There may have been a time when recovery from a disaster for small businesses just involved getting the mess cleaned out, the damage repaired, new product ordered in, and hanging a “business as usual” sign on the door. However, this is no longer the case. Even for small businesses, the business model today is complex and being able to continue following an interruption of any kind relies on a wide understanding of all the influences that could affect it as well as having carefully prepared plans to get those influences back together following the disruption.
Not only do small and medium-sized businesses need to struggle and work hard and fast to survive commercially, when battling against big-box stores and internet-shopping. While potentially being exposed to incidents that are outside their control, small businesses in most industries also need to operate within tight-industry regulation, and to stay on top of their own business processes, personnel and procedures.
Sadly, as many as 80% of businesses hit by fire, storm damage, tsunami, or earthquake go out of business within a year because they have not planned effectively for recovery. The downtown Ishinomaki case makes this especially clear. Nine months following the disaster, many of the businesses in the downtown core, and the majority of businesses in the Watanoha district have failed to come back online.
May 25th Reopening poster for Maruka
Estimates of the direct material damage of the tsunami are said to exceed ¥25 trillion ($300 billion), but insurance and government coverage will only be able to cover a fraction of those losses. Although there’s not much that can be done in the cases where an entire business’ physical location, and many of the management and staff members were lost, there are several other cases where the lack of a business continuity plan to resume business elsewhere, also contributed to the post-disaster closure of the business. The case of the Maruka Pro Shop in Ishinomaki is a strong case for following the Best Practices scenario for post-disaster Business Continuity Practices.
Business continuity planning is not only necessary to protect an organization against extreme disasters such as the big-three cases that affected the East Coast of Japan, it’s also important to take into account the importance of preparing for electrical problems, IT failures, theft, damage, or irregular and unseasonal local conditions. What should a business do in the case that their best people suddenly resign? Or if one of their key suppliers goes under? Or a new competitor opens up nearby? Creating contingency plans for all of these cases, on top of larger disasters, and understanding the impact on day-to-day business planning, is essential for maintain both day-to-day business, and preparing for long-term profitability.
Despite being completely gutted by the tsunami, losing long-term access to the local fishing pier due to infrastructure damage, losing ice suppliers, and losing many of its customers in the local region, the Pro Shop Maruka managed to reopen its doors on May 25th (only 64 days after the tsunami) in the hard-hit coastal district of Ishinomaki, thanks to effective business continuity practices.
The Maruka Pro Shop is managed by a Mr. Masahiko Sasaki and his wife, Mrs. Kazuko Sakaki. Mr. Sasaki has come to be known as the “Walking Fish Dictionary” thanks to his expansive knowledge of different types of fish, their habitat, uncountable ways of preparing and cooking fish, as well as knowing much about the deep link between the sea and Japanese folklore. He can always be seen first thing in the morning at the local sea ports, haggling and bidding for the biggest and heartiest fish to be caught.
Mrs. Kazuko Sasaki comes from a long lineage of fishermen. She is the eldest daughter of the president of “Miyamoto Fisheries” which has been operating since well before the Meiji Era. It was her idea to refocus Masahiko’s business on the professional sector, to become a provider of top quality and bulk fish products for small and medium sized businesses across Miyagi.
The Sasaki’s had lived through smaller disasters before. They were familiar with how a tsunami could affect local businesses and the fishery sector, by experiencing the tsunami generated by the Great Chile quake of 1970. They knew that fishing supplies would be momentarily disrupted, and expected there to be damage to their main shop.
They studied the breakdown of their business, and worked hard in developing business continuity planning processes and practices that would ensure that, whatever the disaster, the day to day activities of their shop would be able to get back up and running quickly. This included clear processes for their employees so that there is no doubt what action to take, whatever the circumstances. In the case of potential tsunami, the shop workers were well trained in escape routes to nearby hills. The Sasaki’s emphasized that personal safely was the first priority, and told their staff to drop what they were doing, and to run to the hills.
Since Pro Shop Maruka is a middleman, acquiring fish directly from the ports, and selling it to smaller and mid-size businesses, rather than walk-in customers, they were very dramatically hit by the tsunami. Since most businesses in the downtown district had their first floors devastated, and partial flooding of the second floors, many businesses ended up going out of business completely. Since insurance companies refused to cover coastal businesses with tsunami or flooding insurance, and government compensation would only be enough to cover personal living expenses, most businesses without and effective business continuity plan have been unable to cope post-tsunami.
Employing teams of local volunteers, coordinated through local Volunteer Centers, and by visiting the temporary offices of Peace Boat and other local post-disaster NPOs, the Sasaki’s were able to get their shop cleaned out, remove the tsunami sludge, and remove any rotting insulation within the first couple weeks following the disaster.
Once their store-front was moderately recovered by early April, they followed up with a plan to offer the front part of their shop to their pre-disaster customers. Since the majority of coastal businesses were devastated, this means that many of their own customers had also lost their shop fronts. An important element of disaster planning involves contingency plans for not only the acquisition of materials, and relocation, it also means finding ways to protect or recover your customer base.
In Pro Shop Maruka’s case, they extended the offer to four of their local customers, who had lost their own businesses completely. The Takigawa Japanese restaurant, Baorai Sushi, Ishikawa Sukiyaki, and the Loulan Chinese Restaurant. With a date set for a May 25th opening, the Sasaki’s invited the four businesses to set up small stalls in the front of the Pro Shop Maruka. They worked with the Ishinomaki 2.0 and IDRAC (Ishinomaki Disaster Recovery Assistance Council) to secure loans for buying new stoves, fridges, and supplies, and used the power of social media and local newspapers and radio broadcasts for promoting their business.
Pro Shop Maruka excelled at putting their Business Continuity Plan into action, and serves as a beacon for other tsunami, and disaster-affected businesses to prepare for worst-case scenarios comprehensively and effectively.