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Dealing With Contingencies

4 min read

“You never in your wildest imagination can imagine two of your businesses just getting totally destroyed.”

This unthinkable scenario became a reality for Anne Fuller last March, when an EF3 tornado ripped through the west Little Rock building that houses her company, Best Association Management.

Fuller, the company’s president, also owns and leases out space in the Shackleford Plaza building – which was left in ruins. But this wasn’t Fuller’s first brush with disaster, so she had learned to have plans in place to get Best Association Management back on its feet quickly.

“Before I bought our building, we were in another space, and I lived through two floods in that space,” Fuller said.

Because Best Association Management’s computer server hosts large amounts of client data, she said, “We had learned to have an off-site backup and on-site backup. And then we had a third backup, which was the cloud. So we had lots of backup.”

Best Association Management tornado damage (Photo courtesy of Anne Fuller)

Having also learned lessons from the COVID-19 pandemic, the company had made it possible for employees to work remotely.

“So, the contingency was that if we ever had a problem, we could go work from home, and we’d be able to utilize our backups,” Fuller said. “If we were burned out, we could have done that scenario. If we were flooded, we could have done that.”

Darin Hoover, president of McGhee Insurance Agency in Little Rock, said this type of contingency planning is vital for small businesses, in addition to their insurance coverage.

“It’s important that businesses have a plan in place in case of a business interruption, whether it’s caused by natural disaster, fire, power outages or civil unrest,” he said. “There are several steps that go into being prepared.”

First, Hoover said, a business should conduct a risk assessment to identify potential issues. In addition to natural disasters or fires, this could include location-specific problems, like flooding, or other potential vulnerabilities, like cyberattacks.

Once business owners have identified their risks, they should create a continuity plan that outlines how to maintain essential operations during and after a disaster, Hoover said. This could include details such as communication protocols, evacuation procedures, plans for protecting physical assets, data backup and recovery plans, and options for alternate suppliers or vendors.

Once a contingency plan is in place, he said, it’s important to communicate it with employees and conduct any necessary training.

“Preparation looks different for each business,” Hoover said, adding that some businesses may be able to operate remotely or temporarily relocate their offices, while others might have to cease operations until they can repair or replace their facilities after a disaster.

PattiCakes was destroyed in a fire in January 2024, halting the bakeries’ operations.
(Kurt Jones.)

This was the case for Patti Stobaugh, owner of PattiCakes Bakery in Conway.

A January 2024 fire destroyed one of two PattiCakes locations in the city. Unfortunately, that location contained all of the bakery’s production equipment, forcing the closure of both locations for months as Stobaugh and her husband and business partner, David, pondered how to move forward.

Ultimately Patti Stobaugh, 66, announced she would not reopen the bakery, citing her age as a reason. But, like Fuller, the Stobaughs had learned lessons from a past disaster that left them more prepared this time around. A 2016 fire heavily damaged their other Conway business, Stoby’s restaurant.

“We did learn after the Stoby’s fire to make sure that you’re adequately insured or willing to accept the loss,” Patti Stobaugh said. “We took a very hard look at all of our coverages and made some changes so we were adequately insured on the [PattiCakes] building.”

Stoby’s, a Conway staple, was rebuilt after a fire in 2016. (Google Maps)

And, like Fuller, Stobaugh said PattiCakes had made sure to back up its data to the cloud every day. So she was able to access important information, including accounting records, despite losing several computers in the fire.

Both Fuller and Stobaugh said they also learned new lessons from their most recent experiences with disaster.

“I wish I’d had business interruption [insurance],” Fuller said, “because basically it took us a week to set back up to work remotely. And so we lost probably seven or eight days of staff time.”

Fuller also said she’d learned that her business was responsible for insuring rented office equipment on her property.

“If you’ve got a $60,000 copy machine that’s not yours … or you have a leased postage machine or whatever, you should have coverage for all those items,” she said.

Hoover said insurance options can vary greatly from business to business. An insurance agent can help determine the best coverage for a particular business by considering factors like business operations, assets, the number of employees and contractual obligations, he said.

Stobaugh, meanwhile, recommends businesses immediately make a record of all of their equipment to make any insurance claims easier.

“Take your phone and record everything that is in your place of business,” she said.

“If you have to prove your loss to an insurance company, you need somewhere to start,” she added. “And having a video makes it so much easier. We learned that the hard way, because we were in a facility that we’ve been in since 1990, and it’s a 6,400-square-foot warehouse that just had so much stuff in it. And there’s no possible way that we can remember everything that was in there.”

But Stobaugh said her ultimate advice would be to make sure you protect whatever is most vital to your business.

“How do you insure yourself for everything?” she said. “I would say take the thing that’s most important, such as your building, and just make sure that you are covered.”

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