Undefeated Seasons It's been a year since September 11 made Americans ask how we would ever get back to business as usual. How have business owners fared? Resisting the dual forces of terror and recession proved to be a challenge entrepreneurs were able to step up to.
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If Shirley Dreifus had not overslept on the morning of September 11, 2001, she and most of her staff would most likely have died when a Boeing 767 plowed into 1 World Trade Center. Her company, Strategic Communications Group Inc., had offices several floors below the main point of impact. "I understand that my office was gone immediately," says Dreifus, who was on the phone with her staff when the first plane hit. "I think a lot of people wouldn't have made it because we would have been meeting in my office--if I had been on time."
As it turned out, all 22 employees made it out safely after Dreifus directed rescue workers by phone to the adjoining office where they were trapped by a locked stairwell. "It really was a miracle," says the 54-year-old Manhattan resident, who owns Strategic Communications with Farhan Ali, 40.
Nearly as miraculous is the fact that their company, which provides marketing and communications services to financial services firms, is alive and well, despite losing almost everything in the attacks. Like many entrepreneurs, Dreifus and Ali went into high gear that fateful day and in the hazy weeks that followed, focusing on their business, not their emotions. "We didn't give ourselves a lot of time to think because we knew what we had to accomplish," says Dreifus. "You have to keep going. You have a job; you have to do it."
"A lot of small-business people didn't give up because they knew there were a lot of people out there trying to help them." |
Their story of survival is not unique. Across the country, small companies are finding ways to survive and thrive despite the combination of terrorism and recession. While initially devastating to many businesses, the terrorist attacks did no permanent damage to the majority, say experts.
"I've seen a number of businesses that suffered physical damage or were at Ground Zero, and they were able to relocate 10 or 12 blocks away, re-establish their business and reconnect with their customer base," says Jim King, director of the New York State Small Business Development Center, which dispatched business advisors to New York City in an effort to assist small firms with their recovery efforts. That meant helping companies apply for disaster loans, file insurance claims and even simply retrieve their e-mail using SBDC computers. "A lot of small-business people didn't give up," says King, "because they knew there were a lot of people out there trying to help them."
By the Numbers
Some industries, such as construction and services, have done well since September 11. Others, such as travel and manufacturing, have suffered.
"I think in the aggregate, small businesses were hurt pretty seriously," says Damon Dovier, director of government and public affairs for National Small Business United. "We also found a number of indirect effects. Not only were restaurants hurt adversely, but we also found that the people who service those restaurants were hurt tremendously."
Despite those challenges, small companies remain a driving force in an economy posting surprisingly high employment and a solid gross domestic product. According to an April survey by the National Association for the Self Employed (NASE), 49 percent of the nation's self-employed say they're optimistic or very optimistic about their revenue, while 41 percent said they are cautiously upbeat. Just 10 percent said they are not optimistic.
That's not to say small businesses haven't struggled. The survey also found that 48.6 percent of respondents saw sales drop after September 11, with 46.4 percent seeing no change and just 5 percent seeing an increase.
The NASE study also found that 87 percent of respondants expect the state of their businesses to improve in three to six months; 51 percent expect their businesses to be strong in five years. Just 7 percent said that "World Events/Terrorism" had the most impact on their businesses in the past year, behind "Self" and "Consumers."
"'Rebound' is the word I would use," says NASE president Robert Hughes in describing the state of small businesses one year after the attacks. "There's no doubt there was an economic downturn prior to September 11, and September 11 probably deepened it." He adds, however, that entrepreneurs are resilient, responding by refocusing efforts on personal service, the effective use of technology and the like.
Ups & Downs
Whether an individual business does well or poorly depends on a number of factors. For companies affected directly by the attacks, the year has been filled with challenges. Strategic Communications, for example, lost physical infrastructure, technology, client files, tax returns and more. Dreifus and her staff pieced together much of the work by obtaining copies from clients and searching their home computers for work they had done after hours.
Dreifus estimates that the $5 million company has lost about $1.5 million in sales during the past year. Some of those losses were offset by loans and grants. Strategic Communications received a World Trade Center Business Recovery Grant and a Lower Manhattan Business Retention Grant, both from the New York City Economic Development Corp. The company also received an SBA Economic Injury Disaster Loan of almost $250,000.
"It took us almost eight months to get back to where we were on September 10, 2001," says Dreifus. "But now we are managing all the old projects we had and we're finally starting to work on new business."
Strategic Communications is now located in a nondescript building on Manhattan's lower East Side-far from their old site, but close enough to clients. The company was able to avoid layoffs, and the staff is determined to move on, Dreifus says. Still, personal effects of the tragedy remain. Says Dreifus, "I think it's going to take a long time for people to recover, even though business itself is coming back."
For Vishal Garg and Raza Khan, the twentysomething managing directors of MyRichUncle.com, the year has been equally tumultuous. In July 2001, they moved their student finance company into offices on the 78th floor of 1 World Trade Center. Luckily, neither Garg nor Khan was in the building when the plane hit, but it took nearly eight hours to determine that just one of their 12 employees was. When the attack began, she was in the lobby and sustained minor injuries.
