11/22/2005
Leasons Learned from the Gulf Coast Hurricanes
by Timothy Lee, Associate Extension Specialist, UALR Lead Center
Several months after the devastating effects of three major hurricanes on the Gulf Coast, data on small business is beginning to appear. Our worst fears are being confirmed.
While FEMA predicted about 25% of businesses would not reopen, Louisiana economic development officials now put the number -- nearly 81,000 -- at over 40%. Employment in New Orleans is estimated to be at 1963 levels.
What business lessons have we learned?
1) Small businesses need a line of credit. The key factor effecting whether a small business was able to reopen its doors was cash, usually in the form of a line of credit from a local bank. These lines of credit enabled small businesses to start repairs, replace inventory, and continue to meet their payrolls. While business continuity insurance claims take about 90 days to process, lines of credit provide an immediate source of cash.
2) Small businesses need insurance. While most small business had basic liability insurance, few had flood insurance or business continuity insurance.
3) Small businesses need bridge loans. Both Mississippi and Louisiana made "bridge loans" to small businesses that had applied for federal disaster loans. These bridge loans provided critical cash for many businesses. Unfortunately, Louisiana's bridge loan program expended all allocated funds within weeks. Arkansas does not have a bridge loan program.
4) Small businesses need computer back-ups. Many small businesses lost valuable business data files when their computers were flooded. Business that used online file storage accounts were able to resume operations within days. Online file storage services, such as Box.net, cost as little as $3/month for 1 GB of storage.
5) Small businesses need emergency contact information. With the unprecedented evacuation of New orleans, many businesses have been unable to contact employees, suppliers, and valued customers. The Public Entity Risk Institute offers one free copy of Open for Business, a simple emergency plan, to any business that calls 1-866-657-4247.
Don't think this can't happen to your business. You may be but one tornado away from ruin. Act now!
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