Adapting to Nature
Andrew Herrington, an erosion control and coastal restoration specialist, had a career change after Hurricane Katrina hit last year.
Once he planted marsh grasses and other vegetation along the Louisiana shoreline, but then Herrington got into the demolition and clean-up business, pumping out flooded interiors, gutting them and rebuilding.
“Right after the storm, nobody was worried about the vegetation side of erosion control,” Herrington said. “I didn’t think we would survive if we waited around. I needed to keep my guys busy until my regular business came back.”
So Herrington used his pump trucks to help drain water from commercial and residential properties. His team helped gut and tear down buildings. Then came requests for help with construction.
Before long, Herrington and business partner Glenn Landrum had another idea: They launched Hurricane Guy, a company that provides pre- and post-hurricane services, including making and storing customized window shutters, cleaning refrigerators, electronically documenting important records and storing photographs.
“You have to be able to adapt and change your business model these days. Don’t be afraid of change,” Herrington said about his new business that started in February.
Almost a year after floodwaters drowned New Orleans, many businesses are still struggling to recover. Orleans Parish, the center of Louisiana’s economy where New Orleans is located, had 12,695 small businesses before Katrina, according to state statistics. By May this year, a little more than 2,000 had reopened.
Lack of money, displaced employees and a shortage of customers have hampered the revival of many ventures, financial analysts said. Many business owners have given in to the debilitating challenges, and others hobble on with low profits in the hope that business will eventually rebound.
But some entrepreneurs have abandoned or retooled their usual way of doing business.
“The businesses that survived identified what people needed,” said Tim Williamson, president of Idea Village, a nonprofit organization that since Katrina has provided about 100 local businesses -- as many as 40% of them reinvented -- with technical support, contacts and capital. “If you try to do what you did before, it may not work now. If you’re not going to be flexible, you’re going to be out of business,” he said.
Herrington, a New Orleans native, acknowledged that his initial reaction to Katrina’s effect was panic. Three years earlier, Herrington had given up a stable corporate job to start his own erosion control business.
“We thought, ‘Oh my God, what have we done to our families?’ ” he recalled.
But Hurricane Guy currently has about 50 clients, whose homes range in size from 1,500 to 4,500 square feet. Many customers are elderly homeowners who are willing to pay the $700 to $4,500 fee rather than “fool with the headache” of preparing their homes before a storm and setting things back to normal after, Herrington said.
On a recent afternoon, two of his workers measured plywood and cut the shutters for a dozen windows of a majestic house with white pillars on New Orleans’ State Street in the Uptown neighborhood. Then they did a dry run to determine how long it would take to hang them.
Herrington explained that within 72 hours of an expected hurricane, his team would remove and store the swing set and patio furniture that graced the home’s neatly manicured back garden, while hanging the storm shutters. Customers would be alerted of their pack-up time via e-mail or by phone.
Fear of going bust is what motivated Aaron Wolfson not to abandon the Savvy Gourmet cooking school that he and business partner Peter Menge Jr. had launched less than two weeks before Katrina.
“I had just sunk all this money into the building,” Wolfson said of the school’s venue on Magazine Street, one of the city’s most vibrant commercial strips. The property sustained minor storm damage, but the businessmen lost the big tour groups that they had hoped would fill their cooking classes. Half a dozen or so events, with an anticipated 25 to 40 out-of-town participants, had already been booked.
“We realized that if we couldn’t use our space, which was relatively untouched, then what would encourage other people to come back?” Wolfson said.
So the two men decided to open their doors to displaced chefs, who started cooking meals for the city’s returnees. They hosted so-called devacuation parties. And before long, a restaurant began to take root.
“It was a matter of survival,” Menge said.
Neither he nor Wolfson had experience in restaurant management. So they hired a manager and someone to train their staff.
“Our previous business model, providing a cooking class, is a fairly controlled event,” Wolfson said. “When you have a restaurant, there are so many opportunities to fall down. The level of service and attention to detail that restaurant diners expect is a bit different than the expectation of someone coming to a cooking class. You have to adopt a totally different management style.”
