THE NEXT VICTIM of the swine flu: U.S.-based small businesses.

Airlines, hotels and other tourism-focused businesses are already seeing a falloff in sales as swine flu cases continue to pop up in Mexico and parts of the U.S., says Jim Grogan, vice president of consulting product development at SunGard Availability Services, a disaster recovery firm in Wayne, Pa. The World Health Organization raised its pandemic threat level to 4 from 3 Monday, just two levels shy of a full-blown pandemic. Meanwhile, health officials at the U.S. State Department and Centers for Disease Control in the U.S warned against nonessential travel to Mexico. And the European Union urged its citizens to postpone nonessential travel to the U.S. and Mexico.

The travel industry won't be the only one taking a hit. Even though the CDC says swine flu cannot be spread through the consumption of properly handled pork products, restaurants should be bracing for a drop in business. Public gathering spots like bars and movie theaters should also prepare to see fewer customers as the outbreak continues, says Larry L. Smith, president of the Institute for Crisis Management in Louisville, Ky. “People are going to be afraid to be around other people,” he says.

No matter how warranted (or unwarranted) consumer concerns are, businesses need to work toward gaining their confidence and allaying their fears, says Smith. To keep customers coming to your business during outbreaks and other scares, try these steps:

Review or set up a disaster plan

Review and update your firm’s disaster plans so that business can continue smoothly even if it takes a hit, says Grogan. Try to set aside funds for as much as two to three months of expenses if there’s a business stoppage, or if you have to pull products off the shelves or items off the menu. You may want to consider business interruption insurance which can cover financial losses, extra security or the cost to rent a temporary workspace.

Also, make sure that all essential employees have someone who can cover for them should they fall ill, and secure a secondary work site or initialize a plan for how employees might telecommute (if that's an option). Back up computer files and house them in a secure spot away from the business.

Keep customers informed

Educate your customers so they don't feel as if they're being left in the dark, says Tom Becker, a crisis communications consultant at Sitrick and Company, a public relations firm in New York. Prepare employees to field customer questions and post a notice on the company web site about the quality control efforts that have been put in place.

New York City’s famed hotdog seller Papaya King has never registered any health-related complaints associated with past food outbreaks, yet dealing with public perception is often on the menu, says Dan Horan, Papaya King’s president. During past food scares, the company posted signs in each of its six locations offering details about the issue, whether or not the problem was isolated and how the company’s food was safe. Beyond educating the public, Horan says ensuring that employees can handle customer queries is vital. “We certainly have to make sure our crew of people is able to answer questions,” he says.

Let them know you're following government guidelines

The Centers for Disease Control and the World Health Organization each issued guidelines to help mitigate the outbreak. The CDC, for example, suggests cooking pork to an internal temperature of 160°F, which will kill the virus and wipe out other bacteria and viruses. Once you’ve ensured your business is strictly following official guidelines, post a printed version of them around your establishment, says Becker. When consumers know your company is doing everything in its power to mitigate health risks, their willingness to do business with you will improve, he says.

Take visible health and sanitary precautions

Install hand-sanitizing cream dispensers by the exits, near point-of-sale locations or even around the office, says Becker. “Just the sight of sanitizers can have a positive effect,” he says. Spraying disinfectant on door handles and telephone handsets routinely throughout the day may also boost both employees' and customers' comfort level.

Use “safer” alternatives

Restaurant owners should consider changing the menu if it involves lots of pork products. To be safe, one of Smith's restaurant clients planned a replacement menu in case health issues arose with items on its regular menu. The company even secured back-up suppliers to fulfill its replacement menu’s needs.

Of course, changing menu items can be costly and doesn’t always make sense. Michael Eberstadt, the owner of Rack and Soul, a barbeque restaurant on Manhattan’s Upper West Side, says such a move would be difficult because it would require reengineering the entire menu. “We’re a barbeque joint. What would we do?,” he says.

Offer services involving less person-to-person contact

One way to appease consumers who want to avoid crowds is to bring your services to them. Grocery stores can introduce door-to-door delivery services, while restaurants that don't currently have to-go offerings should add them. Just make sure there is enough staff available to deliver the product or service and that the company web site can handle online transactions.

—Write to Diana Ransom at dransom@smartmoney.com

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