Undefeated seasons

Entrepreneur, Sept, 2002 by Michele Marrinan

It's been a year since the attacks of September 11 made Americans ask how we would ever get back to business as usual. How have businesses owners fared? Resisting the dual forces of terror and recession proved to be a challenge even Ground Zero entrepreneurs were able to step up to.

IF SHIRLEY DREIFUS HAD NOT OVERSLEPT ON THE MORNING OF SEPTEMBER 31, 2001, SHE and most of her staff would most likely have died when a Boeing 767 plowed into 1 World Trade Center. Her company, Strategic Communications Group Inc., had offices several floors below the main point of impact. "I understand that my office was gone immediately," says Dreifus, who was on the phone with her staff when the first plane hit. "I think a lot of people wouldn't have made it because we would have been meeting in my office--if I had been on time."

As it turned out, all 22 employees made it out safely after Dreifus directed rescue workers by phone to the adjoining office where they were trapped by a locked stairwell. "It really was a miracle," says the 54-year-Old Manhattan resident, who owns Strategic Communications with Farhan Ali, 40.

Nearly as miraculous is the fact that their company, which provides marketing and communications services to financial services firms, is alive and well, despite losing almost everything in the attacks. Like many entrepreneurs, Dreifus and Ali went into high gear that fateful day and in the hazy weeks that followed, focusing on their business, not their emotions. "We didn't give ourselves a lot of time to think because we knew what we had to accomplish," says Dreifus. "You have to keep going. You have a job; you have to do it."

Their story of survival is not unique. Across the country, small companies are finding ways to survive and thrive despite the combination of terrorism and recession. While initially devastating to many businesses, the terrorist attacks did no permanent damage to the majority, say experts.

"I've seen a number of businesses that suffered physical damage or were at Ground Zero, and they were able to relocate 10 or 12 blocks away, re-establish their business and reconnect with their customer base," says Jim King, director of the New York State Small Business Development Center, which dispatched business advisors to New York City in an effort to assist small firms with their recovery efforts. That meant helping companies apply for disaster loans, file insurance claims and even simply retrieve their e-mail using SBDC computers. "A lot of small-business people didn't give up," says King, "because they knew there were a lot of people out there trying to help them."

BY THE NUMBERS

Some industries, such as construction and services, have done well since September 11. Others, such as travel and manufacturing, have suffered.

"I think in the aggregate, small businesses were hurt pretty seriously," says Damon Dovier, director of government and public affairs for National Small Business United. "We also found a number of indirect effects. Not only were restaurants hurt adversely, but we also found that the people who service those restaurants were hurt tremendously."

Despite those challenges, small companies remain a driving force in an economy posting surprisingly high employment and a solid gross domestic product. According to an April survey by the National Association for the Self Employed (NASE), 49 percent of the nation's self-employed say they're optimistic or very optimistic about their revenue, while 41 percent said they are cautiously upbeat. Just 10 percent said they are not optimistic.

That's not to say small businesses haven't struggled. The survey also found that 48.6 percent of respondents saw sales drop after September 11, with 46.4 percent seeing no change and just 5 percent seeing an increase.

The NASE study also found that 87 percent of respondants expect the state of their businesses to improve in three to six months; 51 percent expect their businesses to be strong in five years. Just 7 percent said that "World Events/Terrorism" had the most impact on their businesses in the past year, behind "Self" and "Consumers."

"'Rebound' is the word I would use," says NASE president Robert Hughes in describing the state of small businesses one year after the attacks. "There's no doubt there was an economic downturn prior to September 11, and September 11 probably deepened it." He adds, however, that entrepreneurs are resilient, responding by refocusing efforts on personal service, the effective use of technology and the like.

UPS & DOWNS

Whether an individual business does well or poorly depends on a number of factors. For companies affected directly by the attacks, the year has been filled with challenges. Strategic Communications, for example, lost physical infrastructure, technology, client files, tax returns and more. Dreifus and her staff pieced together much of the work by obtaining copies from clients and searching their home computers for work they had done after hours.

Dreifus estimates that the $5 million company has lost about $1.5 million in sales during the past year. Some of those losses were offset by loans and grants. Strategic Communications received a World Trade Center Business Recovery Grant and a Lower Manhattan Business Retention Grant, both from the New York City Economic Development Corp. The company also received an SBA Economic Injury Disaster Loan of almost $250,000.