Why 40 Percent of Businesses Never Reopen — And What Red Wing Area Owners Can Do About It

An emergency plan gives your business a tested, documented path through disruption. According to federal emergency guidance, 40 percent of businesses never reopen after a major disaster, and another 25 percent fail within the following year. For business owners in Pepin County and the greater Red Wing corridor — where spring Mississippi flooding, winter ice storms, and extended power outages are recurring realities — the risk isn't abstract. It's seasonal.

Identifying the Risks Your Business Actually Faces

Risk assessment is the structured process of identifying which hazards could disrupt your operations and estimating their severity. Start with your geography: the Mississippi River corridor carries real flood risk that can cut roads, disable utilities, and force extended closures on both sides of the river. Then layer in operational risks — a key employee's injury, a supplier shutdown, or a ransomware attack can halt business just as effectively.

Map your exposure across three categories:

• Natural hazards: river flooding, ice storms, severe wind, extended power outages

• Operational hazards: equipment failure, key-person unavailability, supply chain disruption

• Digital hazards: ransomware, server failure, loss of customer records or financial data

In practice: Start with the single risk most likely to close your doors — that's where your plan should anchor, and everything else follows.

Your Property Insurance Probably Doesn't Cover What You Think

If you have commercial property coverage, you might assume it handles a multi-week closure — "property insurance" sounds comprehensive. But property coverage handles physical damage: building repairs, equipment replacement, inventory loss. It does not cover the revenue you lose while you're closed, the payroll that continues, or the lease obligations that don't pause.

That separate coverage is called business interruption insurance, and most small businesses don't carry it. A 2015 Nationwide Insurance survey — the most thorough primary study of small business disaster coverage gaps — found that most small businesses lack this coverage: 66 percent carry no business interruption insurance, and 75 percent have no disaster recovery plan at all.

Ask your commercial insurance agent two direct questions: Do I have business interruption coverage? What is the waiting period before it activates?

Bottom line: Property insurance and business interruption coverage are separate policies — owning one doesn't give you the other.

A Backup Isn't the Same as a Recovery Plan

Running regular data backups feels like protection — and it's a start. But a backup stores your data; a business continuity plan defines who restores it, from which location, on which equipment, and in what order. That distinction is where most businesses lose ground when disaster hits.

Having a documented recovery plan led to full recovery from ransomware attacks 96 percent of the time, per the 2024 Veeam Ransomware Trends Report. Without a plan, 40 percent of affected businesses couldn't recover quickly or at all. Your plan needs to specify where backups are stored, who can access them during an outage, how long a restore takes, and when you last ran a successful restore test.

Bottom line: A backup you've never tested is an assumption — schedule a restore test before you need it.

Communicating Your Plan to the People Who Will Execute It

A plan your employees haven't seen is no better than no plan. Schedule an annual all-hands meeting to walk through emergency procedures: who contacts whom, where people evacuate to, and what each person's assigned role is.

If your emergency documentation currently exists as a PDF — a common format for downloaded templates or drafted one-page guides — Adobe Acrobat is an online document tool that lets you convert PDF files to PPT, turning a static file into a slide deck your team can present from and update directly. Assign specific slides to named employees so responsibilities are visible, not implied. Re-present after any significant change in staffing, location, or key suppliers.

Emergency Preparedness: Self-Audit Checklist

Use this before your next staff meeting to identify gaps:

• [ ] Risk assessment documented (natural, operational, and digital hazards mapped)

• [ ] Business interruption insurance confirmed with your agent

• [ ] Emergency contact list current and distributed to all employees

• [ ] Data backups tested for restore within the past 90 days

• [ ] Evacuation routes posted and practiced

• [ ] Emergency supplies stocked (first aid, flashlights, batteries, 72-hour food and water)

• [ ] Plan reviewed and updated within the past 12 months

The SBA offers resources to prepare for emergencies before they strike, including continuity frameworks and information on federal disaster assistance programs.

Start Before the Next Flood Season

Emergency planning is most useful when it's done in February, not April. The Red Wing Area Chamber of Commerce connects local business owners with peer networks — businesses that have navigated river flooding, regional outages, and severe winters firsthand. Reach out for information on preparedness workshops, SBDC resources, or peer introductions to owners who've built and tested their plans.

For a deeper look at insurance gaps and recovery frameworks, the Insurance Information Institute offers resources to understand your disaster recovery options. Pick one item from the checklist above and close it this week. A plan built one step at a time outlasts a perfect plan that stays unwritten.

Frequently Asked Questions

What if my business is home-based — does emergency planning still apply?

Yes, and the gaps are often larger. Standard homeowner's policies typically exclude business property and income losses entirely. Confirm your coverage with an insurance agent and document your backup and communication procedures the same way a storefront business would.

Home-based businesses face the same disruption risks with fewer default protections.

What's the minimum viable plan for a solo operator or very small business?

One page: your top three risks, a named backup contact who can notify customers if you're unreachable, your data backup location and restore instructions, and your insurance agent's number. A brief, tested document outperforms a comprehensive plan no one reads.

For solo operators, the most critical element is a named backup contact who knows the plan before you need them.

Does the age of my equipment affect what I should prioritize?

Older equipment typically has longer replacement lead times, which extends your recovery timeline after a failure. Flag any equipment with no ready replacement in your continuity plan and consider spare parts or vendor agreements that reduce that window.

Equipment with long lead times should be treated as a higher-priority risk in your assessment.