After the Storm
Online exclusive: For one Entrepreneur reader's story of business survival after Hurricane Katrina, read Surviving Hurricane Katrina."
It's been six months since Hurricane Katrina ravaged the Gulf Coast. From the devastation emerged stories of strength, survival and courage. Many of those putting the pieces back together are entrepreneurs--forced to take on new challenges and opportunities that came in with the floodwater in the nation's largest natural disaster.
For beleaguered Gulf Coast entrepreneurs swamped in the chaos after Hurricane Katrina, survival has become a matter of fight or flight. Despite overwhelming obstacles, the entrepreneurs we met with haven't lost hope. They're moving forward, taking whatever steps necessary to ensure their businesses survive--and even thrive--in the wake of Katrina.
Reborn to Thrive
Things aren't back to normal at Meauxbar Bistro in the French Quarter. In many ways, they're better. New Orleans restaurateur Jim Conte is one of the fortunate entrepreneurs for whom the hurricane had a catalytic effect.
"Business is fantastic," Conte says on a rare break. Since the French Quarter was largely spared from flooding, residents there were among the city's first to return. "We opened quickly after the hurricane....
Your initial response is to make the restaurant look the same as before--to restore normalcy in people's lives in a place where people had lost everything."
Word spread rapidly that things were almost back to normal at Meauxbar. Almost. "In the first two weeks, there were so few restaurants open, we had twice the business we were doing pre-Katrina," says Conte.
The hectic pace was just what Conte, 45, and his partner, Matthew Guidry, 50, needed. They had to recover from not being open, from fridges full of spoiled food and from losing staff to flood-forced relocation. They hired a few reliable family members and didn't look back. "We needed that boost to start the financial wheels turning again," says Conte. "It's still very busy, but it's not at a fever pitch--you can't keep doing that. You have to make money to stay in business, but I'm not sure that's anyone's first thought--it's more about being open and thriving." Meauxbar's 2005 year-end quarter sales rose to nearly $100,000, a 67 percent increase over the same quarter in 2004.
"What the big economic picture is, we have no idea," says Conte. "That's ultimately the scary part for New Orleans. There's no idea what's going to happen here. We just do what we can as residents of the French Quarter."
Going With the Flow
For June Coldren, Katrina prompted quick decision making--and a growth spurt. An attorney who moved to Louisiana in 1997, she found her place by providing logistics and consulting expertise to the oil industry. Coldren, 49, is president and CEO of the New Orleans-based Cenergy Companies, a group that had combined sales of $12 million in 2004--and was thrown into a test of its own mettle in the aftermath of Katrina. Response to the crisis showcased the staff's ability to deal with any situation, something her business specializes in. "It was just like, 'Here's what's happening, here's what we have to do now.' We were seamless. We missed two days, and that was it," she says.
After the hurricane, Coldren and her staff quickly assessed their communications capabilities. "We all found ways of getting back in touch with each other. Cell phones didn't work-text messaging did," she remembers. "We had to temporarily move our office to Lafayette, Louisiana. We then realized we wanted to keep an office there. It occurred to me a lot of our clients evacuated to Houston, so we opened an office there as well."
Just days after the levee breaks and floods, Coldren had a lease agreement for a Lafayette office, and by Labor Day, the company had a new face on its updated website.
For Coldren, juggling the company's logistics while managing those of her clients meant nailing down the details. "The biggest [priority] was paying our consultants and making sure our logistics team supported our clients," she says.
The company quickly expanded from 50 to 80 employees, then to 100 within the first few months after Hurricane Katrina. "Right now, we have openings for 16 people--yesterday, it was 12. The reason behind that is how well we reacted during the storm for our clients," Coldren says. "That helped people see how good we are."
From a Distance
When five feet of water seeped into her New Orleans studio warehouse after the levees broke, Alicein Rinard had a lot of dead time on her hands--literally. "We lost about 80 percent of our stock," she says of the retro clocks and signs that dominate the catalogs of Quality Time LLC, a wholesale and manufacturing company that designs its own products, selling mostly to independent stores around the country.
Rinard, 37, bought into the company three years ago, and three years later, sales had increased tenfold, with half a million dollars projected for 2005. Then along came Katrina. Like most of the entrepreneurs in her neighborhood, Rinard didn't have flood insurance.
Rinard has also had personal setbacks--her Bay St. Louis, Mississippi, home was among the hundreds of thousands damaged beyond rescue, and three of her husband's four rental properties were ruined.
With heightened overhead, the business found itself operating on a shoestring by November. Not dependent on a retail storefront and relying heavily on the company's website, Lora Davenport, Quality Time's manager, relocated the business to St. Louis, where she set up a workshop in her parents' basement. St. Louis businesses Pioneer Printing and Traci Moore Graphics also came to the rescue with office and warehouse space. "It was Lora's relationship-building skills that made it all possible," Rinard says.
By December, power still hadn't been restored to the warehouse area in New Orleans. "We're just kind of waiting on the city like everyone else. We love New Orleans, and we'd like to be part of rebuilding it. We're going to give it some time," Rinard says.
