Coronavirus

Businesses Prepared for Natural Disasters Are Surviving COVID-19 Better Than the Competition

A government survey finds that prepping for hard times can have wide benefits.

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In the early days of the pandemic, as toilet paper, flour, and other supplies disappeared from market shelves, rueful media stories acknowledged that prepperswho have been the butt of jokes and over-the-top reality showsmay be on to something after all. Being equipped to weather difficult times, it turns out, puts you ahead of the game when those difficult times arrive.

A recent federal report gives preppers perhaps more reason to feel a bit smug. Drawing on the results of a survey of over 1,300 small- and medium-sized enterprises across the country, it reveals that businesses that planned for and have dealt with natural disasters are surviving lockdowns and social distancing better than the competition.

"Nearly a quarter of businesses felt natural disaster preparations helped them address COVID-19," researchers from the National Institute of Standards and Technology (NIST) and the National Oceanic and Atmospheric Administration (NOAA) report of the results of the joint survey.

Two-thirds of surveyed businesses said that they had prepared for natural disasters. The reason why becomes clear given that a large majority of respondentsranging from 74 percent in the West to 89 percent in the Southsuffered natural disasters within the past 10 years. Such disasters included predictable chronic problems (as defined by the survey) such as drought, extreme cold, heat waves, winter storms, and flooding, as well as unpredictable acute events including hurricanes, storm surge, earthquakes, tsunamis, tornadoes, and wildfires.

In a year marked by hurricanes and wildfires in addition to COVID-19, a full 29 percent of surveyed businesses reported suffering from a natural disaster since the beginning of the pandemic.

Unsurprisingly, preparations that help businesses pull through the strictures and economic pressures of the pandemic are those that aren't completely targeted at events such as hurricanes or earthquakes. "Practices with broad applicability shone through over those specific to one kind of disaster. Two notable examples from the responses were having rainy-day funds for when income streams dry up and the ability to operate a business remotely."

Working with companies that would normally be rivals is also a common tactic. "Across the board, there are reported increases in cooperative actions with counterparts in the same industry and geographic location that would typically be market competition."

To a large extent, the NIST/NOAA survey results confirm with data the impressions of a flurry of earlier media takes on the unanticipated (in some circles) wisdom of preparing for hard times when things are good.

"For years, one of the most smirked-at subspecies in the technology ecosystem was that of the Silicon Valley Prepper," Nellie Bowles wrote for The New York Times in April as many Americans scrambled to find kitchen staples and cleaning supplies. "Now, with Covid-19, they feel vindicated. Because they are. The coders and founders long snickered at for stockpiling flour and toilet paper were absolutely right."

The worst panic-buying and shortages of the early days of the pandemic have since subsided. But some products remain in short or spotty supply. Lean manufacturing practices left cleaning-product companies slow to respond to an unexpected surge in demand. Some canned foods remain hard to find as a result of high demand and also because certain crops have one harvest per year that needs to last until the following season.

Anticipating new purchasing rushes in case of a second wave of COVID-19 (or election-related worries), grocery chains are stockpiling supplies for future sale. But they're relying on supply chains disrupted by regional conflicts around the world and then stressedbeyond the breaking point in placesby pandemic-related restrictions.

"This year, farmers and consumers have been planning production and managing household budgets at a time when markets—food, commodity, labor, energy—are being jolted by global, national and regional shutdowns, slowdowns, and overall uncertainty," Robert Johansson, the U.S. Department of Agriculture's chief economist, wrote this month. "Those shocks to the U.S. and global economies have affected both the supply and demand for food in the U.S. and the rest of the world, leading to short-term, localized shortages in the U.S." and "the impacts of COVID-19 are expected to continue into next year."

In September, the United Nations reiterated earlier warnings of the potential for a "global hunger crisis" and stressed the need for balance between COVID-19 containment measures and measures "to keep borders open and trade flows moving,"

So, being prepared for difficult times isn't becoming any less advisable.

That's not to say that preparing for disaster is the same thing as rendering yourself or your business disaster-proof.

The NIST/NOAA survey asked respondents how long it will be before they can return to pre-COVID-19 business capacity, getting 992 responses. Twenty percent said less than one year, 19 percent said 12 to 18 months, and 23 percent said more than 18 months, with 19 percent saying it will likely never happen.

Natural disaster preparations that help a small firm survive the absence of customers who choose to temporarily shelter at home or closure orders from a state government are of limited help if the market changes and a business model stops being viable. In that case, extra money in the bank and a resilient mind-set won't stop the fallbut they might cushion it. Part of preparations, then, should probably include readiness to close up shop and try something different.

