Five Fiducial franchisees were right in the thick of things when Hurricane Katrina devastated the US Gulf Coast, and they are experiencing firsthand what it takes to rebuild a small business that has lost everything.
As the closest Fiducial franchisee in Katrina’s path, Richard Drexel of La Place, LA, says he’s doing “as well as can be expected” after the recent destruction considering he’s lost “50% to 75% ” of your small business customers.
La Place is located 25 miles west of New Orleans in the parish of St. John, where Drexel has operated its office for the past 10 years. Since communications have been severely disrupted, he doesn’t know when he will be able to get in touch with his clients.
“Communications are so bad I can’t call from my own area,” Drexel said. “I can’t even call someone on the cell next door and I haven’t heard from any of my clients.”
A friend who works for FedEx told him “there are no businesses to deliver to and you can’t get supplies” because of the flooding.
Taking stock of his business, Drexel says his office suffered only minor damage to its building and all of its records are intact. His home also suffered minimal damage and his family is healthy.
“I’ve been through a few hurricanes that have brushed against us, but this one was different,” he said. “The official wind flavor at my house was 84 mph, but my parents in Slidell were right in the eye with 145 mph winds. That area was pretty much totalized. Where they live, there was nothing left to see. Yeah hit by the eye, we wouldn’t be talking.”
Reinventing the business
Drexel is concerned about its customers, especially those who had direct business connections to New Orleans. After the storm, he met with members of his community and discovered that one of his neighbors fixes porcelain tile in antiques like claw-foot tubs.
“It’s been in business since 1958 and 90% of its customers are in New Orleans,” Drexel said. “I told him he needs to reinvent himself. Porcelain repair is a niche business, so I gave him some ideas of what to do.”
During the brainstorming session, the neighbor admitted that he will likely scale down to fix porcelain chips rather than take on larger projects. The neighbor wants to register as a customer but he revealed that he himself now has no money to pay for Drexel.
Offering additional advice, Drexel suggests that the porcelain repairer call the Federal Emergency Management Agency (FEMA) to file a claim. For other small business owners who were decimated by Katrina, he says that if they had a place of business with a damaged storefront, they can take the loss on their taxes, but if they operate from home as a 100% business services. “You’re out of luck.” (See the attached sidebar for more information on taxes.)
It is unknown how many small businesses will be able to fend off these tremendous losses. Even if their operations remain intact, other companies they do business with are faltering, and that’s a big dilemma.
One of Drexel’s customers, for example, has a cleaning supply company that now has nowhere to deliver because all its customers are in New Orleans. Another client is in the plastics business, but his store is under eight feet of water and all the inventory is probably ruined.
location is everything
In Houma, LA, 60 miles southwest of New Orleans, Fiducial franchisee Terri Dockery says she and her clients suffered minor shingle damage, but businesses managed to weather the storm. She believes that many customers should safeguard their business records by scanning vital information onto compact discs that can be easily taken with them if they have to evacuate quickly due to an approaching storm. This will prove invaluable when filing insurance claims after a natural disaster.
“You have to save all your personal asset information on CD now,” said Dockery, who has operated his business for 20 years. “That way all the important documents are there, so when disaster strikes, just grab those CDs.”
Eddie McFearin and Cheryl Millin own Fiducial franchises in Baton Rouge, the Louisiana state capital. Location is everything in business, and when it comes to hurricanes, these franchisees benefited from their geographic proximity when winds and rains hit the state.
“Being on the western side of the hurricane helped a lot because that’s the calmer side,” McFearin said. Other than losing power at his home and having some phone lines down near his office, which he has run since 1997, his business experienced no real damage. However, dealing with the influx of refugees from New Orleans has been another matter for local residents. Gasoline and certain foods are in short supply.
“My wife went to the supermarket and all the meat was spoiled,” he said. “There was a lot of panic buying.”
For those businesses that will have to rebuild, McFearin made the distinction that depending on the type of business, some will have an easier time than others.
“If they are a physical plant that was badly damaged, that is one thing, but if they are lawyers, all they have to do is rent another building,” he said.
When it comes time to rebuild businesses, McFearin says local banks and financial institutions are ready to help. If business was strong before the hurricane hit and they were properly insured, they should be in good shape. But if they are uninsured or underinsured, “they will have to climb a higher hill.”
rising from the rubble
Millin is no stranger to disasters, as evidenced by the fire that burned down his office last year. In fact, coping with the hurricane was easier than examining the ash from his burned-out office last May. His business, located in an office complex, was moved four weeks later to a permanent location.
He bought the operation in 1999 after working in the office for 25 years. The biggest crisis for its gas station and convenience store customers post-Katrina has been getting gas for customers.
“One of my clients, a Shell convenience store owner, just called me this morning and was told by the broker that they have been assigned an assignment,” Millin said. This limits the amount of gasoline the dealer receives.
For small business owners who have lost everything, he advised them to contact the state sales tax department and the Internal Revenue Service for copies of important business records. Millin remembers how difficult it was to revive his business after the fire.
“For the first week after the fire I was doing live payroll at my kitchen table at home,” he said.
When he first examined the ashes of his fire-damaged office, Millin recalled looking for the bank’s check stubs and ledger. Fortunately, the records could be retrieved and key data scanned into the computer system, but not all entrepreneurs have that capability.
“The average business owner doesn’t have that kind of thing,” he said. “Hopefully your tax preparer has it.”
Perhaps the biggest problem for small business owners who evacuated the region, Millin says, was that they thought they were going to leave for a few days and come home. But in their rush to leave, they left behind critical business documents such as insurance policies and tax returns.
“They are in denial because they did not pack those papers,” he said.
In Jackson, MS, Fiducial franchisee James Vlach said small businesses in this location, 200 miles north of New Orleans, did pretty well overall after losing power for several days.
“We had about 12 hours of 50 to 80 mph winds, tons of trees down, and people are still without power,” Vlach said.
Several convenience store owners lost sales because they did not have enough gasoline available for customers. “That also affects internal sales,” she said.