In the meantime, Rinard is laying plans to express appreciation to the manager who almost single-handedly saved the company. Says Rinard, "I'm giving Lora some stock for all her hard work."
If You Build It, They Will Come Back
Steady streams of relief aid, construction workers and displaced shoppers have turned the tables for Travis Bolster, 30. He opened his first Smoothie King franchise in Hattiesburg, Mississippi, four years ago. And he opened his Gulfport, Mississippi, location just weeks before Hurricane Katrina bore down on the Gulf Coast. "The whole time we had to evacuate, I was just bawling. All the talk was about devastation, and you [kept] asking yourself if anybody [was] going to come back," he recalls.
Reopening was delayed because the water supply was under a boiled water alert for the first few weeks after the hurricane--and it takes ice to make a smoothie. But Bolster repaired the storefront and held his entrepreneurial breath. "It's this huge investment, and I was thinking I would never see a return from it. Insurance only goes so far--if you don't have a customer, you don't have anything," he says. "I thought, 'What am I going to do? Business will never be the same.'"
Bolster was right. It wasn't the same. It was better. He finally reopened three weeks after the hurricane, and he says, "We're seeing a big spike in sales. In August, we did $34,000 in sales. In October, we did $56,000--a 65 percent increase from before the storm," he says, citing increased traffic from relief and construction workers.
Another reason for the surge: shopper displacement. A major retail shopping area of the Mississippi Gulf Coast on the beach at Gulfport was destroyed, and shoppers were forced to discover treasures inland. Bolster observes, "If you're in food or service, you're doing well right now."
With his wife, Jennifer, 32, Bolster has made a total investment of close to $200,000 per store; the goal is to recoup that investment within three years. The Bolsters have picked up rights to a franchise in Ocean Springs, Mississippi, and are preparing to open a second Hattiesburg store this year. "We've been fortunate," says Bolster. "We went from doom and gloom to joy and craziness."
Crash and Learn
When it comes to disaster preparedness, Al Waller, 45, of Fradella's Collision Center Inc. learned a hard lesson from Katrina. "I could tell you what not to do in this situation because of the mistakes I made," Waller says. "There were so many things we could have salvaged. I had two measuring systems worth $40,000 apiece. I could have moved them onto a lift, raised the lift five feet and saved $80,000 worth of equipment in minutes," he says.
Hurricane Katrina shook things up for Waller's auto collision repair business in other ways, too. Waller knew from market research that his New Orleans-area business made two-thirds of its revenue from customers within the St. Bernard Parish community of 67,000. All those people were displaced by Katrina, he says. The remaining one-third of the company's revenue came from New Orleans East and coastal Slidell, Louisiana. Waller faced the unpleasant truth: 100 percent of his customers had been displaced.
Once the storm dissipated, he started assessing. "We looked at getting as close as we could to where our customers had relocated," Waller says. "Most logical were Metairie and Jefferson Parish, so voilá, that's what we did."
Just 13 weeks out of the hurricane's clutches, Fradella's on Rye St. in Metairie became operational. Waller had only seven of his 23 original employees and had trouble finding skilled employees at an affordable price. "There's tremendous amounts of work, but getting the labor together to produce it is a real challenge," he says. "If we could find the labor, we could double our business in 12 months. The labor market has just shriveled."
Waller has some advice he learned the hard way: "Don't skimp on insurance. A small loss, just about everyone can survive, but a catastrophic loss like this--if you're underinsured, you've got no hope."
Thankfully, Waller had a few resources that saw Fradella's through the lean months. "We lived off the cash flow we established prior to the storm. We also lived off the fact that we had good credit and our vendors are working with us, which is a huge advantage, especially from a restart perspective," he says. That's good news, since Waller plans to reopen his original location this spring.
From Wisconsin With Love
While the Gulf Coast reeled, entrepreneurs from around the country reached out.
Wisconsin Film and Bag is one example: The Shawano, Wisconsin, manufacturer with $35 million in annual sales has a plant in Summit, Mississippi, one hour north of New Orleans. The area suffered widespread damage to property and homes, losing power for 11 days--and gaining an influx of evacuees fleeing the Big Easy.
Determined to assist in some way, Wisconsin Film and Bagpresident and co-owner Jack Riopelle, 60, started the nonprofit Wisconsin Cares About Mississippi just days after Hurricane Katrina hit. He partnered with The Salvation Army and asked companies for contributions of the things most needed in the early days of relief--staples like bottled water and medical supplies. By November, the organization had shipped 14 truckloads of donated goods to Mississippi.
It also provided a Thanksgiving dinner for more than 400, inviting evacuees and the volunteers who accepted them into their homes. With help from nine area churches, an additional 100 dinners were distributed to shut-in evacuees.
Riopelle says the experience was life-altering: "Not until you're there and you talk to people, and you see with your own two eyes what's going on, can you really have an understanding of just how much tragedy those individuals have gone through."