Kenneth Lamy considers himself pretty lucky. When Hurricane Katrina hit the U.S. Gulf Coast in August of 2005, more than 1,800 people died and 275,000 homes were destroyed. Louisiana, in particular, bore the brunt of the storm — 360,000 of its residents are still displaced and approximately 220,000 lost their jobs.
But Lamy and his family not only escaped bodily harm — he was able to get his firm, the Lamy Group, back to normal operation within 90 days of the disaster. The Lamy Group is a financial management and consulting firm employing 22 professionals that service retail property owners and managers. It produces reports for clients on topics like sales and compliance of merchants, tenant selection analysis, compliance examinations, restaurant consulting and lease consulting.
For such a small firm, getting back up and operating so quickly was an impressive feat in a state where 18,700 businesses were either severely damaged or destroyed by the 2005 hurricanes. The figure represents 17.4 percent of all establishments located in Louisiana as of last September.
“Only somewhere between 10 and 20 percent of small businesses in New Orleans have reopened and it's amazing that they have been able to,” Lamy notes.
What saved the firm was contingency planning. Even though Katrina was the first major disaster he had lived through as a business owner — impact from previous hurricanes was limited to two or three days of lost work time — Lamy had been careful to secure hisfiles just in case of such an event. Moreover, Lamy kept track of where all the people in his office planned to seek shelter and how he could contact them. That meant that even with employees scattered and dealing with major damage, the firm was able to continue serving its clients. Ultimately, even with the firm's main office in New Orleans wiped out, the company was able to survive, resettle in the region and move forward, all without having to rely on a loan from the Small Business Administration.
The planning began in the days before Katrina struck. Lamy and his staff decided to evacuate August 26 — a few days before Katrina would hit land. They had been watching the progression of the storm on The Weather Channel and believed the prognosis was not good. They did what they could to safeguard office furniture and equipment and exchanged personal emails in order to find each other as soon as they got settled in temporary arrangements. For days they waited in limbo as the storm passed, flooding began and the saga of the government's failure to evacuate survivors played out. Meanwhile, Lamy was tracking down his employees, finally getting in touch with them all by about September 3.
“Our staff ended up from Los Angeles to North Carolina,” he says. “Many were displaced for the balance of 2005 and some are still displaced because their homes are gone. They are living with family, friends and in temporary housing. When we reopened the office, they were still living a couple of hours away and had to commute from [wherever they were].”
But because the company's clients are national and given the nature of the firm, most of its employees were able to continue working despite the scatter. “The structure of our technology [and organization] is such that it allows us to function remotely,” he says. The company was able to share data via e-mail and its staff could keep in contact with clients.
“Everything was done electronically and by Wednesday after the storm, each of our clients and all our staff [received] an e-mail, and we sent communications to clients and posted updates on our website every week [after that],” Lamy says.
That was all enabled by the company back up systems. Rather than using tape backups, it had all of vital data stored on external hard drives that Lamy could take out of New Orleans. All the firm's data was preserved and accessible to his employees.
The Lamy Group took this step to add an external hard drive to its technology arsenal on the advice of network consultant Tricia Shirer, principal of local technology firm Beyond Networks, Inc. According to Shirer, the traditional data back-up method (tape) is a good option for mistakes inside the office, but not for major disasters, when you no longer have access to your server.
“Unless you can find the exact same type of tape drive, it's a 50/50 chance that you will be able to restore your files,” she says. “In some cases, you can find the same drive model and it still [wouldn't work].”
Moreover average taps hold 20 gigabytes of data while external hard drives can hold up to 1,000 gigabytes.
Such backups aren't only necessary in hurricanes. When severe thunderstorms struck St. Louis earlier this summer, parts of the city ended up without power for more than a week. Approximately 590,000 customers of AmerenUE, the local power utility, were affected. Immediately after the blackout began, local development company THF Realty, moved its critical computer equipment to a nearby vacant retail property that had power and was better buffered against the storm. As a result, its workflow was interrupted for only eight hours.
“We were still closingand being very productive. We didn't miss any deadlines,” says THF COO Marian Nunn. “I think we might be the only company in St. Louis that had done that and in the conversations that I've had with other businesspeople, they have realized how vulnerable they were and that they needed to institute a disaster recovery plan.”
