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Family Business

Lessons for Family Businesses Hit Hard by Irma & Harvey

How one New Orleans business recovered after Hurricane Katrina

By April Hall

As Hurricane Katrina made landfall in 2005, the Rau family evacuated to a hotel in Dallas. Back in their hometown, New Orleans, the third-generation family business, Rau Antiques, was taking a beating.

It would be three weeks before owner Bill Rau would be able to assess the damage.

In the end, the business was hit with $5 million in damage, mostly in its warehouse filled with fine art and antiques. Some of the items were already sold but hadn’t been shipped.

For family businesses now facing similar challenges in Houston and Florida, the Rau family’s story of ruin and ultimate triumph may be just the inspiration they need.

From the beginning, given the unpredictability of the storm, Rau didn’t know how the antiques store would fare. He had tried to secure his inventory, he hoped to get in touch with his employees, he knew he would reopen, but there was no guide for what to do next.

But the family prevailed, and today the business is even more successful.

Rau shares his story on how things played out and three lessons he learned:

Get leadership together and on the same page.

His cousin, Jack Rau, who is now retired but was in the business with him at the time, was in Waco, Texas. Bill Rau moved his family there from Dallas. The firm’s COO, Andrew Fields, was in Colorado, but met up with the rest of the leadership team in Waco. That was the company’s headquarters for the next 10 days.

“I got the brain trust together, and for a few hours we were deciphering what we knew and what we didn’t know,” Rau recalls. They didn’t know much.

But they did provide a united front to staff.

“When you have different people in the business, have everyone on the same page, there can be no mixed messages,” Bill Rau says. “You need to say, ‘This is what we’re doing.’ And do that whether you agree or not in the gameplan. Agreeing is irrelevant at that point.”

Keep calm, especially for employees’ sakes.

“It’s an extraordinarily stressful time and we had set up our first conference calls with employees. My COO said, ‘Bill, these people are just as stressed as you are. They don’t know if they have a job. They need a leader. They need to know that we’re going to rebuild and we’re going to open again and be better than before. Take a good deep breath before you get on the phone.”

Rau was able to pay his 50 employees while the business was closed and he believes that incentivized their return when they reopened. In all, he estimates 10 employees left as a result of the hurricane.

And don’t underestimate your customers. While some clients could be tough on him over late deliveries, following Katrina many became very understanding. The sold items that were damaged in the warehouse didn’t end up being the big customer service issue he expected. The customers, he recalls, were “exceptionally understanding.”

Be patient, but persistent, with insurance claims.

Antiques and fine art were damaged, mostly at the company's warehouse.

“It was a long, painful ordeal,” Rau explains. “Some [insurance companies] you could leave and say, ‘OK, they were fair with us,’ some weren’t. On the bigger amounts they dragged their feet.”

He says he believes the biggest stall was the never-ending request for additional records and information throughout the claim process. He was dealing with 14 separate adjusters and with each request his company responded as quickly as possible to keep the process moving.

Since the company’s founding in 1912 by Rau's grandfather, Max Rau, the current owner says he’s never heard of the business facing a similar tragedy. However, he does remember that Hurricane Betsy in 1965 took a piece of the gallery’s roof. Since then he guesses there have been more than 40 storm “near misses.”

Because there was no precedent, there was no plan to prepare for a natural – or even unnatural disaster. He’s changed that and hopes other business owners will make their own plans, whether susceptible to hurricanes, tornadoes, earthquakes or even terrorism.

He now has all of his employees' contact information, as well as all of his insurance policy information remotely accessible, for example.

“There wasn’t a striking of the bell,” Rau says, about when they realized the business had come back from the storm. “It was just we continued to push. All of sudden, business was better than it was in 2005. But it took time and we lost things we’d never get back.”



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