Post-Disaster Business Survival Depends On Adaptability

By Deborah Austin After a disaster, why do some businesses rebound while others fail? A recent study suggests possible answers for businesses with fewer than 50 employees. Those adapting to environmental change will more likely emerge healthy than those seeking to simply regain "status quo," the study says. Physical-damage levels have little impact. The nationwide study, "Organizations at Risk: What Happens When Small Businesses and Not-for-Profits Encounter Natural Disasters," by the University of Wisconsin-Green Bay's Center for Organizational Studies, was funded by a grant from the Public Entity Risk Institute, Fairfax, Va. It examined natural-disaster sites including Hurricane Andrew (1992) and the Los Alamos fire (2000), finding five critical long-term survival factors:

  • Impact on company's clientele: If geographically displaced, survival is harder.
  • Availability of substitute goods/services: If easily available elsewhere during company shutdown, maintaining client base is tough.
  • Pre-disaster trends in the company's industry.
  • Extent of financial resources lost: Tighter resources signal less-likely survival.
  • Owner/operator's adaptability to new business environment.
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