Academic journal article Academy of Strategic Management Journal

The Impact of Hurricane Katrina on Small Business in Ruston, Louisiana

Academic journal article Academy of Strategic Management Journal

The Impact of Hurricane Katrina on Small Business in Ruston, Louisiana

Article excerpt

ABSTRACT

Hurricane Katrina struck Southeast Louisiana and the Mississippi Gulf Coast on August 29, 2005. The effects of Katrina were catastrophic and widespread as it was one of the deadliest national disasters in U.S. history. Katrina impacted more distance parts of the U.S. especially the Northeast. Kentucky, Ohio, and West Virginia suffered flooding from rains brought on by the hurricane. Georgia was hit with storms, rain, and tornadoes.

The hurricane essentially initiated three disasters, the Mississippi Gulf Coast, New Orleans, and geographical areas distant from the main impact, harming these areas from a small to large degree.

In analyzing the impact of Katrina, research may consider what happened before, during, and immediately after the storm and what will happen in the future. This study concerns the impact of Katrina right after the storm on small business in Ruston, Louisiana, some 400 miles from the impact area.

One hour personal interviews were held with 12 small business owners during the period September 14-27, 2005 as well as the head of the Ruston Chamber of Commerce and the director of the Small Business Development Center at Louisiana Tech University.

Ruston was relatively unscathed by Katrina. There were some minor power outages. The major impact was the influx of evacuees from the New Orleans area. Many small businesses in Ruston experienced an increase in sales due to evacuees and travelers. Motels were full. Of those firms interviewed, sales increased for those catering to the transportation, housing, and healthcare needs of travelers and evacuees, e.g., gasoline, auto parts, auto repairs, and convenience goods. The two restaurants interviewed also experienced an increase in sales. Four businesses that did not cater to the transportation, eating or healthcare needs of evacuees felt no impact (auto wrecker yard, real estate, hair care, and retail motorcycle sales). The two healthcare providers provided free drug prescriptions and eye care services.

Two businesses had difficulty getting supplies or clearing credit cards as their vendors or credit card servers were in New Orleans. The specialty drug store which did not charge for prescriptions experienced a cash flow bind. In one case a respondent carried a weapon due to his concern over the character of evacuees staying at the Ruston Civic Center. The small business community as well as nonprofits such as churches donated shelter, goods, and services to the evacuees.

Disasters, natural or man-made may strike anywhere in the U.S. Physical damage may be severe to none. The impact may be indirect such as the influx of evacuees. Those small businesses which are located in an area of a low probability of severe damage, yet could be impacted by evacuees, should develop a plan to handle the extra business, especially in catering to the food and transportation needs of evacuees. They should have alternative sources of supply and credit card service and security. Each disaster plan should be tailored to a specific business, however, such plans should not be overlooked in this age of uncertainty.

INTRODUCTION

Hurricane Katrina struck Southeast Louisiana and the Mississippi Gulf Coast on August 29, 2005. The effects of Katrina were catastrophic and widespread as it was one of the deadliest national disasters in U.S. history. Katrina claimed over 1,800 lives (Wikipedia, 2006). As of April, 2006 the Bush Administration has sought over $105 billion for repairs and reconstruction (St. Onge, & Epstein, 2006). The total economic impact to Louisiana and Mississippi may exceed $150 billion (Burton, M. & M. J. Hicks, 2005).

Katrina impacted more distant parts of the U.S. as well, especially the Northeast. Western Georgia was hit with bands of rains, winds, and tornadoes. The western part of Kentucky was already suffering from flooding from previous storms. Rains from Katrina added to Kentucky's flooding problems. …

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