Samantha Ford – Adarna Consulting

In July 2008 at 4:00am a fire broke out in the offices of Netbox Blue.  At approximately 6:30 am Trent Davis, Chief Technical Officer and the founder of Netbox Blue was contacted by another tenant with the news that a fire had occurred in the building.

It is believed a faulty emergency light smouldered for a few hours before fire devastated Netbox Blue offices and those of surrounding tenants.  Damage was extensive.  The top floor of the building in which the fire occurred housed 4 different businesses and was closed for over one year.  The floors below sustained substantial water and smoke damage and tenants were not allowed access for 2-3 weeks.  One neighbouring business had to relocate 100+ workers to Melbourne at substantial expense to ensure their business continuity.

For two weeks or more staff worked 24/7 to recover and re-establish operations.  It took another 6 months for the business to get back on track and a further 6 months or so to recoup lost ground.

Hundreds of thousands of dollars worth of damage was incurred by Netbox Blue.  The business was in the beginnings of substantial international activities and a high growth period.  The fire resulted in growth delays and anticipated earning potential was affected in the years immediately following.

All paper based files and records, internal systems, office equipment, servers and computers were lost.  Fortunately, data backups were stored off site and services were already delivered through data centres elsewhere in the world.  A second source of product stock was also held off-site in a warehouse.

The owners contacted staff, undertook an immediate assessment of the damage and began their response by prioritising what needed to be done to ensure business focus and continuity of service.  Customer service, telecommunications and an alternative site from which to operate represented initial priorities.  They also contacted insurers and key service providers who could assist with business recovery.

A temporary office location was found within a week.  It was not perfect but allowed time to undertake initial response and recovery activities.  It was 3 months before a new permanent location was found.  Telephones were diverted to the Sydney office however an Optus outage that occurred in Sydney at the same time caused a few additional problems.

The focus was to ensure the fire did not disrupt service to existing customers.    They did this successfully and the only flow on effect was the cancellation of scheduled meetings and a delay in project development activity.

John Fison credits a great deal of the recovery success to 4 things:

• A good relationship with their insurance brokers – Bright Key Insurance;
• An efficient insurance assessor – Crawford and Co;
• Committed staff and excellent technical people; and
• Strong leadership.

Prior to the fire Netbox Blue had no formal disaster recovery plan in place but they had talked through what they would need to do if such an event occurred.  Since the fire they have made concerted efforts to identify points of failure and risk and put appropriate mitigation measures in place.  Although they are not reliant on a lot of stock what they do have is stored in separate locations.  All systems are now replicated in the Sydney office so access and continuity is swift and efficient.  Data is now stored and delivered through 4+ data centres located across the world.

Two years after the fire Netbox Blue has continued to grow.  They now have a rapidly expanding workforce across their offices and are continuing to build on their Australian and international interests.  A company that offers unique and innovative technology Netbox Blue has won awards for its new products that take the anti-social side out of social media.  Their product and service offerings address reputation, brand and image risk.

The owners at Netbox Blue feel that they have faced their bad luck.  When asked whether there was any personal emotional toll, John Fison replied, “Traumatic is how I would describe it.  I never want to go through that again, horrific, really bad.”

Netbox Blue is a crisis recovery success story.  The technological nature and financial capacity of the business provided distinct advantages in their ultimate recovery from the fire.  The Optus outage that occurred at the same time provides an example of how other non-related events can affect your crisis.  It is also worth considering the devastating effects this fire had on surrounding tenants.  What happens next door can have dramatic effects on your business.  Are you prepared?

For more information on disaster preparedness contact Samantha Ford at Adarna Consulting Pty Ltd.

As a small business owner you’ve probably spent a great deal of time and money to ensure success. You might have sacrificed things and taken risks to turn your idea into something tangible. You may have chosen to do your own bookkeeping, develop your own website and man your own phones in a bid to reduce costs. And you might even be thinking that insurance is just another cost that you can afford to forgo. But have you considered the true financial impacts?

For many small businesses, price is the most important factor when it comes to insurance. As we’ve discussed previously, most of you will be forced to buy insurance through a broker as the insurer will not want to deal direct with you. This means that you may end up paying for cover that you don’t need (although you need to be the judge of that), and you might also pay a insurance broker a fee or commission through your premium. In addition, it is likely that you will be paying for the same insurance product (see the burglary insurance example) as this is the main way in which insurers ‘compete’.

Of course, insurers will argue that they need to hold greater reserves to cover claims but then this is a difficult argument when major insurance companies such as Suncorp are doubling their profits. Still, according to our industry sources, premium rates for small business insurance are still highly competitive…

So, what does this mean for you? Well, consider the photocopier in your office. You like to own what you have and don’t see much point in leasing so you went out and spent a few thousand dollars. The old one died some time ago and is collecting dust in your filing room as ‘insurance’ just in case your new one breaks down. You know that it will cost you about $550 to get the old one repaired.

What happens if your there’s a fire (maliciously lit) in your office over the weekend and you lose both? Well obviously you will need to replace at least one of them – of course, at your own cost as you weren’t insured!

So Mary Joe accidently spills water on the new one whilst she’s photocopying, taking phone calls on the mobile and sorting through the mail. Now you have to get the new one and the old one repaired or replaced.

Say you previously did get the old one repaired and forked out the $550, well, you probably could have insured the new one for about $150 for breakdown therefore actually saving money by taking our business insurance. In fact depending on your policy and your insurer, you probably could have paid $600-$700 (and claimed the GST) and had all of your business contents covered – now wouldn’t that be a better outcome rather than you taking on the risk?

Need somewhere to start? Check out our quick guides here!

Insurance for your business is quite often a one-sided thought: what happens if my place burns down and I lose my property, what happens if I cause a car accident and damage someone’s shiny brand new Mercedes? But the reality is that insurance is as much about protection for your own business as it is for your customers.

Consider the earlier cases of public liability: you’re a graphic designer and one day a visiting client trips over a box of Reflex paper that you had been reminding yourself to pack away all day! If your policy provides protection for personal injury under the public liability section then it will almost certainly be covered. You don’t have a spare $50,000 for physio treatment at your disposal so you would be able to give your client some comfort that the insurer will be able to pay the claim (of course, after you have checked your policy wording or PDS). Indeed, your client is then able to return to work much sooner rather than later..

You run a small legal practice and have a paperless office (dream come true?) that demonstrates your green credentials. A fire breaks out during morning tea in the staff room, melting down critical parts of your computer system. You didn’t have time to set up an online data backup service. Your policy happens to cover the costs of restoring data and you know that you can be back up and running again within a few days. This gives you enough time to respond to your client on an important matter without damaging your reputation. You respond to your client who can proceed on that matter.

You operate 041-PET-GROOM which reflects your mobile phone number. You’re on the road all day so don’t see a need for a landline and you certainly don’t have time for emails. One day, whilst giving a Maltese terrier a scrub-down, your iPhone slips out of your top pocket and into the doggie bath. Another client of yours Mrs Makeltoe, runs a small dog-breading company and is dependent upon you to prep her new pack of Doberman pinschers for a show that she will be doing towards the end of the month. The organisers decide to bring the event forward by one week and she is desperate to get in touch with you. Was your mobile phone insured? How quickly can you get a replacement?

Of course, only you know your business better than anyone else and only you will know what sort of risks you can take – will you operate a catering company without public liability or take out property insurance but no insure your specialised business equipment? Sure, you might have good reasons for doing that but have you considered the risk to your clients as well?