My mistake!

Today I experienced one of those convergences we all hate.

Between the time that I started my post on our (nearly universal) reluctance to own up to mistakes and the present moment, I’ve had to confront a mistake of my own…worse yet, an error of the type that Darwin abhorred (see his quote on the home page of this blog).

Worse yet, an error that made its way into my prepared remarks at last week’s Congressional hearing.

The mis-statement in question? My assertion that “85% of the small businesses who close their doors because of a disaster never reopen.”

Now prior to last Tuesday, I was so sure of what I had heard, and so confident in what I remembered to be my source, that I didn’t take the time to re-check it.

I should have!

One site I checked stated that according to the Insurance Information Institute, 25% of small businesses closed down due to a disaster never reopened their doors.

Not exactly 85%.

Another site quoted “federal experts” as estimating that 40% of small businesses close their doors permanently after a big disaster like Katrina. One quote attributed to David Paulison, former FEMA executive director, states “Small businesses that don’t have a plan in place generally don’t survive after a disaster, whether it’s a flood or a tornado. We see that anywhere from 40-60 percent of those that are hit like that simply don’t come back to business…”

The Small Business Digest estimates that 75% of the businesses that fail to plan to survive a disaster won’t.”

A Red Cross FAQ states that studies over the years have shown that an astounding 94% of businesses that are affected by disaster will close their doors within two years.

More than 85%…but a little different from “never reopen.”

[Other statistics available on the web speak to a large percentage of small businesses that do reopen, but slowly die over the next year or so…often after their owners have doubled up on their bets by mortgaging their homes and taking other measures to try to save the company.]

These disparate scraps make it clear my prepared hearing remarks, though crisp, oversimplified a far more complex reality. However, they don’t take away from the idea that small businesses are typically among disaster’s victims.

In the spirit of my earlier post, I felt it necessary to inform the staff of the Senate Committee. I’ve done that.

So, my apologies to readers! But also a warning to small business owners. You need to have a disaster plan. Why? Because there are several ways your business can be threatened. To start, your business could be vulnerable now, under the rosy scenario. The odds are against small businesses even absent a natural disaster. Then, your business itself my be flattened or flooded. Or, even should your location itself survive, your customers might be devastated. Or your employees might be too preoccupied with recovery at home to come in to work…get the idea?

Again, my apologies to readers. Mea culpa!

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4 Responses to My mistake!

  1. Lee Tryhorn says:

    Hey Bill,

    Well it seems that you are only human after all! 🙂

    The indirect effects of disasters can also complicate this whole question. The businesses in the town that was the focus of my dissertation research in the Australian Alps lost millions of dollars in revenue because of the 2003 fires. Not because they were burnt out (they were untouched by the actual fires), but because the region was fire affected the tourists disappeared and it took several years for the tourist numbers to bounce back. The message that the Alps were no longer on fire did not seem to filter through to the general public, so the tourists stayed away. This type of indirect effect is very difficult to plan for and also makes it difficult to quantify how much was actually lost.

    • william h. hooke says:

      🙂 Thanks, Lee: Your comment is terrific…and timely as well, because yesterday’s triggering event was a call from someone at the US Travel Association on just this point — the tendency of tourists to stay away from affected areas, even though everything is okay. We saw that last summer with the Gulf Oil spill, even though President Obama, The Tourist-in-Chief, went down there. We’re seeing it in Memphis, etc., because of the floods. A few years back, when Colorado was experiencing a spate of wildfires, the governor went on the air and said, “the whole state is on fire!” and that kept people away for a good while.

  2. Professor Bob Ryan says:

    Very well done – making mistakes is human, admitting them is saintly.

    • William Hooke says:

      Thanks, Bob…makes me feel a little better!

      But I’m afraid this means that I’m really, really human…and beatified several times over…

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