Big blow for small businesses
Storm damage, lack of power, limited communication with customers take toll on owners
New York — Small businesses hit by Hurricane Ida face a slow and daunting recovery as they grapple with storm damage, a lack of power, water and internet service and limited ability to communicate with clients or customers.
It’s yet another blow for business owners who have been coping with the disruption caused by the coronavirus pandemic for over a year.
“Our fear is many businesses aren’t going to be able to recover, given everything else they’ve gone through for the past 18 months,” said David Chase, vice president of outreach for the advocacy group Small Business Majority.
More than 1 million homes and businesses in Louisiana and Mississippi were left without power as Ida pushed through on Sunday into early Monday. Officials said some areas could be without power for weeks. Experts say there are several ways for businesses to begin to recover from a disaster. First and foremost is making sure all staff and their families are safe. Then consider low-interest natural disaster loans from the government and insurance claims. The process could drag on for weeks if not longer.
“It’s a big storm, slow moving, and hitting a number of states,” said Todd Mccracken, president of National Small Business Association. “The higher the number of claims, the slower response is going to be.”
For Bill Rau, the owner of M.S. Rau, an antiques business that has a gallery on Royal Street in the French Quarter in New Orleans, the biggest obstacle to recovery isn’t damage to the physical location. Instead, it’s the fact that without power and water, no one can tenably live in the city. He said most of his 62 employees in New Orleans have evacuated, spread out to 11 states.
The gallery survived Ida with minor leaks. Back in 2005, the warehouse sustained several million dollars of damage from Hurricane Katrina.
Rau says his employees are “safe and sound.” He evacuated to Bentonville, Arkansas, and then New York. He was hoping to return Tuesday but is now resigned to wait until power officials give the all clear.
During Katrina, Rau dealt with as many as 14 insurance adjusters. But he hasn’t even begun to consider whether he will apply for disaster relief this time.
“It’s way too early to think about that,” he said.
While efforts to assess the damage are just underway, an early estimate from Fitch Ratings says Ida will cost insurance companies $15 billion to $25 billion. That’s well below the record $65 billion of insured losses from Hurricane Katrina in 2005. But Ida will likely surpass the winter storm dubbed Uri that hit in February as the costliest storm in 2021. Power and internet are lifelines for small businesses, said David Lewis, CEO of HR services firm Operations Inc. Ideally, businesses had a hurricane plan in place and sent out emails ahead of time, letting customers know how to reach the company if power is lost.
Business owners also should closely review their insurance policies to know exactly what is covered. In the aftermath of Superstorm Sandy, it became apparent that some insurers covered storm damage but not wind damage, for example. Alternatively, owners might be covered for some things they didn’t realize.