Entrepreneurs who survived other disasters offer Katrina’s victims the benefit of their hard-won experience.
While most of the economy-related headlines in the aftermath of Hurricane Katrina have focused on industry shakeups and major corporations with a presence in the Gulf Coast, the storm has also dealt a devastating blow to small businesses throughout the region. And that, in turn, hurts the economy at large. Nationwide, small businesses account for half of all employment, more than half of nonfarm gross domestic product, and the majority of new jobs.
The exact number of small businesses damaged or destroyed remains unknown, but the toll could prove enormous. New Orleans alone has more than 105,000 small businesses (including sole proprietorships, the category into which most such outfits fall), according to the Small Business Administration. The Biloxi-Gulfport-Pascagoula region in Mississippi is home to more than 24,000. In Mobile, Ala., also rocked by Katrina, that number tops 41,000.
As recovery efforts gradually shift to reconstruction, small businesses trying to pick themselves up will serve as fundamental building blocks for cities and small towns alike. And as every small-business owner knows, there is no substitute for firsthand, from-the-trenches experience. “Been there, done that” is a de facto motto for the most successful of entrepreneurs — a group always eager to impart some of the wisdom picked up along the way.
Who better to lend advice than small-business owners who have survived catastrophe in the past? We went to past winners of the Phoenix Award, created in 1998 by the Small Business Administration to recognize outstanding disaster recovery — from fires, floods, and yes, hurricanes. All insisted that what they experienced was not as bad as what they’ve seen in TV reports of Katrina’s horrors. Nonetheless, they have valuable advice to offer. We selected five of the best tips to help Gulf Coast businesspeople as they prepare for the rebuilding effort.
Communicate, communicate, communicate.
That was Step #1 for Jim Anderson, president and CEO of Republic Storage Systems, a Canton (Ohio) gym-locker manufacturer that suffered $11 million in damage after a nearby creek flooded and sent four feet of water crashing through its facility in July, 2003. By phone and eventually via a special section on the company’s Web site, he delivered constant updates throughout the recovery to his roughly 450 employees — and equally important, though often overlooked in times of crisis, to his customers.
“The key is to be as timely and truthful as you can,” Anderson says. “Because at the end of the day, people will get angry.” The U.S. has already witnessed such anger on TV, arising because of communication failure between officials and residents in New Orleans.
Enlist any help you can find.
Whether by providing startup funding or manning the register, family and friends serve as lifelines for most small businesses — and never does that help take on greater importance than after a disaster. In March, 2002, Stefano and Toni Magro watched fire consume an entire city block that housed four buildings they owned, including a pizzeria and apartments, in Carthage, N.Y.
Afterward, “it was a parking lot,” Toni Magro says. “There was nothing there.” The couple leaned on relatives and longtime employees, and found unexpected help from members of a community for which the pizzeria served as both a lunch spot and employer of 20.
Likewise, Susan and Sherman Goldstein, whose Martha’s Vineyard (Mass.) inn was destroyed by fire in December, 2001, experienced the type of community support already flourishing in Katrina’s wake. “We didn’t have to make dinner for a month,” Susan Goldstein says. “Our friends, people we didn’t even know, brought over food for us. Another company gave us space in their basement.”
Many small-business owners joke that the best thing the government can do for them is leave them alone. Despite controversy surrounding the government response to Katrina, though, federal and local agencies really do have a good number of resources available to business victims. (For example, Phoenix Award winners are selected from those receiving low-interest SBA disaster loans).
“I’ve never really been a taker, always a giver, but in this case, I really had the sense that this is what the government is supposed to be there to do,” Susan Goldstein says.