Groups Cooperate to Help Small Businesses Recover

By Dave Franzman, Reporter

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By Dave Franzman

Story Created: Oct 31, 2008 at 4:58 PM CST

Story Updated: Oct 31, 2008 at 4:58 PM CST

CEDAR RAPIDS- Small businesses that recovered and reopened after the floods might not be out of danger yet. And that's why a number of groups involved with business development are joining up to help flooded-out businesses in the Cedar Rapids metro area.

U.S. Labor Department statistics predict that about 45 percent of businesses impacted by a major disaster will fail within three years. That due to the financial pressures of recovery and replacing lost machinery.

The June floods in Cedar Rapids impacted about 700 businesses total. Based on the national statistics, the government would expect 385 of those businesses to eventually fail.

But the Cedar Rapids Small Business Recovery Group in cooperation with the Cedar Rapids Area Chamber of Commerce has come up with a plan to improve the recovery odds.

Those two organizations are partnering with the Entrepreneurial Development Center and the Small Business Development Center to offer assistance to companies trying to reopen. The groups will provide free mentoring, education and training services to flood-impacted companies.

The Coffee Emporium in downtown Cedar Rapids provides an example of some of the potential pitfalls. That small business reopened a ground level shop downtown a few weeks ago. Owner Robin Morris took out a business loan four years ago to buy the downtown shop and another in Hiawatha. It was almost paid off. But borrowing money from the SBA to reopen has turned back the clock on her financially.

"This puts me right back to day one basically...right back where I started from...all new equipment...but in debt," she said.

Part of the effort will involving getting small businesses to take an honest look at recovery plans and not rush financial decisions that won't work out long term. That means making an honest assessment of whether a reopened business can pay off new borrowing.

Curtis Nelson, Entrepreneurial Development Center CEO said "this is why so many fail when they come back...the danger is the rush to come back to what I had instead of looking forward to what I should have."

Nelson and others say their goal is to make sure those businesses than can reopen stay open.

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