TOPICS > Economy

Small Business in New Orleans Still Struggling for Survival After Katrina

December 21, 2006 at 12:00 AM EST
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TOM BEARDEN, NewsHour Correspondent: There aren’t many cities where one can buy candy out of a 91-year-old cart, pulled by a 17-year-old horse named Patsy. While Patsy does the driving, inside, Ron Kottemann pulls taffy, using an Italian family recipe even older than the cart.

He’s the fifth generation of his family to vend “roman chewing candy” like this. He and Patsy evacuated before Hurricane Katrina, and it was several months before they were able to get back on the street.

But Kottemann says his trade hasn’t returned to normal 16 months after the storm.

RON KOTTEMANN, Roman Candy: I had some — a lot of wholesale accounts, but I lost most of those. You know, they either went underwater or got looted.

TOM BEARDEN: He says that’s true for most of his wholesale accounts.

RON KOTTEMANN: In Orleans Parish, I don’t have a whole lot anymore. But I have a few out in Metairie, you know, out in the suburbs, and they’re doing all right.

TOM BEARDEN: To stay solvent, Kottemann has added Internet sales to supplement his horse-and-buggy approach.

A couple of miles from where Kottemann plies his wares, the historic French Quarter is all dressed up for the holidays. But the real tourist season doesn’t start until January, and a lot of businesses are hanging on by their fingernails in the meantime.

Laura Drumm runs the Tabasco Country Store in Jackson Square.

LAURA DRUMM, Second Wind NOLA: We’ve seen a lot of small businesses closing this quarter. I mean, I had to grow a thick skin, because I couldn’t sleep at night worrying about my business and other people’s businesses. But I realized that you have to grow a thick skin so that you can go out and fight everyday and not give up.

Searching for funds to aid business

Laura Drumm
Second Wind NOLA
A lot of us are concerned that we won't be able to build up our reserves to last another summer, and $20,000 to a small business is a lot.

TOM BEARDEN: Instead of giving up, Drumm became president of a group of small business owners known as Second Wind NOLA. Instead of asking for loans, which many would have problems repaying, they lobbied the legislature for direct grants, pointing to the hundreds of millions of dollars given to businesses in New York City after 9/11.

LAURA DRUMM: We deserve no less than New York. This is probably controversial, but I have seen New Yorkers being attacked by foreigners. I feel we were attacked by our government, by the fact that they knew those levees weren't safe.

TOM BEARDEN: She says her figures show that the majority of federal grant money that came to the city went for housing, with only 5 percent set aside for economic development. The legislature now is debating a $100 million community block grant program that would give small businesses up to $20,000 each.

Drumm says a quick infusion of cash could spell the difference between survival and bankruptcy for many.

LAURA DRUMM: A lot of us are concerned that we won't be able to build up our reserves to last another summer, and $20,000 to a small business is a lot.

A new angle for old stores

Vera Warren-Williams
Community Book Center
We had at least two feet of water without any flood insurance, so that was real difficult for us, and it still is.

TOM BEARDEN: Even without that money, the owners of these five shops on Bayou Road in Seventh Ward, one of the oldest thoroughfares in the city, reopened their doors with much fanfare last week.

Calling themselves the "Belles of Bayou Road," they hope to be the vanguard of a resurgent New Orleans business scene. The city recognized their perseverance with proclamations marking their achievements.

Vera Warren-Williams runs the community book center, where repairs are still under way.

VERA WARREN-WILLIAMS, Community Book Center: We had at least two feet of water without any flood insurance, so that was real difficult for us, and it still is. As you can see, we have not been able to repair our floors. And you know that books and water in any form don't mix.

TOM BEARDEN: To help herself succeed, Warren-Williams is adding a coffee shop and a business center to the store. She hopes to encourage others to come back.

