These four entrepreneurs got hit hard by Katrina. Here’s how they’re rebounding.
(FORTUNE Small Business) – When Katrina and Rita struck, they each managed in mere hours to destroy the work of a lifetime for untold thousands of small-business owners. In the days following the storms, FSB tracked down a wide array of those victims. Some live in New Orleans, others along the hard-hit Mississippi coast. Some were in Houston helping Katrina victims just as Rita hit. Some are involved in new-economy ventures, such as web design; others are nightclub owners or manufacturers. Most fled the storm, but one chose to ride it out. Even in the face of massive loss, frustration, and uncertainty, not one of those we spoke to is giving up. “Small-business owners on the gulf are a bulldog kind of bunch, a can-do population,” says Mike Vanderlip, an economic development official in Mississippi. “They’re going to fight and kick their way back.”
The profiles that follow tell their stories: how they are weathering this tragedy and getting back on track.
Jason Perry | Out the Box Web Productions, New Orleans
For Jason Michael Perry, August started out as a very good month. His company, Out the Box Web Productions, had just won a five-year contract worth $5.5 million. He also got married. Perry and his bride spent the night of Saturday, Aug. 27, in the penthouse suite at the International House hotel, the start of a honeymoon during which the hard-charging, 24-year-old entrepreneur simply planned to stay and relax in his native New Orleans. Early the next morning someone slipped a piece of paper under his door. “I thought it was the bill,” he says. “It turned out to be a Hurricane Katrina evacuation notice.”
The Perrys fled to Birmingham, where his uncle lives. Other members of the Perry clan also sought shelter there, and soon the house was packed with 15 people. From this cramped base, Perry is trying to resume business. Out the Box does web design for clients that include Dillard University, Liberty Bank, and the city of New Orleans. New Orleans was a prized new client and had just granted Perry that $5.5 million gig, for minority contractors. That job alone, Perry says, promised to boost his three-year-old firm from $250,000 in annual revenues to roughly $1.25 million.
But after Katrina everything was in tumult. Perry couldn’t reach many of his clients, including his contact in the New Orleans city government, who would know the status of his new contract. He did get through to some other city officials, but they were hardly encouraging. “They were pretty frank, saying that nobody was even thinking about contracts,” says Perry. “They were busy trying to rescue hurricane survivors.”
Perry wasn’t about to argue; he agreed that this was exactly how his city should be spending its time. But he also knew that he had to make Out the Box his own priority. He had eight employees depending on him, and some were already calling to ask whether they’d be paid. To compound matters, Katrina had scattered them to seven cities, including Boston, Miami, and Winston-Salem, N.C. Some had computer access and tried to do some work. No money was coming in. Even if someone had tried to mail a payment, it would not have reached Out the Box’s vacated office on the sixth floor of the Amoco Building, directly across from the Superdome.
Within days of Katrina, Perry faced a serious cash crunch. All through that giddy August, he had been borrowing heavily to buy the equipment to service his new client. He had purchased a phone system and two servers and had leased new computers from Apple and Dell. For all he knew, Katrina had wiped out all his equipment, and he had no idea how he’d make his lease payments. (FSB later put Perry in touch with Dell, which let him suspend his payments until he got back on his feet.) Sadly, Perry has no insurance to cover any of his losses.
Soon Out the Box’s account had dwindled to less than $5,000, not even enough to make the next payroll. Perry’s personal savings fell south of $1,000. He applied for a low-interest disaster-assistance loan from the SBA but found the questionnaire bewildering. What size business was he trying to save? How much money would he need? Even the line asking for his address threw him. “I didn’t know what to put,” he says. “And that’s when it really hit me.”
Whatever came to pass, wherever he happened to land, Perry vowed to hang on to his Louisiana driver’s license until he was forced to give it up. “Nothing is more amazing than just walking around my hometown–Bourbon Street, the French Market–nothing compares,” he says. “No one ever really leaves New Orleans. You just can’t stay away. Everyone who’s ever lived here comes back.”
And then it happened. The call, or rather, the text message to Perry’s BlackBerry. The city intended to continue the contract. That meant Perry could afford to pay his employees. Perry knows much still lies ahead: reassembling his workforce and rebuilding his client list (he estimates that 50% of the small ones aren’t coming back)–plus the Amoco Building announced that it was terminating leases, meaning he will have to find a new office.
