Prepare for the Unexpected
As I was writing this article, in the midst of the devastating wildfires ravaging California, the whole topic of planning for the unexpected really hit home. I opened a newsletter that I read frequently to find the writer stating:
“As I begin to write this newsletter from a desk that is not my own...the home I was living in - where I had spent years tailoring my tastes, created countless memories - has burned to the ground, taking most of my worldly possessions with it.”
The writer goes on to say: “It sounds cliché, but you never really think it will happen to you,” but also adding a note of gratefulness for still having a car, a laptop, a cell phone, a few items of clothing, and probably most importantly, a good backup system in the cloud.
What if It Happened to You?
How would you fare if you were in that position? Being prepared for various contingencies may be one of those tasks that you postpone or let slide to the end of your to-do list, but it needs to find its way to the top of your list and then be subject to an annual review.
Planning for the Unexpected Falls into Several Broad Areas
Here are just a few:
● Disruptions that physically impact your business operations
● External market forces and laws that impact your business
● Personal or professional setbacks that impact your ability to perform your daily tasks
There are many good resources that can help you create a contingency plan. For example, the Small Business Administration and FEMA have various online tools that can be adapted to your particular circumstances.
Whether you are a sole proprietor operating from a home office or a multi-appraiser firm occupying conventional office space, your business may depend on it, and these tools can help.
Floods, Fires, & Storms
Natural disasters are usually at the top of the list when you think of external physical disruptions, primarily because of their prevalence in the news. Have you noticed how many areas suffered damage from floods last year that may not have been in a flood zone? My small rural community in central Pennsylvania, which has not flooded in the more than 30 years that I have lived there, experienced a flash flood on Labor Day weekend.
Your Disaster Checklist
At a minimum, your checklist for dealing with such a situation should include the following:
● Evacuation plans, first aid supplies, fire extinguisher
● Inventories of all equipment with serial numbers record of suppliers (such as internet service, software providers, anti-virus, firewalls, etc. along with account numbers)
● Instructions on how to retrieve information from your backup system. Cloud backup has made this an easier task
● Preservation of paper files. A recent survey of appraisers noted that almost half (48%) answered “no” to the question: “Is your office paperless?”
● Contact information for key clients who would need to be notified of any interruption in your workflow
● Copies of business insurance policies with contact information for your agent and for reporting claims
In the event that a disaster occurs, having the items on this checklist completed beforehand can save you time and give you much needed peace of mind.
External Forces - Market and Regulatory
Preparing for unexpected natural disasters is only one of the important tasks that are often overlooked. It is also important to take a deep, hard look into the business climate. What if the impending disaster is market driven?
Maybe you can’t influence global financial policy or movement of interest rates that impact the real estate market. However, you still need to have your antenna tuned-in to what is happening in these areas, as well as on the regulatory front, and plan for contingencies that impact you and your business.
Mergers and acquisitions in the financial services area have been widespread in recent years, with the result being that some of your former clients may no longer exist. Or, you find added requirements for doing business with newly merged entities. Another change that can impact your business.
From Dodd-Frank, to ongoing changes generated by the government-sponsored enterprises, to changes in licensing requirements, the government never rests! While you may not be able to influence many of these actions as an individual appraiser, you do have the opportunity to do so through your associations and state appraiser coalitions.
A Look in the Mirror - Growing or Stagnant?
At this point, you may be thinking the universe is loaded with land mines that have the potential to sabotage your business. Not necessarily so, but you do have a greater opportunity to impact or control disruption that relates to how you handle personal and professional challenges and opportunities.
Whether it is hybrid appraisals, new forms and rules, the loss of a key client, learning new software, going paperless, or even handling a personal loss - these situations challenge everyone on a daily basis. The best way to respond is to “learn, grow, and prosper” - which I believe was the theme of one of the recent Valuation Expo’s.
What are you doing to grow and develop your business? Perhaps diversify into new areas? Maybe take some courses or seek a mentor to help you break into a new segment of the market. A good way to take account of all the details is to complete a SWOT analysis, and cover all your bases.
Another good practice, especially for one-person operations, is to self-audit some of your files. Check out some appraisals from two or three years ago and try to look at them through the eyes of a reviewer. Look for errors, presentation, accuracy; if you were doing that appraisal today, what would you do differently? What can you learn from your review?
If a claim or disciplinary action is filed against you, look at that situation as a learning experience that helps you further bullet-proof your work. Of course, you should report these actions to your errors and omissions insurance company and cooperate in the defense of or response to any matter.
Protecting Yourself and Your Business
This article is not intended to be an encyclopedic look at disaster or contingency planning, but instead be a few reminders of the importance of this task to the overall health of sustaining and growing your business.