— By Michael Mastous —
Fire prevention and protection tips business owners need to know.
According to the U.S. Fire Administration, 8.3% of fires take place in non-residential properties, with an estimated 100,300 non-residential fires reported between 2014-2016, resulting in annual property losses of $2.4 billion, and, tragically, an estimated 90 deaths.
Michael Mastous, Delta Disaster Services
What does this mean to you, as a business owner? Fire protection and prevention is an integral aspect of keeping your business, employees and guests safe.
The Cost of Fires Lies Not in Repairs
With a commercial fire, the real cost isn’t necessarily the restoration process. In fact, the time the business is interrupted (i.e., not producing revenue due to being closed for repairs) is often more expensive than the repairs themselves. And, even still, the real impact on your bottom line can be much harder to identify. But we’ll get to that later.
One of our fire restoration clients was a fairly large car dealership in the Denver market. After it suffered a fire, we had to look at the business holistically to strategize what to restore first. There are four separate revenue streams that encompass a car dealership to analyze: new cars, parts, used cars and service. Figuring out which one of these business arms to restore to productivity first, and the order of the remaining ones, was key in minimizing the financial impact of the fire.
Property restoration costs could run anywhere from $50,000 to $100,000, but if the car parts department is down for 3 weeks and generates $50,000 a week, that’s $150,000 in lost revenue. Understanding these nuances is integral.
The good news is that it’s likely in your insurance company’s best interests to get repairs completed as quickly as possible — the faster the work gets done, the less it has to shell out in lost revenue.
Fire Costs You Don’t See Upfront
But, it’s not just lost revenue that business owners have to worry about. What about all of those folks who were planning to come in and spend money while your doors were closed for repairs? Well, they’ve likely taken their business elsewhere. Moreover, while most insurance plans will cover employee wages and lost revenues, they won’t cover the business you lost to your Number 1 competitor.
It’s important to remember that the real cost is an inefficient restoration process. Choosing the right restoration services provider with an expert team — who is dedicated to getting the job done effectively and efficiently — is essential.
Choosing the Right Insurance Plan — and Broker
Let’s talk about protection. That, of course, starts with insurance.
Property insurance policies for commercial spaces are completely different from residential policies and therefore require a very different set of expertise and approach. Commercial policies are a shell, whereas homeowner policies are “filled in.” It’s up to you and the insurance broker to build out the policy to your needs and specifications.
Therefore, it’s important to work with a broker who has sustained a significant loss or two so they can make sure you are choosing the right plan and building it out in a way that covers you, entirely. Additionally, make sure you work with a broker who insures businesses in your space — they will understand the nuances of your business and specifics you’ll need in your plan.
Fire Prevention — Preparedness is Key
When it comes to fire prevention, there are ways to keep your business and your employees safe. Here are a handful of pointers:
- Check the fire suppression system annually. This system is vital to minimizing a fire’s damage once it starts; ensuring that it runs properly is key to fire safety.
- Keep fire extinguishers visible, up-to-date and inspected.
- Test smoke alarms often and replace batteries as needed.
- Pay attention to changes in the fire code. Local governments update them on an ongoing basis.
- Make room for appliances, like toasters and coffee machines. There should be space between appliances and the walls so they can breathe. Additionally, unplug at the end of the day, if possible.
- Finally, prepare staff for arson. Surprisingly, arson is one of the leading causes of commercial fires. Properly training employees is fundamental to preventing arson from impacting your business. They should keep a watchful eye on what’s going on at all times, lock all doors and properly dispose of waste.
Remember: Planning Ahead Gets You Ahead
For business owners, planning ahead for fire protection and prevention is crucial to making sure that you’re minimizing the risks of a fire starting (with best practices like testing smoke alarms and training staff to prevent arson risks) and, in the event that your business does suffer a fire, your insurance plan provides the necessary coverage. Thinking this through sooner, rather than later, will position your business to get back to productivity and profitability as soon as possible after the smoke clears.
SIDEBAR:
A Restaurant Case Study
During a recent restoration project we completed for a restaurant client, many of the considerations we discussed here had to be taken into account prior to beginning work.
The fire originated in the kitchen due to improper ventilation. For health reasons, the restaurant had to be shut down. We prioritized the bar area first, as this was the restaurant’s highest profit margin area.
After we worked to reopen the bar, we began restoring the kitchen and dining area. This took 3 weeks, due to insurance coverage issues that stemmed from required asbestos cleanup work. Our team worked closely with the insurance company to represent costs and cause — a key advantage in working with a restoration firm that has strong relationships with insurance carriers.
— Michael Mastous is founder and president of Delta Disaster Services, which provides restoration services to commercial and residential properties for water, fire and environmental damage, including reconstruction, in 30 markets across the U.S. Delta Disaster Services is part of HRI Holdings’ portfolio of franchise brands.