There are also limits to resilience and the ability to create a cushion. Many respondents, including 90 percent of those who dealt with disasters in the past, agreed that "the impacts of COVID-19 will leave my organization unable to cope with a natural disaster, should one occur, in the next year."

There are no guarantees in life. But the data suggests that preparing during good times for possible challenges ahead can tilt the odds at least a little in our favor.

NEXT: 545 Migrant Kids Snatched by the U.S. Government Are Still Missing Parents

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  1. Try to find a chest freezer…

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  3. Can we Please stop referring to coviiid as “the pandemic”? The primary lesson to be learned from trumps ascendency , whatever you think of him, is the danger of devaluing language. However much of a Nazi he in fact is, nobody cared; decades of hysterical hyperbole broke the scale. Similarly, if this is a pandemic, gosh help us when something with a fatality rate above one comes along.

    1. It is a pandemic by definition.

      I guess you are welcome to consider a quarter million American deaths as no big deal. It’s all relative.

      1. Poor Tony and his pandemic heart disease ignorance for the USA where 650,000 die every year.

        Kungflu kill less people around the World than Influenza.

        It’s a hysteria pandemic though.

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    2. Georgia businesses are doing great. No lockdowns, no mask requirements, all booths can be filled.

      Bidness is a boom’n.

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    3. You talk about “devaluing language,” then describe Trump as a National Socialist.

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  5. Shouldn’t the sub-headline be:

    “No shit, Sherlock”?

    1. Or the simpler “Duh!”

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  8. Two notable examples from the responses were having rainy-day funds for when income streams dry up and the ability to operate a business remotely.”
    Some business can’t operate remotely. The recommendation for rainy-day funds for businesses are similar to that for households – 3-6 months. That isn’t enough if the government closes you for a year or more.

    1. You also need funds available for taking an out-of-control government to court, to reverse the unscientific closures and restrictions.

      And business interruption insurance, with a rider for all causes.

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  10. So it’s the business’s fault they are failing good news. This is going to be the most economically apocalyptic event in our lifetime good to know where reason stood on the lockdowns in general from the beginning. fuck you people you stood by and let the greatest encroachment of liberties in our lifetime people were banned from doing business, going to work or even really moving around freely. This whole economy thing is a ponzi scheme based on never stopping and irrational confidence it will continue and you let them do the one thing that means certain death halting it.

  11. “Businesses Prepared for Natural Disasters Are Surviving COVID-19 Better Than the Competition”

    Correction: Businesses Classified as Essential by Democrat Governors Are Surviving COVID-19 Better Than the Competition

    1. Also, Businesses With Lobbyists in Democrat States Are Surviving COVID-19 Better Than the Competition

    2. Businesses that had extra cash survive COVID-19 better.

      1. And everything else…

        I had strikethrough HTML code around “COVID-19”, but Reason filtered it.

  12. Dealing with the pandemic will likely teach a multitude of lessons. I wonder how this will translate into starting new businesses. Will entrepreneurs need to incorporate planning for disaster in business plans? Will lenders want these or give better rates for businesses with plans? I suspect that one day my grandchildren will be in school learning about things that changed after this pandemic. This fact maybe on of those things.

    1. Schools aren’t going to exist then.

      1. do you mean learning pods?

    2. Maybe Tony will be teaching them?

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  16. The problem with being a prepper is that nobody can be an expert at everything, so no matter how prepared you are, there will be some medical procedure, some farming skill, some anti-radiation measure you won’t have the skill for, and you will die, no matter how many cans of pork & beans and guns you stocked.

    It takes a village or you’re fucked.

    1. I hate to tell you this but everyone dies Tony, it’s inevitable it’s a matter of time no matter how large the village is.

      1. So why are you bitching about your tax rate?

        1. Because I’d like as much discretionary income to blow on coke and whores as possible before I go.

          1. Tony prefers the government to decide where your estate should go.

    2. This makes no sense. How can your explanation be construed as “the problem with being a prepper?” Are preppers not allowed to form community, or align with others who specialize in medical procedures, farming, or anti radiation?

      1. Appoint mayors of prepper-town, sheriffs, centers for disease control…

      2. I think what he means is, if the village collapses, he just wants to go ahead and die quickly.

    3. The Lykov family did pretty good though.

    4. If you’re talking “build a bunker, try to store enough supplies to last six months without seeing the sun” kind of prepper, sure.

      But if you’re aiming for “we can last a few weeks if we lose services (electric, water, transportation, etc.) and can’t drive anywhere”? Then nah.

