Past disasters show a long recovery for small businesses

By JOYCE M. ROSENBERG , Associated Press

September 06, 2017 - 1:10 PM

NEW YORK — After Hurricane Katrina hit New Orleans in 2005, an antique store needed more than six years to fully recover. A Long Island restaurateur couldn't reopen one of his locations for a year and a half after Superstorm Sandy struck in 2012.

For small businesses, the recovery from hurricanes and other natural disasters can take years — if they can recover at all. Business owners in Houston have only just started assessing their damage and how to move forward. Many may find themselves facing the same hurdles and delays as small business owners who have been through other big storms.

After Katrina, the city of Kenner, Louisiana, west of New Orleans, resembled a ghost town. The Golden Corral franchise restaurant there suffered extensive damage. Managers were able to hire a crew for repairs, and within 10 weeks the restaurant was fixed up enough to reopen. But there were few residents around, and only nine of 70 staffers were in town to run the place, says Malcolm Clark, the franchise's director of operations.

"You realize, there's no one there," Clark says. "The workers didn't have homes, the customers weren't back. You start this long, slow crawl back to normal."

At first, the Golden Corral could serve only lunch. The customers were construction workers and insurance adjusters. Sometimes it was difficult to get deliveries of food and supplies. It took a year after Katrina for the Golden Corral to be back to normal.

Still, the damage could have been worse, Clark says. The restaurant had gone through devastating hurricanes in the past and when it was rebuilt, it was constructed to be more stormproof. "We were lucky with that," he says.

Bill Rau's antique store in New Orleans' French Quarter escaped heavy damage from Katrina, and was closed for just six weeks. But M.S. Rau Antiques had $5 million in damage to its inventory when its warehouse flooded, and it took a year and a half for the insurance company to reimburse him.

Even then, he said, the effects of Katrina lasted years because people thought that New Orleans remained under water. The number of visitors to New Orleans fell from 10.1 million in 2004 to 3.7 million in 2006. It wasn't until last year that New Orleans surpassed the 2004 figure.

So Rau sold more online rather than depending on store business, went to more antique expos and fairs, and reached out to customers. "People went out of their way to buy something from us," he says.

Many small businesses are far less fortunate — the government has estimated that nearly 40 percent of small companies never reopen following a weather-related disaster. Many don't have adequate insurance and/or cash reserves to repair the damage and pay the bills while they can't operate. And even without physical damage, a business can have financial losses — a restaurant can lose tens of thousands of dollars in spoiled food, for example, if the power goes out.

Companies whose workers can telecommute have a better chance of survival than a manufacturing company, says Chloe Demrovsky, CEO of the Disaster Recovery International Foundation, which among other activities provides training on disaster preparation to small businesses.

"For other types of businesses, it's going to be a lot harder — they have to ask, how long can we keep our doors shuttered?" she says.

Some small businesses make repairs and reopen — but may not survive in the long term.

When Hurricane Irene hit North Carolina's Outer Banks in 2011, waves from the Atlantic slammed into Mickey Daniels' crab meat business, tearing holes in the walls. Daniels, whose company had been in the family since 1958, thought about shutting down, but his friends helped fix up the small building. Still, the walls were weak and would need more extensive work.

Daniels was contending with other issues, like increasing imports of cheaper crab meat from Asia that hurt his profits. He also considered the likelihood that the business could be devastated again, given the number of hurricanes that affect North Carolina.

"You think about another storm, and you think, what's the point?" Daniels says. He closed the business in 2013.

Five years after Superstorm Sandy damaged his four Long Island restaurants and catering halls, Butch Yamali is still feeling the effects. One of the halls, The Sands on Lido Beach, had 4 feet of water that destroyed furniture, carpeting and kitchen equipment.

Yamali focused on getting the two least-damaged of his establishments running again, and had one open within three weeks. But the devastation throughout the area made the recovery harder.

"We couldn't find Sheetrock, we needed a boiler. ... We had trouble getting wiring, panel boxes and circuit breakers," Yamali says.

One more opened in early May 2013, six months after Sandy, and another was ready for the beach season starting Memorial Day. But the fourth, located in the devastated village of Island Park, was shuttered until April 2014.

Still, though, Yamali says some customers don't want to commit to the kind of big affairs he used to put on or make long-term plans. "They question it, they think, maybe it will happen again," he says.

The storm also brought some painful lessons. Yamali didn't have flood insurance on his properties when Sandy hit, but "I have it now."