The staff gathered the next day to form a strategy for saving the company, a student-financing site through which investors fund tuition in exchange for a percentage of students' post-graduation income. The employees split up immediate tasks: filing an insurance claim, determining data lost, securing office space and so on. Through it all, their site remained live because it was hosted elsewhere and backed up in several locations.
Nevertheless, the attacks came at a particularly inopportune time. The company was in the process of negotiating a major investment deal and poised to enter an aggressive marketing phase. The deal fell through, and the marketing campaign had to be put on hold. Garg and Khan decided not to fill vacant positions, shrinking the company down to four employees.
"To not be able to pursue that marketing plan and business development delayed our growth significantly," says Garg. Nevertheless, MyRichUncle.com is again in discussions with prospective investors, and Garg estimates the company took in about $5 million in investments and fees this year.
MyRichUncle.com eventually relocated to the Woolworth Building, about 10 blocks north of Ground Zero. And the remaining employees have adjusted well. "We've dealt with the setback, and we've become stronger," says Garg. "We're much more flexible, much more dynamic and much more cohesive as a result of all this."
Khan is just as upbeat about the performance of MyRichUncle.com and the company's prospects. "We haven't let the doubters stop us; we haven't let the challenges of a recession stop us," he says. "And we're not going to let terrorism stop us."
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New Heights
Fallout from the terrorist attacks has indeed been far-reaching. Some businesses had clients in affected areas; others suffered as customers cut spending due to economic uncertainty.
Charter airlines and flight schools were among those hardest hit in the early days after the attacks. According to a study released on September 27, 2001, by the National Air Transportation Association (NATA), charter airlines, flight schools and other aviation-related businesses lost $300 million to $400 million and had to furlough thousands of employees during those first weeks. Since that time, however, many have seen gradual increases--and even spikes--in business.
"People are even more frustrated with the airlines because of the delays," says Clif Stroud of the NATA. "That's a big advantage of charter. There's also the security advantage of knowing with whom you're traveling and what is being brought on board."
Michael and Maureen Tarascio's charter business and flight school came to a screeching halt when the Federal Aviation Administration shut down Republic Airport in Farmingdale, New York, where Air East Airways Inc. and Air East Management Ltd. are located. Because of the airport's proximity to Ground Zero, it remained closed for almost a month after September 11 and then under restrictions until December 31.
"Charter airlines, flight schools and other aviation-related businesses lost $300 million to $400 million during those first few weeks. Since that time, however, many have seen gradual increases--and even spikes--in business." |
"It was hard," says Maureen, co-owner and operations manager. "We had 19 aircraft to consider and notes that still had to be paid."
Maureen, 44, estimates the $3.5 million company lost $2,000 to $4,000 per day. Since then, they've made up those losses in a big way as charter business has jumped more than 50 percent in the past year. In an uncomfortable twist, the attacks have been a boon to Air East's business. "We took on a new jet," Maureen admits. "We saw the increase in business, and we saw that there was a need for a third jet."
Clyde O'Connor has experienced a similar boost at Execstar Aviation, his $4 million private charter company in Fort Lauderdale, Florida. After the first two weeks--when he considered closing up shop--O'Connor saw a "huge increase" in business at the 22-employee operation. He brought home regular customers stranded by groundings and delivered safety-conscious tourists to their destinations.
The tourist side has become a new line for Execstar, and O'Connor admits: "If business stays the way it is, I would say we are better off than we were [before] September 11.
Looking Ahead
In the end, the September 11 attacks may have actually had positive effects on the small-business community. Many businesses are now more nimble and able to do more with less. And some experts believe there's renewed interest in entrepreneurship. "September 11, I think, caused people to look inside and say 'What's important to me?'" says Hughes. "If I've had any dreams or ideas about running my own business, now's the time to do it."
Dovier agrees: "Nine-eleven reminded us all that we don't have a promise of tomorrow. The time is truly now to do the things you really want to do."
Duty CallsTed Valentini's company is located far from Ground Zero and the Pentagon, but the September 11, 2001, terrorist attacks hit Beaver Creek, Ohio-based Tramco Mold hard. The 37-year-old father of three had to take out a $91,600 loan when he was deployed to the Emergency Operations Center at the National Guard Bureau in Washington, DC, last December. Those funds are providing working capital for his $1 million plastic molds business, but the company still lost $125,000 last year, a 63 percent drop in sales.
"Where it's really hurt us is I did all the sales and marketing," says Valentini. "And now's the time we need to be out there, beating the bushes harder than ever."
Tramco Mold isn't alone. As of May 31, the SBA had approved 28 Military Reservist Economic Injury Disaster Loans for a total of $2.56 million for businesses affected by the activation of reserve units.
Michele Marrinan is a Long Island, New York, writer specializing in small business, technology and e-commerce.
Contact Sources
- Air East Management Ltd./Air East Airways
(613) 756-5500, www.aireast.com - National Air Transportation Association
(800) 808-6282, www.nata-online.org - National Association for the Self-Employed
(800) 232-NASE, www.nase.org - Strategic Communications Group Inc.
(212) 802-0803, www.scgnyc.com - Tramco Mold
(937) 426-8681, TramcoMold@aol.com
