It’s doubtful that American small businesses have ever been impacted by as many potential business interruption events as we’ve seen in the past 20 years: beginning with the Oklahoma City bombing, the events of 9-11, and now the Boston bombings; hurricanes like Katrina and Sandy; tornados like those that wiped out Joplin, MO, and Hackleberg, AL, and many floods.

Recently we asked our online audience if they were financially prepared for an interruption with this question: “Could your business handle the financial impact of a business interruption?” Almost one-fifth said they, “… have cash and business interruption insurance if we need it,” and a little more than one-third reported they had “…cash and credit if we need it.” The other half admitted, “We would be hurting if it lasted more than a few days.”

There are three kinds of interruption preparation to focus on: operational, financial and digital. Here are examples of how to manage all three:

Operational
What would you do if your building became unavailable to you or your customers?

1. Use laptops that allow key employees to work and connect remotely, both internally and with customers. And make sure they have high-speed Internet connections at home.
2. Identify and become proficient with cloud-based applications that serve as an alternative for any installed programs that may be lost.

Financial
A significant part of the working capital of most small businesses is from cash flow. What would happen if your cash flow was interrupted?

1. Purchase a “business interruption” rider on your property and casualty policy to pay you cash upon the acceptance of a claim. Read the fine print; all policies are not created equal.
2. Maintain a close working relationship with your banker so you won’t have to introduce yourself to the person you might ask for a disaster loan.

Digital
Small businesses are increasingly using digital assets more and physical assets less. Are you prepared to protect your data as diligently as you do your building, equipment and inventory?

1. Assign one person to be in charge of keeping all computers enabled with a proven firewall and anti-malware program, and keep them current.
2. Regularly copy critical data from your hard drives and store it offsite. Better yet, backup your date with one of the cloud-based backup and recovery firms. Search for “online data backup.”

Business interruption – it’s a matter of when, not if.

For 10,000 years, business leverage has come from three asset categories, shown below in chronological order of appearance:

1. Muscle power: human or animal
2. Tangible stuff: raw material, buildings, inventory, machines, etc.
3. Intangible stuff: Patents, trademarks, copyrights, trade secrets and other intellectual property

For most of history, business power was heavily weighted on the first two categories. First the strongest caveman and biggest horses had the advantage. Later the fastest ships and largest factories got the jump on lesser competitors. For a small business it sounded like this: “We have the largest inventory in the tri-county area.”

But, as revealed in a study by IP attorney Kenneth Krosin, intangible assets became a powerful force in the latter third of the 20th century. Krosin discovered that at the end of the 1970s, corporate balance sheets were represented by 80% tangible assets and 20% intangible. But in 30 years, by 1997, the ratio of assets had essentially inverted to 73% intangible and the rest tangible.

Here’s what small businesses should take away from the breathtaking explosion of IP revealed by the Krosin study:

• The power of IP is no longer the wholly-owned franchise of big business.

• For centuries intellectual property provided only a marginal advantage even for big business, but has become a two-edged sword – one edge provides opportunity for those who leverage intangible assets more and tangible less, and the other edge delivers disruption for those who don’t.

• Exciting Internet resources and other digital innovations are converging and coalescing in front of our eyes to make intangible assets a much more powerful lever for all businesses.

• IP in the form of digital assets has evolved from two-dimensional tools, like websites, to add the third dimension of a virtual marketplace in cyberspace, aka The Cloud.

• Just because a small businesses may never reach 73% intangible assets doesn’t mean it shouldn’t have an IP strategy.

• Your IP strategy should include acquired intangible assets, like software, as well as the kind that you create, like a business process you maintain as a trade secret.

In The Age of the Customer, a small business must have an IP strategy that’s born from the acknowledgement that it is integral to the performance of virtually every talent and task in your business, and required to maintain marketplace viability.

What does your IP strategy look like?

In my previous column, I discussed intangible assets as intellectual property (IP) and recommended every small business have an IP strategy.

It’s not my job to tell you what your IP strategy should look like because, by definition, small business intellectual property is as unique as belly buttons. But it is my job is to help you get your head out of the tangible asset sand and start thinking about the increasing role IP is playing in the success of your business operation and customer acquisition.

Remember, your strategy will include IP you acquire from others, as well as the proprietary intangible assets you create. Here are some ways to think about both kinds of IP:

• Don’t think of your new delivery schedule as just a new route for your trucks; it’s your proprietary IP that’s making your business more efficient and more relevant to customers.

• The systems you’ve developed to produce products probably seem routine and common sense to you, right? No big deal. Well, it is a big deal because it’s one of the keys to your success. It’s an intangible asset you created and are maintaining as a trade secret – your proprietary IP. As such it should be recognized, protected and defended just as diligently as you lock the doors of your business at night.

• Don’t think of social media IP you’re borrowing from Facebook, Twitter, etc., as an obligatory task everyone else is doing; this acquired IP is an intangible resource you use to create communities from which come very tangible customers.

• Connect members of communities you build on social media IP with your face-to-face communities (customer list) by developing proprietary IP that integrates the two groups.

• Acquire customer relationship management (CRM) and email marketing IP, and integrate the two with your own program to deliver content to and connect with prospects and customers.

• When you buy your next computer, don’t think of it as replacing an old one. This time acquire an IP tool that puts you in a position to maximize time, energy and resources, and is the device from which you can create your own IP and manage your IP strategy.

Having an IP strategy doesn’t mean you abandon tangible assets – we’ll always need those. But it does mean you put them in the proper proportion with intangible assets. Today, the alpha member of the asset classes is IP. In fact, any and all tangible assets we acquire, and how we use them in the future, will be determined by IP innovations.

Grow your business more efficiently and effectively with an IP strategy.