We always try to provide a small voice that whispers in your ear, offering ideas that may not bubble to the forefront of your conscious mind as you fend off the alligators that seem to appear daily in most wholesaler’s life.  This is the old urgent vs. important conundrum that Steven Covey wrote about — that the urgent tasks in our life often supersede some, or many, of the important, often life-protecting tasks that need to be attended to.

So we just want to throw some topics on the table that we think are important and often not urgent until the proverbial waste matter discharged from the bowels after food has been digested hits the apparatus with rotating blades that creates a current of air. From experience, we know that preventing the event is often more fun than doing the cleanup and postmortem.

Disaster recovery

Most wholesalers have little or no DR plan. The recent data center problems experienced by Southwest Airlines (estimated cost up to $10 million), Delta Airlines (estimated cost $150 million) and the FAA remind us that unplanned events do occur.

While the most damaging are often natural disasters, there are often simple flaws such as the piece of switchgear that failed downing Delta’s entire domestic computer operation and, with it, all other airline operations. While you cannot plan for every possible problem, there are some cost-effective, prudent actions that you should take in order to get through these unplanned events. 

Many natural disasters will also render your cell phones inoperative, so you will need a way to connect with your team when all phones are down. One wholesaler in a hurricane-prone area asks all employees to check in with the store (if the store is not under water) for a couple reasons: 1) They will be trying to locate every employee to ensure that they are safe; 2) The branch will be helping the community to get back in operation and will need employees who are available to help.

As you build your plans, consider how many days of revenue you are willing to lose. For Delta, we will bet that nobody would, with the clarity of 20/20 hindsight, refuse to spend millions to install redundant switchgear given the huge penalty they paid for not protecting this vital, single-point of failure in their mission-critical system.

Manual Procedures (Phase 1)

Ideally, you will be able to operate your stores if there is a computer outage or a network outage. Most wholesalers have become so computerized that they cannot imagine taking and filling orders without a computer. Unlike Delta and Southwest, most wholesalers could hand-write orders, pick product and deliver it without a computer if they are minimally prepared. Some wholesalers would simply send the team home claiming that it would just be too complicated to do otherwise. It is also important to consider that in disasters impacting a whole community, our industry is often the source of critical materials needed to restore lights, heat, water and sewage to the community.

Manual Procedures (Phase 2)

Rich had an old flight instructor who would concoct simulated emergency situations while flying and declare, “So now the cheese gets binding.” Rich never fully understood the phrase, but it always meant, “So now the real hard work starts.”

Phase 2 is when you need to operate for an extended period of time (like Katrina) while attending to the other operational problems like invoicing and collecting because few companies can easily forgo the cash infusion. Then there is the procurement of product and inventory management that will be needed in order to serve customers.

Data backups

Any plan that involves the team, who may be running for their lives, “trying to grab the server on their way out the door” needs some serious work. There are always two parts to data backups: 1) Having a current backup of your data that is available to you when and where you need it; 2) Having the ability to restore it onto a computer that can then be used to continue the operation of your business. There are lots of “great” data backup plans out there that were concocted years ago, put into a drawer, never tested and that, when the chips are down, will result in days of outages and great expense. 
Some reminders:

• Have multiple copies of your data. Data devices and media are vulnerable to Murphy’s law and thus they will fail when you need them the most.
• Have data backups in multiple locations that are not likely to be impacted by the same flood, wildfire, hurricane, tornado, massive solar flares like the ones that just missed the earth in 2012, etc.
• Have multiple copies of print and electronic data restoration plans that include all the passwords needed to rebuild the data and network on a completely new computer in a new location. If the passwords required to restore the down network are on said network that will not work out in your favor. 
• Have whatever hardware is required to access the backups available too in a secure location. (Many wholesalers back up their data on antique (that’s more than three years old) tape or backup devices that could not be readily replaced if the original drive is destroyed in a fire, flood, tornado, hurricane or other catastrophic event.)
• Consider monthly and yearly snapshots of your critical data that are never overwritten. 
• Have a clear understanding of how long the restoration will require and what will be lost in the process.
• TEST your backup system.

Using the cloud doesn’t absolve you of needing a plan

Rather, it’s just a different plan. We would have trouble sleeping nights if all our business data was housed many, many miles away along with hundreds or thousands of other users. Cloud providers promise that they are covered six ways from Sunday, but that’s what Delta and Southwest thought.

In the immortal words of Lily Tomlin, “When the going gets tough, we’re all in this alone.”

If their plan doesn’t work, they will be very sorry and may even send you a $50 gift card from Starbucks. Ten iced mochas will not be much solace if you are out of business. The first task is to really understand your provider’s DR plan. If it involves magic or sounds too good to be true, it probably is. What happens if their plan doesn’t work? If they have all copies of your data, the event is going to leave a mark – on you. Consider whether you need a copy of your data at your location.

The ‘hit by a bus’ plan

Many independent wholesalers are very dependent on the talents and skills of their owners and key employees. There should be a plan for how the company will operate if the owner or key employee is suddenly unavailable. There needs to be a multi-tiered plan for short-term stuff, such as getting the keys to all the critical operational locks, the passwords to critical software systems, procedures to process payroll, necessary approvals for writing checks and drawing on the line of credit, etc. so the doors can be kept open. Then, a plan of attack for transitioning to a new leader whether family or hired gun.

A serious succession plan is at the heart of this process. Most families never even discuss the possibility, so they are caught flat-footed when it happens. We have heard many stories over the years about companies and families thrown into a business mess, in addition to their grief, when the unexpected happens.

Succession plans

In our mind a proper succession plan involves two parts: 1) identifying the people in the organization who will replace others as they retire, leave the company or contact the aforementioned bus; 2) A process for grooming the successors for expanded responsibilities in the organization.

Family development plan

We continue to harangue our readers with this one. If the next generation of family is destined to take over the company, they must be consciously prepared to assume their roles. We continue to see situations where there is little, if any, being done to actually help the family kids to handle the situation.

If you are an owner and you die suddenly, your family will be thrust into a ton of turmoil – even if you have worked to prepare for the transition. If you are lucky and live to be 100, the time spent in preparing the next generation will help them to carry on as you enjoy your retirement. Of course, if you don’t care about what will happen to your wife and kids, just kick the can down the road

Use this column to start your own list

We have probably missed other topics that should be included in your thought processes and plans. We hope this reminder will cause you to move some of this disaster and contingency planning higher on your list of priorities. For more on DR plans write us at rich@go-spi.com or jen@go-spi.com.