In some ways, Perry expects, it is going to feel a lot like starting over. But at least he’ll be doing it in New Orleans.
THE JOURNEY MAN
Donald Ridings | ABS Computers & Satellites, Gulfport, Miss.
On the morning Katrina hit, Donald Ridings and his wife, Helen, started driving. They had a plan that was both vague and crystal clear: to get far away from Gulfport. The couple own an old New Jersey Transit bus that they’ve converted into an RV, complete with a bedroom, a kitchen, and hot and cold running water. They simply got on I-10 and headed east. “We had no clue where we were going,” says Ridings.
That first day they got all the way to Bonifay in the Florida Panhandle, but what is usually a three-hour drive took them 14 hours. When they awoke the next morning, the buzz among fellow RVers was that Gulfport had taken a direct hit. Don, 43, and Helen, 40, both work as self-employed computer technicians. They do jobs for a variety of clients, everything from a house call to fix a broken laptop to upgrading the server for a McDonald’s franchise.
Don called Jeffrey Leventhal, CEO of ComputerRepair.com., a job-listing service the Ridings use. “Where can we go for a couple of weeks? What cities need good-quality tech help?” Ridings asked. Leventhal was in a position to answer. ComputerRepair.com is a sort of eBay for infotech services. It matches customers seeking someone to, say, fix a hard drive or kill a virus with techies who enter bids online to do the job.
As it happens, Leventhal’s site also provides a real-time geographic snapshot of the market for techies. Living in New York City, he never expected to be involved in hurricane relief. But Leventhal was able to identify places where a labor imbalance existed: too many job requests, too few techies to fill them. Among them: Cumberland, Ohio, and Jacksonville, Fla.
The Ridings drove to Jacksonville and stopped the RV in a park on the outskirts of town. Because of the extraordinary circumstances, city officials allowed them to stay. From their new base, the couple began sending out e-mail (the RV has a wireless Internet connection) to friends who had also fled from Gulfport. They discovered that their house had been destroyed–only the foundation and some pipes were left standing. Their office in downtown Gulfport was also obliterated.
And insurance? It’s a bleak picture. The Ridings own their office, but their business insurance doesn’t include flood coverage. The same holds for their house, which is covered only by a standard homeowner’s policy. Like so many in the gulf region, they hadn’t seen the need for far pricier flood insurance.
Faced with such financial uncertainty, finding new work has been imperative. Don Ridings has landed several jobs, including some computer-installation work for Circle K, a convenience-store chain. After only a few weeks in a new town, he says, he has managed to match the revenue stream that he had from his business in Gulfport. Helen Ridings, who was too distraught to speak with FSB, is not yet looking for work. She takes comfort in knowing that jobs will be available when she’s ready.
Don’s original question to Leventhal was “Where can we go for a couple of weeks?” Now the couple is wondering how long it will be before they can return to Gulfport. What will be there for them anyway? If they don’t go back, they face the uncertain prospect of launching life afresh from an RV parked in a strange, new city.
Austin Tindol | Gulf Coast Glycol, Gulfport
The mood was giddy on Aug. 26 as Austin Tindol held a ribbon-cutting ceremony in Gulfport. It had taken 18 months to launch Gulf Coast Glycol, an outfit that recycles used antifreeze into reusable antifreeze. Tindol raised a glass of champagne, toasting the six employees–his wife, son, and two nephews among them–of a new family business. “We were excited,” says Tindol. “We were very nearly gloating in our success.”
Within hours, an ominous note had crept in. Weather reports indicated that a hurricane was heading toward the Gulf Coast. Tindol, age 41, wasn’t overly concerned at first, having lived through countless near misses when storms petered out or changed direction at the last moment. On Saturday, Aug. 27, he boarded up his factory. But the next day–amid heightened warnings–Tindol returned, this time to bolt his heavy machinery to the concrete floor.
Katrina hit Gulfport full fury. Tindol sought refuge at his home, 15 miles inland. Even there, the hurricane tore a hole in his roof and dumped torrential rain into his living room and kitchen. Still, Tindol counts himself fortunate. Because their homes were in even worse shape, four of Tindol’s relatives, who were also his employees, moved in with him. They brought along spouses and children, and at one point 13 people were in his waterlogged house. With the power out, the evacuees listened to a battery-powered radio and tried to work their cellphones, anxious for any clues about the factory’s fate. “It was heavy anxiety,” recalls Tindol. “This is a family business that everyone is looking to for their livelihood.”
