Gulf Coast entrepreneurs face reality

By Jackie Larson

updated 3:14 p.m. ET Sept. 23, 2005

Woodrow J. Wilson went to the Small Business Development Center in Baton Rouge a week ago seeking help for his New Orleans-based business. His company, Gulf South Animated Motion Technologies Inc., sells a patented new line of fiber optics products, with headquarters on the ground floor of a building just a few blocks from his alma mater, Xavier University. When the levees broke, the building flooded and his business was immediately underwater.

Wilson's been in this business for more than four years and had originally projected sales of $200,000 for 2005. "It takes you that long just to turn the corner on a business," he says. "We had just begun to get to the position where we thought we would be able to make it as a business when this major interruption and disruption came along."

The safety clothing his company produces can be seen at night and in inclement weather. Most items are manufactured in China--but they were stored at a New Orleans warehouse for the upcoming busy season: college football games, the holiday bowls, Mardi Gras. "We lost our inventory, and we lost the opportunity to sell the product in our most heightened season," says Wilson. "A lot of our customers' accounts receivables can be written off also--we've run out of cash. We don't have any cash to continue the business, and many of our customers don't have money to pay us."

But, according to Wilson, his business was one of the lucky few--he had enough information on hand to be able to apply for an SBA disaster loan quickly. "My tax returns just happened to be somewhere else, above water," Wilson says. He also got a call from a business in Baton Rouge that offered to let him use an empty room they had as a temporary office. He got a new cell phone and started to make more contacts. With a borrowed broken desk, a PC and an old chair, he was back in business. As a Louisiana native, he loves his jazz and his French Quarter, and he can't imagine leaving the state. "I'm going to stay in Louisiana, no doubt about it," he says.

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As Wilson listened to the president's speech on September 15, he was heartened by links he heard between entrepreneurship and minorities. "I was very enthusiastic about what I heard--it's not often that you hear that from public officials," says Wilson. "He wanted Louisiana companies involved in rebuilding. He also specifically said he was looking for minority-owned businesses, which is something very refreshing to hear the government say. New Orleans is a majority minority-owned city. He's putting the resources to work and not just saying it, and I'm sure we're going to see some action.

"If the recovery effort wants to use Louisiana businesses," adds Wilson, "I have safety products and medical supplies, tools and pharmaceuticals and many things that may be needed for the cleanup. We just hope some Louisiana companies will be able to [work] as contractors and subcontractors on the actual work."

The Senate testimonies
Mississippi entrepreneur Richard Harris was personally invited to testify on Thursday, September 22, before the Senate Committee on Small Business and Entrepreneurship, headed by Sen. Olympia Snowe (R-Maine), who spent Tuesday, September 20, in the Gulf Coast area surveying Katrina's damages.

Harris has some heartbreaking numbers of his own for the committee. He worked hard to build Harris Homes LLC, one of the largest independent housing contractors in the storm-ravaged Ocean Springs, Mississippi area. At 42, the former trades and industrial instructor heads a company built brick by brick over the past decade. Last year, his total sales were about $3.5 million, and he hoped to sell more than $5 million in 2005.

Before the storm, business was so good that Harris had 24 houses in the works, 12 of them under contract to eager buyers. He employed 60 to 80 subcontracted workers on any given day, with a payroll running close to six figures each week because of the volume of work. On average, his team completed one house every other week. "Nobody had a bigger customer base than me," Harris says, "but because I was doing so well and had so much out and in progress, the properties are working against me right now."

As of Monday, Harris had $3 million in projects outstanding, and $300,000 in vacant property. The deductible on his storm-damaged properties was high enough that he now faces $100,000 in out-of-pocket expenses to fix them up, which will tie up all his working capital.

The really bad news, he says, is that those 12 homes were pre-sold at pre-Katrina prices, numbers he can't hope to deliver on with increased costs and lengthened turnaround times. "I've had to seek legal advice, and I'm going to stop construction, because my money and inventory are tied up," Harris says.

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