Small Business Natural Disaster Preparedness and Resilience Inquiry (2022)

Only one-in-four small businesses have a disaster plan

The impacts of natural disasters on small and family businesses can be devastating and can include damaged and destroyed assets and reduced production and revenue streams. Recovering from this can take a heavy toll on small and family business owners, their employees, and the broader community. Small and family businesses outside of directly affected disaster areas can also be adversely impacted through the effects of smoke taint, supply-chain disruptions, or reduced tourism.

As these impacts are difficult to predict, they may be overlooked in preparing disaster plans and in decisions around recovery assistance and support. While not a panacea, the cost of natural disasters and lengthy recovery time for small businesses and regional networks could be partially mitigated by enhanced preparedness and resilience.

The 2020 Royal Commission into National Natural Disaster Arrangements found that governments have ‘a vital role in educating communities and providing people with the information they need to make sound and informed decisions about how to manage the risks they face from natural disasters’. Recommendation 10.1 of the Royal Commission’s final report was that ‘State and Territory Governments should continue to deliver, evaluate and improve education and engagement programs aimed at promoting disaster resilience for individuals and communities’.

Recognising the importance of small and family businesses to communities, on 23 December 2021 the Australian Government requested the Ombudsman to undertake an Inquiry and provide a Report to the Minister by 18 March 2022. The Inquiry looked at existing education and engagement practices with respect to promoting small business disaster resilience and make recommendations to Government on how these could be improved.

The Small Business Natural Disaster Preparedness and Resilience Inquiry Report was tabled in Federal Parliament on 10 November 2022 and made 16 recommendations.

Background

As part of the Inquiry, the Ombudsman engaged with relevant stakeholders, including small and family businesses, their advisers, and representatives, and with governments and other relevant organisations. Additionally, the Ombudsman visited 36 communities across Australia to directly hear from small and family businesses impacted by natural disasters. In addition to this, an online survey attracted more than 2,000 responses.

The Report made 16 recommendations and found that while natural disasters can be devastating for small and family businesses, only one in four small businesses have a current business continuity plan. By taking simple steps to be better prepared, sensible risk mitigation action and bolstering resilience can help small and family businesses to get back on their feet quicker after suffering the effects of a natural disaster.

The Report also found that all governments and the business community together have a crucial role to play in ensuring small and family business owners have all the information and support they need to manage risks. It highlights the central role local government can and do play in providing place-based advice and support to bolster small business resilience, noting that 97% of money spent by governments on disasters is after the event and only 3% is on preparedness.

The Report found a strong sense of community connectedness, including collegiate business relationships – ‘socio-commercial capital’ – leads to more resilient and unified communities that learn from and support each other to work together to prepare for, and respond to, natural disasters.

Often it is small and family business owners who are the community leaders and the best guide to support their peers. The Report found the building of socio-commercial capital can be done within existing structures, such as the Small Business Friendly Councils initiative run in conjunction with state Small Business Commissioners.

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