Surviving a Small Business Catastrophe

Running a small business
Strong relationships in the community could save your business in hard times.

As an entrepreneur and small business owner, unpredictability is part of the game. But when the truly unexpected occurs, how do you recover?

Entrepreneurs face countless unknowns when starting a business. Can we build a loyal customer base? Can we balance the cash flow? Will our hard work pay off? While many of us manage to balance courageous optimism and prudent planning, the majority never prepare for the flood that drowns our premises.

I’m alluding, of course, to the disaster that befell Jump Gymnastics, a successful Vancouver children’s gymnastics facility. Due to a misstep in renovations above the gym, the property was nearly obliterated by a misfiring sprinkler system.

Jump was the dream of Jennifer Hood – a physical education facility for children aged 6 months to 7 years. After years of planning and red tape, Jump opened its doors, in 2008. It was an immediate hit with Vancouver parents. Things were going well as Hood built her customer base, honed her programming, and developed her business. Then, on September 16, the not-so-metaphorical floodgates opened.

The business came to a shuddering halt. All classes were cancelled, staff were laid off, and Hood’s day job shifted from running a successful business to overseeing the massive headache of an insurance claim. Amazingly, last week – only six weeks after the flood – Jump reopened. Along the way Hood learned where the true strength of a business comes from, a valuable lesson for any entrepreneur.

Having the luxury of time

The health of a business can be evaluated by the numbers, but when the shit hits the fan – or the water the mats – the core of a business’s strength is in its community. While Hood’s insurance would likely cover her costs, settling the claim and getting access to those funds takes time. A lot of time.

Like many new businesses, said Hood, Jump did not have excess cash for emergencies. To get the business back on its feet in such a short time, she had to rely on the strength of her relationships. Her credit union, accountant, lawyers, and suppliers were all willing to work in a timely fashion and, in most cases, without immediate payment (which would arrive following the claim’s settlement).

Investing in relationships

Hood’s positive relationships with her staff were crucial to reopening quickly. Rather than hiring and retraining new staff, which would have been slow, most of the current staff put their lives on hold while the business was down. And, rather than take a refund on classes, parents put their kids’ gymnastics schedules on hold while they awaited reopening. In fact, the most impressive numbers in this tale are the return rates of families. Some even offered Hood loans to help the reconstruction. (She declined these generous offers.)

Prior to Jump’s grand reopening last week, Hood was positive about the final outcome of the disaster. She took it as an opportunity to restart her business and a chance to rework some things with the hindsight of her unique situation. She also evolved from an entrepreneur emotionally tied to her project to one whose job is to direct its success. Hood now finds she’s able to make strategic choices based on what is best for the business, rather than tying decisions to her personal choices.

Understanding that money matters

Another lesson for fellow entrepreneurs is to reserve finances. While it may not mean sitting on a cushion of money, having quick access to funds is critical.  

I’m not sure I could muster the optimism that Hood emanates when talking about this experience, but I will certainly heed her advice with a renewed sense of purpose. While no one expects to take such a devastating blow, building a rock solid community of advisors and customers will increase the strength of your business, regardless of whether or not you’re ever put to the test.