Several days passed before Tindol could return to the factory. To get to the entrance, he had to use a chainsaw to cut through fallen trees. Then he got his first look at the damage. The storm had peeled back the metal siding like a sardine can. Winds had sliced through the open factory, piling the floor with debris and clobbering two fragile and expensive distillation units. Lightning had struck a nearby transformer, blowing out a control board. As a final jab, the hurricane had snapped the valves on a holding tank, spilling Gulf Coast Glycol’s first batch of reclaimed antifreeze, worth $20,000.
Recovering from Katrina has been a slow process, far too slow for an entrepreneur like Tindol, who says he can’t stand the “lack of control.” For nearly a week Gulf Coast Glycol had no electricity and no running water. When those services were restored, he was able to repair one of his distillation units. But the other one required parts. In all the chaos, it took 14 days to get components that ordinarily would have arrived by overnight delivery. Despite a slowed production schedule, Tindol continued to meet payroll, at a cost of $500 a day. He feels he has no choice. His employees are also relatives, and they’re depending on him.
Tindol is fairly certain that insurance will pick up the cost of repairing his equipment, and has so far received partial payment. Physical damage to the factory is a different matter. Tindol was leasing the space with an option to buy. The grim irony: He had already fixed up the factory at his own expense, planning to purchase it. Now he will have to pay to renovate it all over again. Estimated cost: $50,000.
Tindol isn’t sure where that money will come from. Launching the factory tapped him out. He believes his best hope is to quickly ramp up production, to a level far beyond what he initially planned, in an attempt to stay ahead of his ever-mounting debts. “We’re borderline not gonna make it,” he says, his voice wavering. Then he adds, “We’re gonna make it.”
THE DEFIANT ONE
George Brumat | Snug Harbor, New Orleans
And then there are those who chose to ride out Katrina. George Brumat is the owner of Snug Harbor, a storied New Orleans jazz and blues club that opened in 1983 and has seen performances by everyone from Art Blakey to Jaco Pastorius. “All the worthy cats have played here,” he says.
He decided to remain in New Orleans to protect Snug Harbor–hurricane be damned. Inside his club is roughly $250,000 worth of audio equipment, including mixing boards, multitrack recorders, and amps. The walls are hung with original photos of Mardi Gras carnival Indians, taken by Christopher Porché West. There’s even a grand piano that Ellis Marsalis–patriarch of the musical Marsalis clan–plays during his regular Friday-night gig. “I wanted my club to be here when the storm ended,” says Brumat. “I’ve been self-employed forever, so I’m pretty much unemployable anywhere else.”
When Katrina hit, Brumat took cover in his third-story apartment about a block from the club. He’s 61 and single, and has no children. He lay on the couch reading issues of the New Orleans Times-Picayune he’d missed, including one headlined, KATRINA TAKES AIM. Soon the couch was rumbling and bouncing, says Brumat, and the walls were swaying in the 150-mph winds. Looking out the window, he witnessed “roofing tiles flying like sparrows and tall magnolias going down.”
Even so, Snug Harbor’s neighborhood, at the eastern edge of the French Quarter, sustained less damage than much of New Orleans. Right after Katrina blew through, plenty of people were trudging around the area. But with no lights and no plumbing, and with his 30-person staff dispersed around the country, Brumat couldn’t accommodate any customers. Periodically the New Orleans police came around to try to persuade him to evacuate. But Brumat simply hung around, acting as his club’s security guard. Whenever he spotted a shifty-looking stranger, he’d bang pieces of two-by-fours together–as if shooing a bear–sending a clear signal that Snug Harbor wasn’t vacated and lootable.
Snug Harbor will recover, but it may take a long time. Physical damage to the club is minimal. Brumat has taken a hit nevertheless. He estimates that his revenue will drop by about 40% in 2005 vs. 2004. Looking ahead, he doesn’t expect the next Mardi Gras to be the usual tourist-dollar bacchanal. “It’s going to be a mini Mardi Gras,” he says.