New Orleans Small Businesses Today
Last fall BusinessWeek SmallBiz profiled the recovery of three New Orleans businesses in the wake of Hurricane Katrina (see BusinessWeek.com, Winter, 2005, "The Fixer-Upper Fixes Up"; "Cooking Up New Business"; and "Prepared for Anything—Almost"). A year after the devastating storm, we checked back in with all three companies. Their stories reflect the reality—complete with heartache, disappointment, and opportunity—of life in the Big Easy these days.
For two companies, Tuff Equipment Rentals and Peter A. Mayer Advertising, Katrina has helped drive rapid growth. Ralph Kastner, president of Tuff Equipment, has seen a spike in business as the company's backhoes and boom lifts have been in hot demand for use in cleanup work. He says in the first half of 2006 the company booked $3.3 million in sales—about what the business posted for all of 2005. And Mark Mayer, president of ad and public-relations firm Peter A. Mayer Advertising, says business there is also strong, thanks in part to new business from clients directly involved in the area's reconstruction. Mayer figures sales this year will hit about $75 million vs. $68 million pre-Katrina. "There is this new category of clients related to hurricane recovery," Mayer says.
Of course, both companies did take some hits from the storm. Tuff Equipment sustained more than $3 million in equipment and building damage, most of which was covered by insurance. Kastner says ordering the new equipment and getting it ready for rental was like opening a new business. And he says he's been told his insurance rates may now jump from 60¢ per $100 of equipment to $1. And while Kastner says he had considered opening offices in downtown New Orleans—his offices are in nearby Slidell, which is at a higher elevation—he's heard insurance would be very tough to procure if he did that. "I've been told [insurers] won't even quote you if you locate there," Kastner says.
Meanwhile, Mayer had to relocate many of his employees to a second office in Baton Rouge and to some rented space in Monroe, La., where one of the company's large clients is located. That meant Mayer had to pay for temporary housing for a number of employees for as long as four months. But the company's New Orleans office was up and running again by Thanksgiving. And he says the time many employees spent sharing living quarters in houses the company rented built camaraderie. Some of the houses had parties and even challenged each other in sports competitions.
But one key challenge remains: finding the right employees as the company expands. In particular, Mayer says it is tough to find good Flash developers, individuals who can do interactive Web design. "We always suffered from a thin talent pool [in that field] in New Orleans," says Mayer. "But now with a lot of dislocation and people wondering whether to come back, it is getting harder."
However, those challenges pale in comparison to what has faced Loretta Harrison. Harrison, owner of Loretta's Authentic Pralines, was struggling when we checked in with her at the end of last year—and finding her way back from Katrina has remained difficult. Harrison applied for a loan from the Small Business Administration not long after the hurricane and only saw it approved in July. She has received the first $10,000 installment of that $200,000 loan. She got some business interruption insurance, but that lasted only about two months.
Still, Harrison is pushing to make a comeback. She reopened her store in the Farmer's Market in the French Quarter for a short time after the hurricane, but shut it down temporarily due to slow business there. Now a planned renovation of that site means she won't be back there for about 18 months. She continues to operate out of her warehouse in the Faubourg Marigny section of New Orleans. For a short period of time, she offered breakfast and lunch to all the people involved in the cleanup there. But now that other establishments have reopened, she's cut that back to just Friday lunches, concentrating the rest of the time on making her candies and pastries.
For now, Harrison is hanging on. She says while sales were about $450,000 in the year before Katrina, in the year since the storm she's done only about $75,000 in revenues. Certainly there are some bright spots. Her three sons continue to help for free. And a New York businessman who came annually to the New Orleans Jazz & Heritage Festival has stepped up to help her. He convinced his employer, a publishing firm, to use her products for gift baskets it gives to business associates. So far, the company has purchased 100 such baskets at about $55 each.
Meanwhile, Harrison is still not back in her home. She says she will return by December, "come hell or high water." Her commitment to the city is steadfast. "I've seen a lot of other [cities]," she says. "But there's something about this place. I'm staying."