Fires, floods and other major disasters are more likely to cause small businesses to shutter their doors than large businesses. While that might not be a shocker, one key factor of how some small businesses are able to persevere after a setback might surprise you: a strong support network to lean on.
“The more [ties] business owners have to the community, families, friends, and institutions (i.e. the more social capital they have), the better off they will be when they go through a crisis,” says a study that examined the aftermath of Hurricane Katrina.
Plenty of personal stories attest to the research. Loretta Harrison, owner of a candy shop in New Orleans, asked family to help out after her employees left the devastated city and sought help from a small business incubator. Given the scope of the damage, she believed she needed to seek counsel and not be afraid to ask potentially “dumb questions.”
This perspective resonates with Nat Wasserstein, who runs a crisis management firm in New York. “I’ve had many small business clients successfully navigate through a crisis, and they share an important characteristic: a very primal instinct knowing what you don’t know,” he says. “They are willing to put their ego aside and seek out answers from more successful people.”
During Hurricane Katrina and the recovery, Harrison adapted to the community’s needs by staying open and expanding the menu to feed volunteers and workers who were rebuilding the city. Small businesses can only draw support during a crisis if they have made connections well before it.
Just ask Jamie Silvestri. In 2010, flood waters devastated his auto parts business, claiming his entire inventory. His basement and entire first floor of his store filled with water after the area suffered record-setting rain. He admits it would have been easy to fold up. He relied on retirement funds, and help from friends and family to relaunch his business.
Silvestri said little things, like community members dropping off food to make sure everyone was fed, made a big difference. He advises small businesses in such circumstances to throw their pride out the window and ask for help. Relying on people who don’t have an emotional attachment to the business also helps him from making irrational decisions.
The U.S. Small Business Administration gave Silvestri its Phoenix Award for Small Business Disaster Recovery. Tellingly, Silvestri received support from the community because of the ties he made to it. He has served on his local town counsel. And even though his auto parts shop was be evacuated due to safety reasons, he spent the next two days working around the clock in his capacity as a volunteer firefighter, helping others in need.
This suggests a resilient business owner doesn’t go pedal-to-the metal on business matters 24-7. They also spent time connecting with the community, making friends, and being involved. Developing mentors who can weigh in based on their experience during tough times can be another difference-maker. Indeed, the post-Katrina study found this type of social capital should be taken into account as another tangible asset for mitigating and recovering from a disaster.
Strategic Funding provides needed operating funds to small businesses. Strategic Funding has helped business in hundreds of industries. Industries served include: restaurants, personal services, construction, medical, manufacturing, agriculture, retail stores, automotive, and food stores.