue to work on recovery across the community. Continue to communicate the business needs to emergency managers as well.
- Gather data and mapping information from the actual results of the disaster to make sure there is comprehensive information for full recovery and future mitigation. The business and economic impacts need to be fully documented to serve future economic interests.
- Partner with local units of government to add disaster-specific data from the business sector to all hazard mitigation and response plans and maps.
- Business recovery centers should have regular hours at first. As needs change, the online presence and case management system will reduce the need for on-site staffing.
- When a federal disaster is formally declared, share community and economic information with the Joint Field Office (JFO). Include an economic profile and tourism guides. Encourage JFO staff to visit locally owned businesses.
- The LEARN group and individual businesses should keep records of what happened, what worked and what didn’t. Use the information to adjust future response actions and modify continuity plans. Be willing to share your story to help build awareness.
Long-range mitigation decisions should consider future economic factors. Develop mitigation strategies based on hazard identification and economic risk assessment to reduce or eliminate future economic losses.
Hazard mitigation strategies are not exclusively related to financing physical damage. Good hazard mitigation includes physical infrastructure, availability and distribution of planning tools, creative financing tools, real estate asset mapping, and human resource studies. Working with local organizations to finance these mitigation assets will strengthen competitiveness.
Documenting all migration financial support programs provides a clear picture of a region’s ability to recover from future risks more rapidly. As natural disasters increase globally, and in area not previously vulnerable, regions that have sophisticated resiliency skills and resources will have an advantage.
- Encourage businesses to review and update existing insurance coverage.
- Encourage businesses to update their business continuity plans with specific attention to funding in the case of a future disaster.
- Pursue participation in the National Flood Insurance Program Community Rating system, which will result in flood insurance discounts throughout your community.
- Work with local, state, federal and nonprofit agencies to identify potential funding sources to mitigate future disaster impacts in your community.
-Continually track outcomes and return on investment.
- Encourage local governments to evaluate capital improvement plans to ensure they invest in infrastructure that better protects the economy from future disasters.
Identifying hazards that could affect the local economy is vital for the whole community. Include economic developers and businesses in hazard mitigation planning. Analyze where challenges in the communication of needs and resources occurred and define a better system. Conduct forums to discuss hazards, vulnerabilities and mitigation opportunities.
Mitagation is not the removal of potential hazards, rather it is having knowledge of where hazards exist and then applying wisdom and experience towards reducing the potential impacts. Mitigation includes statistically evaluating a communities business composition to make sure there is diversification of businesses that have high resilience profiles and those that don’t.
- Review and update the current county hazard mitigation plan.
- Update plans (comprehensive overview, specific operations, capital improvement, etc.) to address high-risk areas identified in the hazard mitigation plan.
- Encourage enforcement of building codes, standards and floodplain ordinances during the building process.
- Check national resources with disaster recovery expertise. Groups such as IEDC and the U.S. Chamber Business and Civic Leadership Center report on recent incidents and emerging best practices. Research and learn from other communities’ success and best practices.
- Document and share your own successes through professional networks. Highlight successes in local mitigation, especially when the return on investment and planning are realized.
- Identify partners who have not been involved in the LEARN group and add them to the team.
This guide is based on The Wisconsin Economic Development Corporation Economic Recovery Guidebook, developed and produced with disaster recovery funding from the Economic Development Administration.