With the 5th anniversary of Hurricane Katrina just behind us, how are small businesses in New Orleans and the surrounding communities faring?
Recently, new stories like this August 24 AP article revealed just how badly the federal government’s disaster loan program failed businesses after Katrina. (The SBA says it has since improved its disaster loan processing system, and businesses are getting loans much faster in the wake of the BP oil spill.)
But businesses in New Orleans didn’t let the problems with government assistance slow them down. Portfolio Magazine recently took a look at how business in the city has changed since Katrina and found that there’s been much change—for the better.
Before Katrina, New Orleans had a lower rate of new business creation than the national average. Today, according to a Brookings Institution report (PDF) the city is ahead of the national average, with 450 people per 100,000 starting businesses (compared to 372 for the nation as a whole).
However, many of those businesses weren’t exactly innovative: The same Brookings report found that the number of patent applications in the New Orleans region is 21 per 100,000 people—six times less than comparable regions.
But that’s all changing thanks to the efforts of New Orleans entrepreneurs and business supporters who see the city as a potential hotbed of innovation. One key figure profiled in Portfolio, Chris Schultz, founded tech incubator Voodoo Ventures; launched TribeCon, a technology conference; and helped start Launch Pad, an incubator for startups.
Other new incubators or collaborative spaces for small businesses in New Orleans include the IceHouse, the Idea Village and Entrepreneurs Row, all of which cater to tech businesses. The city also recently built a BioInnovation Center to nurture biotech startups, and plans for encouraging cleantech businesses are underway as well. Combine these factors with a low cost of living, generous tax breaks for businesses and an eager work force, and it’s easy to see how New Orleans offers many advantages for innovative entrepreneurs.
What’s behind the transformation of New Orleans to an innovation center? After Katrina, “we had an amazing ‘brain gain’ of smart, passionate young people moving to New Orleans to make a difference,” Schultz told Portfolio. “Many of them have decided to start companies.” While New Orleans was once an “old boys’ network,” Schultz says that’s no more: “The community has embraced the newcomers who are making change.”
In the wake of Katrina, big business stepped in and offered lots of aid to the community. Today, small business is helping its own—without waiting for government assistance. I think this story says a lot about the nature of entrepreneurs. As one entrepreneur cited by Portfolio says, “Katrina was definitely a springboard. There was so much opportunity after for those of us that stuck around and endured.”