The most thankless CEO gig in NY - American Business Media

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IN THE BOROUGHS STATEN ISLAND UNDER WATER STREET— LITERALLY: A damaged storefront in lower Manhattan last week New York’s saddest biz strip Hylan Boulevard, an economic lifeline, is teetering on the edge buck ennis RETAIL Bleak Friday The holidays are already over for shops slammed by storm BY ADRIANNE PASQUARELLI Denise Carbonell and her husband, