Terror attacks affect small businesses
The terror attack on America slammed small businesses,
especially those that relied on shipping and tourism, and also produced
a few short-term business booms.
But now that the transportation system is getting
back in gear, owners are bracing for the economic aftershocks, which
will rely on how tightly consumers clutch their pocketbooks and
confine their movements after the tragedy.
In the first days after the event, businesses that relied on America's
grounded air transportation system took the brunt.
Take, for instance Augusta Seafood Inc., a family-owned
business in Augusta, Maine, that specializes in shipping live Maine
lobsters across the United States.
"We ship Federal Express Overnight with guaranteed
next-day delivery," says co-owner Bob Benedict. "That
guarantee has been lifted. We're doing no shipping whatsoever. It's
definitely had an impact on us. It's a good 20 percent of our business."
FedEx has done a good job, Benedict says, of giving
him daily status reports. The giant shipping firm suspended air
shipments from Sept. 11-15 and reinstated its domestic delivery
guarantee on Monday, Sept. 17.
"We'll keep our fingers crossed," Benedict
says, "that we get back to something near normal."
They're facing the same kind of uncertainty at Norfolk
Wholesale Floral in Norfolk, Va. General manager Jason Cook says
80 percent of the fresh-cut flowers the business uses are from out
of state, and trucking companies are altering their schedules as
word arrives of South American planes that are allowed to land in
"They're jumping back and forth, not knowing
what to do," he says.
Flower deliveries cut
With deliveries uncertain, Cook can't guarantee his customers will
get their flowers
"With weddings, it's a little hard to deal with
the bride and the mother of the bride in a normal week," he
says. "When you tell them you might not have their flowers,
they're a little upset but they understand. We just tell them, 'Maybe
you'll have to find something else to decorate with.' "
Two clients canceled orders for wedding flowers,
one because the bridal party couldn't fly in, the other because
the groom was put on standby for military duty.
On the other hand, Norfolk Wholesale Floral has done
a booming business in red, white and blue floral arrangements, ribbons
"Everyone has become patriotic' it's wonderful
to see that," he says. "We've sold out of flags five times
over, and now we can't find anymore."
A few winners
The grounding of the aviation industry has produced a few other
opportunities. A spokesman for the American Trucking Association
says that the temporary ban on air cargo shipments "increases
the cargo pie for small truckers," and the Postal Service contracted
with thousands of trucking companies to carry mail that had previously
been shipped by air.
Another company that has seen a surge in business
this week is Pre-Employ.com, a California-based employee-background
screening firm. With news reports about airport security firms paying
hefty fines for not doing criminal background checks on their staff,
Pre-Employ has seen a 100 percent increase in requests for information.
"Overall, people across the nation want to know
who they're working with and who they're hiring," Pre-Employ.com
President Robert Mather says.
Business income insurance won't
They also want to know if their insurance will cover the income
they've lost this week. Chances are, the answer is no. Bill Wilson,
director of the Independent Insurance Agents of America virtual
university, says the association has gotten calls asking if their
business income policies would kick in.
The only businesses that qualify, Wilson says, are
in lower Manhattan, where the government has sealed access, barring
employers, employees and customers alike.
The travel industry took an immediate hit from untold
thousands canceled reservations.
Cathy Keefe, spokeswoman for the Travel Industry
Association of America, says it's "difficult to tell right
now" what the full extent of the tragedy will be on the travel
industry, but the association is confident it will recover.
"Americans view travel as almost a birthright;
it's ingrained within us," she says, "and we're incredibly
resilient. We're not going to give up. I think it's steeled our
resolve even more ... I think we'll see a big surge in travel within
America. There's an overwhelming surge in patriotism. They're going
to say, 'I'm going to travel within my country and I'm not afraid
Ed Silver, co-founder of hotel discounter Lodging.com
said his company spent Tuesday helping travelers grounded by the
ban on air travel.
"They ended up in cities they didn't know anything
about," Silver says. "They called from the airport saying,
'Help me out. I don't know where I am.'"
Since then, Silver says the Boca Raton, Fla.-based
company has seen a dramatic increase in cancellations.
"Our cancellations are almost outpacing the
bookings," he says. "There's just a lot of uncertainty."
To help current customers and to convince new customers
to make reservations, Silver says they're waiving cancellation fees
and accepting bookings without them as well.
If there is another industry that didn't need a national
disaster right now, it's Internet companies. Already struggling
to stay afloat, some small dot-coms have been reeling because projects
have been canceled, banner ads have been pulled or client payments
were delayed in the mail.
"We've received word from a number of clients that they cannot
make their payments right now because of incoming payments not arriving,"
says Sharon Tucci, president of Sling Shot Media, a Nevada-based
e-mail service bureau with about 42 staffers. "Two people I
know who run dot-coms had to tell their staff that this week's pay
will not be on schedule. Another one is dealing with a problematic
landlord because her rent was already late when this started and
she has had no money come in this week.
"The reality is that there are a lot of dot-coms
right now that are paying out their right hand what they get in
their left hand," she says. "A one-week or even two-week
situation where cash flow is slowed is recoverable for most. I think
overall in about 30 days time, we'll start to see an improvement
in the general economy. But some companies won't make it that might
-- Posted: Sept. 17, 2001