Businesses deal with many damage concerns. In summer, they watch weather reports for severe thunderstorms, flash floods and tornadoes. In winter, they fret about frozen pipes and snowed-in entrances. Fire, however, is a year-round threat that many organizations forget about.
In 2017, firefighters responded to 111,000 nonresidential fires. Many of these incidents were preventable, with the top five causes including:
- Cooking
- Carelessness
- Intentional acts
- Electrical malfunctions
- Heating
Unfortunately, this emergency has the most potential to ruin a business.
Why Fires Ravage Most Businesses
Fires happen, and when they strike a company, they’re often deadly. Between 40% and 60% of small businesses never reopen their doors after a disaster. For the ones that do, around 90% fail to survive the year unless they can resume operations within five days.
The costs come from several sources, including the ones below.
Building Damage
Fires generate heat, flames and smoke, all of which damage structures and their contents. To eliminate the issue, firefighters use materials like water and powders, which further ruin properties. A small incident can cause costly damage to the interior and exterior of a building, including walls, plumbing, electrical systems and HVAC units.
Repairs can cost a company thousands, plus it results in downtime where profits halt. For an organization lacking the necessary security net, it could mean the end of operations. Alternatively, it may mean applying for a loan or other type of financing.
Property Damage
When a building goes up in flames, the damage extends to everything housed inside. Fires can wipe out computers, tablets, printers, cash registers and other tech devices. They burn up the inventory needed to complete sales or services. Plus, if an employee gets hurt while on the job, the company could face a lawsuit.
Replacing all the supplies needed to reopen the doors could require a significant investment. Businesses can be proactive by purchasing commercial property insurance. The right policy will protect all physical assets from damage, including from fires, water, theft and more.
Workforce Damage
As mentioned above, fires often require time to recuperate from. In the meantime, the business isn’t functioning, and money isn’t coming in the door. Loyal employees will need to look for alternative sources of income. While some may return after renovations, others may find they prefer their new position.
You can purchase an insurance policy to protect from lost wages as well as property damage. Business interruption insurance will cover the loss of income, ongoing operating costs, and additional expenses suffered due to a major disaster and the related rebuilding process.
Record Damage
All the devices used in daily business could be lost, along with the accompanying software and data. Information is valuable, a commodity that cybercriminals often steal. This loss can also occur due to hardware malfunction, something that happens during fires.
The average data loss incident costs $3,957 — a number that takes into account technical services, halted productivity and the value of missing information. Even if the price to restore the business structure and equipment is minimal, the loss of necessary client and project data could ruin the chances of reopening.
How to Prepare for and Prevent Fire Damage
A disaster can prove deadly for a company in terms of destruction and lost productivity. Fortunately, it can take steps to prevent and mitigate damage.
Upgraded Equipment
Businesses should invest in tools that can prevent, detect and warn employees of fires. Install the most reliable smoke detectors available and test them regularly. Properly working devices give people enough time to respond to emergencies and potentially reduce damage.
Add enough fire extinguishers appropriate for the size of the building, and ensure they’re accessible. A trained employee can use this tool to stop a minor fire from turning into a major one. A professional sprinkler system can also mitigate the impacts of flames.
Safety Requirements
Companies need to look up safety requirements and keep buildings up to code. For instance, records show sprinkler systems are effective at fighting fires 88% of the time when activated. Unfortunately, however, many property managers are unaware of equipment conditions.
Staying up to code requires routine fire safety inspections, a process that can prevent devastating losses due to a disaster. A professional will inspect smoke and fire alarms, emergency exits, fire extinguishers, signage and more. They will also determine how fires can start in the building.
Emergency Plans
The best way to respond to an emergency is with a predetermined strategy. Employees should know what to do if they see a fire break out, including how to operate extinguishers. Ensure all exits are appropriately marked and educate workers on why it’s necessary to avoid taking the elevator.
Many companies run through fire drills, where workers practice evacuating the building and meeting up at a secure location. Businesses in a multitenant building should coordinate their plans with the property manager.
Fire Damage — Can Your Business Survive Disaster?
Due to the destructive nature of fires — and the high-cost damages associated with them — this type of disaster often devastates businesses. Even the majority of those who reopen their doors close permanently within a year. To survive the cost of fire damage, companies must take preventive and proactive measures.