The number of customers dining at the Savvy Gourmet has grown from 35 to about 100 a day. The menu is up from two items to more than two dozen soups, salads and sandwiches. Cooking classes are also back inside the 3,500-square-foot pine-furnished venue, which features a demonstration kitchen and cookware store. Outside catering jobs have mushroomed, and the company recently launched Savvy Kids, cooking classes for children.
“We practice entrepreneurial yoga now,” Wolfson said. “You fit into whatever crack you see available, and make things happen.”
Internet entrepreneur W. Anthony Patton has also learned that lesson.
Before Katrina, Patton created websites for African American businesses, and his online marketing and advertising company promoted news and entertainment in the black community. “We were rolling,” Patton recalled. “It was really good business.”
But Katrina flooded his company’s offices, destroying computers, furniture and other equipment. Patton lost about $300,000 in contracts he could no longer fulfill. Most of his clients fled the city, as did Patton, his business partner and staff.
“We realized very quickly that we were not going to go back to New Orleans and be who we were,” Patton said.
What he didn’t lose were the 72,000 e-mail addresses in his company’s online database. He first used this resource to help politicians and city officials contact displaced New Orleanians. And as businesses began to return to the city, Patton identified another crucial need.
“The biggest issue was access to employees,” he said. “Everybody was trying to hire, but there was nobody around, because so many people had been displaced.”
When a friend requested Patton’s help to find a community consultant for his company, scores of people responded to the e-mail blast Patton sent out to his 72,000 contacts. They packed the lobby of his offices.
He knew he was on to something. “People needed jobs. Employers were screaming, ‘We have jobs and no people.’ We had the database. It was the perfect fit,” said Patton, whose company, EBONetworks, now does online recruiting.
On most days, Patton and his staff of eight huddle around a coffee table in a small first-floor room they are temporarily occupying inside the offices of Idea Village. Working from laptops, they vet job applicants for companies that have contracted EBONetworks’ services. For each position, 10 promising candidates are selected to meet with Patton and his business partner, who then whittle that number down for interviews with the prospective employer.
Patton said the experience of reinventing was challenging, but it had taught him an invaluable business lesson: “Don’t put all your eggs in one basket. And be more global,” he said.
But not all businesses have had success bouncing back. In fact, business industry analysts say the reinvention of small businesses post-Katrina has been the exception, not the rule.
“Most people are not changing their type of business,” said Kelley Pace, a finance professor at Louisiana State University’s E.J. Ourso College of Business. “They are trying to make it with their old one, accepting less business and hoping things will return to normal.”
“If you’re in the spa and salon business, you’re not going to suddenly start selling hardware and chain saws,” said Richard Campanella, a geographer at Tulane University. “One builds up a reservoir of knowledge and skills in a certain sector. It takes a lot to let that go and build up in something else.”
Campanella, Pace and LSU geographer Nina Lam have been conducting surveys on post-Katrina business trends along certain commercial corridors in New Orleans.
Their research through May showed that businesses catering to a want -- such as restaurants, hairdressers and spas -- were rebounding at twice the pace of those catering to a need, such as grocery stores, gas stations and auto repair shops.
Laura Drumm, president of the board of Second Wind NOLA, a local advocacy group for small businesses, said that it wasn’t possible for many business owners, especially those with specialty niches, to completely change their model. She owns a store at New Orleans airport that sells Tabasco sauce products.
The organization has been critical of the United States Small Business Administration for not being more efficient in dispensing disaster assistance to storm-battered businesses.
The criticism was echoed last month in a report by the federal Government Accountability Office.
Richard Jenkins, public information officer for the SBA’s Disaster Field Operation Center-West, said that about 31,000 businesses in Louisiana had applied for loans since Katrina, and 12,122 loans had been awarded, amounting to almost $1.3 billion.
He acknowledged that processing loan applications took longer than desired because of the volume of requests, but said that his agency was “working every day to speed up the process.”
Herrington, of Hurricane Guy, said he was denied an SBA loan, and requests to the Federal Emergency Management Agency for help with housing for his workers were unsuccessful.
He ended up relying on a small grant from Idea Village and refinancing from his bank based on his personal collateral. The risk and endurance have paid off.
“We went from survival to growth mode,” Herrington said.