Young entrepreneurs may wonder why some businesses survive natural disasters, such as hurricanes, while others do not. Everyone knows that it is difficult to sustain a business even under normal circumstances, but after a natural disaster, few companies can find the strength to open. FEMA states that less than 40 percent of companies can cope with disasters and continue to operate after a natural disaster. However, some brands survive even in the worst of conditions, and it is important for startups to identify them, prepare early and improve their chances of surviving a disaster.
Business Survival Factors
Springer conducted a study to understand the characteristics that helped some companies survive Hurricane Katrina and concluded that all of the businesses that recovered from the disaster had certain elements in common. Most were older companies with a lot of financial experience and resources. Large brands with more employees also had a better chance of surviving than smaller ones run from home. In addition, companies that had previously experienced natural disasters or faced financial problems also appeared to have an easier time coping with them.
The study also shows which companies are more likely to close after a disaster. Businesses run and operated by veterans, minorities or women are more likely to close after a hurricane or similar natural disaster. And, given the nature of the disaster, companies near the coast also closed, compared to those farther away who were able to recover.