For small businesses, in particular, the cost of an extra harddrive or an extra server — in the $500 to $1,000 range — is worth the assurance that they will be able to stay afloat. Shirer believes that New Orleans companies that have re-opened were able to do so either because their offices remained intact. Of the 30 regular clients her firm has been serving, most were able to get back on their feet by the end of September 2005 and only two remain closed.
The Lamy Group faced a number of other challenges when Lamy returned to the city from a three-week exile. The firm's headquarters space, located in a high-rise office tower on Poydras Street in downtown New Orleans, was off limits because the building had suffered extensive wind damage. And even though 75 percent of Lamy's regional employees had managed to come back, a number had lost their homes and some had lost everything they owned. Lamy's own house, in the town of Manderville, La., is still undergoing repairs.
As he realized the extent of the damage the city had undergone, Lamy began a search for new office space. He eventually signed a lease at Central Progressive Bank Plaza on Highway 22 in Manderville, about 40 miles outside of New Orleans, which is slated to become the firm's permanent headquarters. The town is in an elevated area and offers protection against flooding.
“It was one of the many miracles of Katrina that we were able to find new space. It was almost impossible,” Lamy says. “I started looking even before I returned home and [considered] a very wide geographic area, from Lafayette to as far east as Covington, because we did not know what was going to be available.”
He also explored the possibility of applying for financial assistance from the Small Business Administration, which would pay for lost property and monthly expenses like rent and electricity, but decided against it. As a company hurt by Katrina, the Lamy Group was eligible for loans of up to $1.5 million, with an interest rate of 4 percent, but Lamy did not want to put himself into a debt hole. The disruption to his firm was minimal and his clients were more than understanding, so he chose to rely on existing funds.
Many of his fellow business owners could not afford to be so prudent. To date, SBA received 58,087 loan applications from areas affected by Hurricanes Katrina, Rita and Wilma, and has approved 22,538 of them, representing $2.4 billion. Another 528 applications are being reviewed.
Lamy believes that grants would be much more helpful to people in his situation. “It doesn't matter what interest rate the government offers, it's still a loan,” he says. “It's a source of cash, but all it does is put more burden on a business that's already been hurt by an interruption. What businesses in South Louisiana and the Gulf South really need is federal grant money.”
Even without a grant, however, the Lamy Group was back on track by December of 2005. While the firm settled into its new offices, clients received status reports on their accounts and employees caught up on all their work. In the process, not one client was ignored or forgotten.
According to Stephen Halle, senior vice president of asset management with Combined Properties and Lamy's client for about 20 years, Katrina caused minimal disruption to his own work. In the immediate aftermath of the disaster, the Lamy Group was perhaps not operating at 100 percent of capacity, but it came pretty close.
“We've had virtually no significant reduction in service at all — they notified us within 48 hours of having evacuated,” Halle says. “We received frequent e-mail notifications; they alerted us to the fact that they had CPAs working in other states. They were back to normal in about two weeks.”
On a personal level, however, Lamy says his employees are still feeling the storm's after effects. New Orleans is badly in need of new housing. In some neighborhoods, basic utilities experience frequent interruptions. And as of July, a section of the Lower Ninth Ward, one of the areas that suffered the greatest amount of destruction, remained closed to residents.
For Lamy, it's all the more reason to keep going. His coworkers might have lost their homes, but he is determined to give them a sense of stability in their lives.
“They had to deal with insurance, and losing their homes, and all kinds of things, but one thing that they did have in their life was a job,” he says. “And when you work for a small business in a community that has gone through this much devastation and your company survives it and you can provide for your family, that's a big deal.”
Contingency planning doesn't mean having grandiose plans. There are simple steps to ensure continued operations:
- Protect your computer equipment. With most documents now being stored in an electronic format, if you lose your server, you lose everything you have.
- Know how you can contact your employees outside of work hours. Get as much information as you can, including phone numbers, home addresses and points of contact for close family members. If possible, identify a back-up meeting location in case the main office is not accessible. Even when communications lines were down THF Realty employees knew where to report for work because they discussed the scenario ahead of time.
- Boost workers' morale. If people know their company has made an effort to pay them on time even in the midst of chaos they will be much more willing to go the extra mile in getting the business back on track.
After Hurricane Katrina hit New Orleans, consulting firm the Lamy Group found itself with its headquarters space ravaged and its staff scattered throughout the country. As a small business it had precious little time to get itself back in operation or risk going out of business.
An extensive technology arsenal and constant communication with the head of the company helped affected employees stay productive while they waited to move back home. It took the Lamy Group less than three months to regain 100 percent of its work capacity.