A Year After Sandy, Business Owners Living a New Normal Hurricane Sandy brought devastation to businesses in New York and New Jersey, in the process teaching business owners some valuable lessons. It even sparked a new startup.
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Editor's Note: One year after Hurricane Sandy laid waste to countless businesses and homes across the eastern seaboard, we take a look back at those dramatic few days. Stay tuned tomorrow for more of our Sandy Anniversary coverage.
When Bob Alfano heard that Hurricane Sandy was coming, he took precautions. The president and chief executive of Advanced Neutraceuticals, which manufactures and distributes raw materials for the nutritional supplement industry, gathered up all the sensitive electronic equipment and paper records in his company's office and placed them three or four feet off the ground, on desks and file cabinets.
Alfano never thought the water would get that high. After all, his office in Moonachie, N.J., was not in a flood zone.
He was wrong.
When Sandy hit, the water rose to seven feet in his small office, ruining everything, Alfano says. He knew what had happened because the light-colored brick exterior of his building was caked with a line of dirt -- a high-water mark. "Even before we got into the building, we knew everything was gone," he says.
Without flood insurance, Alfano's business suffered a loss of $60,000 to $75,000, he estimates. But Alfano had two things going for him. The first was cash in the bank -- enough to finance a recovery. The second was a complete digital backup of the business's records.
"We didn't lose one piece of data," Alfano says.
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Two days after the storm, he and his vice president, Kamila Molinelli, bought two new computers and retreated to their homes on Staten Island and North Jersey, respectively, where they downloaded copies of their files -- hosted in the cloud by Carbonite, a computer-backup service -- and tried to get back to work.
All told, they were out of commission for only one week. They were the lucky ones.
One year after Sandy, business owners in New York, New Jersey and other areas affected by the storm are establishing a new normal. Many are back up and running, but some are still in recovery mode. Others are waiting on the result of their disaster-relief grant applications. Most have learned hard lessons about the importance of catastrophic insurance, data backups and other elements of disaster preparedness.
New business springing up
Sandy caused billions of dollars of damage. But, like flowers after rain, the storm also brought a few positive effects. One is MakeSpace, a startup aiming to disrupt the storage-facility industry. MakeSpace was inspired by founder Sam Rosen's nightmarish experience of Sandy, in which his girlfriend's home in Hoboken, N.J., flooded, his own apartment in Manhattan lost power and the couple spent an exorbitant sum packing up and storing everything they could salvage of his girlfriend's and her son's possessions.
"It was like The Day After Tomorrow," he says. "We were cooking on a gas stove and cuddling up with blankets. We were playing board games by candlelight."
Insurance didn't cover the tens of thousands of dollars of damage to his girlfriend's home or belongings. Worse yet, they packed what was left in a hurry, with the help of friends; things got packed accidentally or misplaced. "Where are your winter boots?" Rosen asked her. She didn't know.
That experience provided both spark and kindling. "Imagine if a storage unit was like Dropbox," he thought. Two months later, Rosen was in talks with a venture capitalist about his new startup idea.
MakeSpace addresses three pain points of traditional storage: the cost of packing materials, the cost and trouble of hiring movers to transport stuff to the storage facility and the high price of storage units themselves. MakeSpace drops off plastic storage bins at your home -- you get four for $29 a month -- and, once you have filled them up, a driver photographs the contents and carts them off to the storage facility.
Each bin can hold 70 books, or 12 pairs of shoes, according to the website. For an extra $6.25 a month, you get an additional bin. You can check your inventory online and request delivery when you want to take some items out of storage. Delivery costs $29, whether you're requesting one bin or all of them.
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MakeSpace launched in New York City last month, following a $1.3 million round of seed financing from Upfront Ventures, Lowercase Capital and others.
"Entrepreneurs don't say, 'Poor me. Life sucks' when bad things happen," Rosen says of his Sandy experience. "The only way to go was up. And the only way I could go up was to create opportunity."
Plan for the worst
Like Alfano, Erin Visalli, owner of Relax Concierge, an Ocean City, N.J.-based business that rents amenities such as linens and baby strollers to vacationers, tried to limit the damage Sandy could do to her livelihood. She removed a lot of inventory, boarded up windows and make other preparations. Even so, she told Entrepreneur.com six months ago that her store had suffered about $20,000 in damage and lost inventory.
Now, one year after the storm, she says the cost of recovery has hampered her profitability and expansion for this year. She bootstrapped the rebuild rather than taking a loan. "This was our third full summer season, so we are still growing the business," she says.
In central and south Jersey -- from Long Island Beach to Wildwood -- she did brisk business this summer, Visalli says. But in the areas hit hardest by the storm, Relax Concierge did only 20 percent of its usual business. Nevertheless, she continued to provide her services. "We were thrilled some folks returned to enjoy these beaches and support local businesses," she says.
Having gone through Sandy, Visalli recommends that fellow entrepreneurs build worst-case scenarios into their business plans. "Customer records, insurance policies and vendor lists should always be readily available," she says. Like Alfano, she relies on cloud computing to prevent the loss of crucial records.
As for Alfano, he has been operating out of a temporary office for the past year, but now his business is finally back on track. "The new office is basically going to put us back on the course we were on a year ago," he says.
And there is one crucial difference between the new office and the old one: this one has flood insurance.