      That is to say, prepping for a natural disaster (which is perfectly reasonable, even encouraged if you have the capability) is entirely unlike prepping for an apocalypse (which is where farmings and stuff kicks in).

      1. “But if you’re aiming for “we can last a few weeks if we lose services (electric, water, transportation, etc.) and can’t drive anywhere””

        Then you aren’t a “prepper”. The term does not refer to people who are prepared for the normal sorts of localized natural disasters that occur somewhere every year.

        No, the term “prepper” was coined to refer to people who are (or think they are) preparing to survive a global, civilization ending disaster. Preppers are preparing for the end of the world.

        1. Hence why I asked what Tony was talking about, because doomsday preppers aren’t really relevant to the article (there are no apocalypse-ready corporations).

          When someone appears to go on a weird tangent, it’s not imprudent to say “is this really what you meant?”

  17. Businesses in Georgia are doing better than many states because we dont have lockdowns, no mask requirements, and dine in seating with 100% capacity has been the norm.

    We are probably propping up corporate food chains who are not getting much revenue from Blue states.

  18. I mean, this is pretty obvious?

    “Living paycheck to paycheck” is obviously bad, and a sign that a person’s finances are over-extended. Yet somehow this had become a business norm. Airlines went mere weeks before announcing they needed a bailout of bankruptcy. Why? Because they were over-extended and living paycheck-to-paycheck.

    Businesses that were more prepared were also less profitable. After all, if you have 6 months of earnings in relatively liquid assets (i.e., both accessible and not likely to lose value), that’s a big chunk of change that isn’t being used to make more money. Taking the time to plan, and train the plan, for an emergency is always a lost cost… right up until you need it, when it suddenly becomes valuable. But if the emeregency never happens, it’s just lost. Just-in-time shipments, lean manufacturing, etc. and so-on are ways to cut costs by barely being able to functional. Being so lean that a single missed meal puts you into starvation isn’t healthy, but it’s been called “good business” for a long time.

    So… yeah. This was known. And for many businesses in America, the reward (higher profitability) was worth the risk (an emergency that disrupted their revenue streams). I expect that in the near-term future (next few years or so) businesses will, across the board, be more resilient and prepared. But then they’ll start cutting preparations in order to be more profitable, “spending the emergency fund” as it were, and be woefully unprepared for the *next* disaster.

    1. Airlines went mere weeks before announcing they needed a bailout of bankruptcy. Why? Because they were over-extended and living paycheck-to-paycheck.

      I’m sure it’s pervasive, but I wonder about the share of highly-unionized legacy carriers compared to the upstarts in this regard. I wouldn’t be surprised if this is yet another pension bomb that exploded.

    2. “Airlines went mere weeks before announcing they needed a bailout of bankruptcy.”

      The airlines have been teetering on the edge of bankruptcy for decades. There’s a been a bailout of the airlines with almost every major recession since WWII.

      However, with the current situation, its’ not just companies that are financially strapped that have had problems.

      Companies that make and sell physical products have been moving for decades towards “just in time” inventory systems for economic efficiency. Holding and storing inventory costs money.

      These companies could have decent cash reserves, but if their supply chain collapses, they are in trouble.

      This, and not panic driven hording is what happened to toilet paper. Toilet paper is a low profit item, so it tends be handled with just in time minimal inventory from the pulp mill all the way to the store.

      There are two type of toilet paper, commercial grade toilet paper and home grade toilet paper. They are very different. Plants that make commercial grade can’t just throw a switch and make home/retail grade. Not only is the paper itself different, the rolls are different sizes and commercial grade is packaged for sale in large bulk lots.

      With the lockdowns, the demand for commercial grade toilet paper collapsed and the demand for home grade toilet paper exploded. T

      The demand for home grade toilet paper exploded not because of panic driven hording, but because people were spending more time at home and going to the bathroom where they use home grade paper rather than at work where the bathrooms are stocked with commercial grade toilet paper.

      Plants that made home grade were already largely running at capacity. Plants that made commercial grade toilet paper would need months and lots of $$$$ to retool to make home grade paper*. So the entire supply chain for home grade toilet paper collapsed.

      * and when it’s all over and things get back to normal they will need more moths and more $$$$ to retool back to producing commercial grade toilet paper.

      1. Yes, that’s the spin we’ve been hearing for years. I expect in another five years it’ll be popular again.

  19. As the saying goes:

    Hard times create strong men.
    Strong men create good times.
    Good times create Ted Wheeler.
    Ted Wheeler creates tough times.

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