What you can learn from someone else’s business disaster

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Written By Maureen

A disaster for one suburban cafe is a learning opportunity for all small businesses, writes Maureen Shelley.

In leafy Lindfield, the day started well for Tablespoon cafe owner Scott. Breakfast business was brisk and the full complement of about 10 staff had turned up and were soon hard at work serving soft-boiled eggs with Turkish toast soldiers and pots of Earl Grey tea to anyone that asked.

Lindfield is on Sydney’s leafy North Shore

Tablespoon is in Tryon Road, Lindfield on Sydney’s North Shore. It’s popular with business types, mums and kids and the grey-haired stay-at-homes who populate the area.
In the adjoining street Downer EDI were carrying out roadworks for Ku-Ring-Gai Council. The hum of machinery could be heard in the cafe but not at an uncomfortable level.
As The Copy Collective’s COO I (Maureen Shelley) was hosting a small business MeetUp in the cafe, as I do every month. One of the attendees noticed the staff packing the chairs in the outside dining area.
A river of comment rippled through the restaurant and people started asking: “What’s going on?”
In Tryon Road, the road workers had hit a Sydney Water main with their machinery and it had burst. The cafe had no water. There was no indication of when there would be water and Scott had decided to cut his losses and close early – just 2 1/2 hours into the day.
“We have no water,” a waiter told the MeetUp members. “We can’t do anything without water.”
Another staff member went around offering the remaining diners the freshly cooked scones to take home for free. Business owner Scott had told all the staff that they would be going home – on full pay, of course, because they hadn’t any notice that they wouldn’t be needed for a full shift.

Lindfield shopping village, corner of Tryon Rd

Not understanding that the water being turned off was accidental rather than planned, Scott was asked if he’d been given notice of the shutdown.
“No,” he said, “And none of the people in the street knows when the water will be back on.
“No one can tell me anything. I can’t run the business like this.”
He said that he did have “business disruption insurance” and that he’d be seeing if he could make a claim.
Tablespoon is open 7am to 5pm most days and operates seven days a week.
One customer (an experienced marketing strategist) estimated that, apart from loss of business revenue and reputation, the restaurant would have had to have paid $3,000 in wages for staff to go home and have a swim. Then there was the food that couldn’t be kept for another day – such as the scones being handed around –  and the losses were starting to mount up.
No one can prevent these things – road workers burst water mains, heat waves keep people home, computers crash – random events can impact on any small business.
So, apart from having business disruption insurance like sensible Scott, what can you do to minimise the damage?

Sign at Tablespoon 16 January 2014
  1. Have a plan
    Thinking about the risks to your business before they happen can help. You may not need to ensure that your executives fly on different planes every time but would it hurt to implement it as a strategy?
  2. Make sure everyone knows what the plan is
    How often has your business paid expensive consultants to develop a business plan and then it has lain around collecting dust? Make the plan short and relevant. Keep it simple – maybe just 10 bullet points that address the most likely things that could hit your business – like computers crashing, the internet being down, the phones being cut off. Simple stuff but can you operate without them?
  3. Take out the insurance and pay the premium
    If disaster does strike, knowing that you have insurance to cover it can make the difference between your business surviving or going through a really tough time.
  4. Look on the bright side – it might be a good thing
    I spoke to a business owner who had a fire that destroyed her business premises. They had good insurance cover and she said to me: “It’s actually quite scary how well we did out of the fire. Everyone was very sympathetic, our business was back up and running within six weeks, we were able to fix all the things that were wrong with the previous processing plant and the insurance company money really saved the day.”