Disastrous Effects

Down the Road

The experience of the terror survivors emphasizes the value of having insurance, backing up data, preparing for succession and, basically, having a plan. But merely putting the parts of a business back in place may not result in a fully functioning firm. Nolan says one study found that fewer than 7 percent of businesses that suffer a major disaster are still in business five years later. "They can sustain the loss," Nolan says. "But it changes the organization so dramatically that over time, surviving is tough."

What goes wrong? Often, it's loss of people. If the founder of a small company dies in a disaster, chances are good that the company will die as well. Take the case of Judith Larocque. The 50-year-old founder of Market Perspectives Inc. in Framingham, Massachusetts, was on American Airlines Flight 11, which crashed into the World Trade Center. After the attacks, Market Perspectives' phones were disconnected, its Web site taken offline, and its handful of employees dispersed.

When death unexpectedly claims any employee, expect to go through a significant grieving process. "It's almost the same as the loss of a family member-the stages of bereavement, the terrible sadness, the getting of support from others," says Rhoda Frindell Green, a New York City psychologist specializing in small-business issues. It's important to recognize that both entrepreneurs and employees will be distracted for a period after such a loss. "To expect ourselves or others to be producing just like we were before the catastrophe is not very realistic," Green says. She adds that each person affected by a loss grieves on an individual timetable, so entrepreneurs can't arbitrarily decide that in, say, three months everyone will be over it and business will be back to normal.

Many people and companies in the New York City area are seeking counseling to cope with the aftermath. But even with expert help, dealing with the loss of an employee requires levels of flexibility and sensitivity that many entrepreneurs find challenging. There are no simple, universal or quick solutions, Green says. "It's a question of being willing and able to entertain the massive amount of change that has to occur."

The attacks are reminders of the importance of planning for someone to replace you or other key executives in the event of a sudden need, says McGovern. But they are also gut-checks for entrepreneurs deciding where-and whether-they are going in the future. If the company's founders were just you and a few others, and one or more is dead, do you continue? Many companies are still making that decision and will be for months to come.

A Shot in the Arm

"Sold out" signs went up on flag stores everywhere as Americans, suffused with patriotic spirit and sadness, snapped up symbols of their country for display. Sales were also booming for such businesses as survival supply distributors and wedding chapels. Security companies, business aircraft dealers and insurance brokers may all get more business in both the near and intermediate terms. Still, it's hard to forecast how customers will respond over the long haul. As director of the Pace University Small Business Development Center in lower Manhattan, the closest SBDC to Ground Zero, Ira Davidson says he sees few permanent opportunities emerging from the attacks. "I don't think anything is in short supply," he says, "except large-scale commercial space in midtown."

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This article was originally published in the January 2002 print edition of Entrepreneur with the headline: Disastrous Effects.

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