VERA WARREN-WILLIAMS: We believe, here on Bayou Road, in this little small corridor, this strip of businesses, that if other businesses can see what we have done with the little that we have and still operating under the conditions that we are operating on, that it may inspire them to move forward and to get themselves together.

'Spirit of entrepreneurship'

Tim Williamson
Idea Village
It's 16 months later, and the government money hasn't come. So I think what you've seen is, many of these businesses, they did it themselves. And it's not the government.

TOM BEARDEN: Tim Williamson thinks this kind of spirit is essential. He's the president of Idea Village, a non-profit group which helped the "Belles" and more than 100 other small businesses with emergency funding and technical support.

TIM WILLIAMSON, Idea Village: It's 16 months later, and the government money hasn't come. So I think what you've seen is, many of these businesses, they did it themselves. And it's not the government.

How do they pull themselves up? How do they find the resources? And it really is the spirit of entrepreneurship from the ground up. And I think that's the one bright light that's coming out of New Orleans, are those brave souls who really figured it out on their own.

TOM BEARDEN: Dawna Luciano-Bennett and her business partner Sara Segovia may just qualify as brave souls. While other stores were closing their doors, the women decided to start a new business: a stained glass craft store in the French Quarter.

Why did you decide to open a business, when businesses all around you are not doing that well?

DAWNA LUCIANO-BENNETT, Glass Magick Designs: Well, I love my artwork, and I've been doing it for other shops and decided, if I was going to come home and do it for other shops, the best way for me to help rebuild the city is to fill an empty storefront.

TOM BEARDEN: How's it going so far?

DAWNA LUCIANO-BENNETT: Well, it's touch and go. It's a struggle. We've only been open three-and-a-half months, and we have some zero days. And we have some OK days.

Businesses' role in city's future

Dawna Luciano-Bennett
Glass Magick Designs
We need money now to help the people stay. Even two or three or four months' worth of rent will help the small businesses until our season possibly kicks in, if it does.

TOM BEARDEN: Both she and her partner have held onto part-time jobs to help pay bills. They weren't in business before the storm, so they won't qualify for a grant. But they might be eligible for a new no-interest loan program that the legislature also is debating; $38 million would be set aside for that purpose.

But Luciano-Bennett says loans aren't much help.

DAWNA LUCIANO-BENNETT: I think loans are going to be detrimental, because if you can't pay your rent and you can't pay your electric bill, how in God's name are you going to pay back a loan, even if it is a low-interest loan?

We need money now to help the people stay. Even two or three or four months' worth of rent will help the small businesses until our season possibly kicks in, if it does. We don't know yet.

TOM BEARDEN: Luciano-Bennett says the city's survival depends on its business community.

DAWNA LUCIANO-BENNETT: We have to have businesses opened in order to generate sales tax, which helps run the city, and we also need people here. The city's not going survive without its heart, without its people, without its artists.

TOM BEARDEN: City Council Vice President Arnie Fielkow agrees.

ARNIE FIELKOW, New Orleans City Council: Well, small businesses are the guts and soul of New Orleans. It's what makes us unique and special. You can go into our French Quarter and go into our small retailers and our restaurants. That's what makes New Orleans so special, and that's why it's important that we help those companies.

TOM BEARDEN: But he sees one looming problem for old and new businesses alike: the cost and availability of insurance.

ARNIE FIELKOW: We're seeing commercial insurance rates in the triple digits right now from increases. And we had one of our larger commercial insurers announce that they may pull out of our state.

This is a big issue statewide, both for our businesses and our homeowners. We're working real hard on it. Discussions are ongoing with the insurance industry.

TOM BEARDEN: Back out on St. Charles Avenue, Ron Kottemann says he'll probably apply for a grant if the program is approved. After all, why not? It's free money. But he's not counting on it.

RON KOTTEMANN: When's it coming?

TOM BEARDEN: Kottemann and other businesspeople say the city's future depends on whether displaced New Orleanians come back and on the tourist trade returning to former levels. The prospects for both are uncertain at best.