Small Business in the Face of Crisis: Identifying Barriers to Recovery from a Natural Disaster¹

Abstract

The crisis management literature has not dealt in depth with small business response to disasters. This study takes a qualitative approach to consider how small businesses respond to and recover from a large disaster, by interviewing stakeholders in five different communities in the Gulf Coast of the United States. Events that are considered to be crises in nature are usually characterized by high consequence, low probability, ambiguity, and decision making time pressure. Hurricane Katrina and its aftermath caused small business owners in the U.S. Gulf region to experience each of these. Findings include lack of planning by small business; vulnerability to cash flow interruption; lack of access to capital for recovery; problems caused by federal assistance; and serious infrastructure problems impeding recovery.

Disaster risk management and business education: the case of small and medium enterprises

“…Some researchers suggest that a smaller business size is a major source of vulnerability to negative disaster outcomes (Alesch, Holly, Mittler & Nagy, 2001), while others argue that smaller businesses suffer disproportionally greater losses than larger businesses (Kroll, Landis, Shen & Stryker 1990). Further research suggests that smaller businesses have fewer resources to plan, respond, and recover from disaster impact (Runyan, 2006), which is in line with data that points that businesses with fledging financial conditions and smaller businesses have less chances of recovering from disaster related losses (Tierney & Dahlhammer, 1997).…”

Business continuity management systems BS 25999-2 in Poland: empirical studies

“…So maybe smaller companies should implement BCMS more than bigger ones should because of the potential consequences of every risk. Nowadays, it seems that this area of management in SME organizations is realized in an intuitive way and with a lack of plans in case of emergency results from missing money [Runyan 2006] or the owners' interest in spending money because of a lack of danger in the past. The conclusion is that every company, independently of the size and kind of operations should undertake business continuity activities [Jin 2010].…”

The structure of disaster resilience: a framework for simulations and policy recommendations

“…Runyan (2006) studied US communities along the Gulf Coast in the weeks after Katrina. He found that business interruption was essential for small business owners and that delays in releasing Federal Emergency Management (FEMA) and Small Business Adminisreation (SBA) funds were the principal problem that businesses faced in recovering after the storm and thus in rebuilding downtown communities along the gulf.…”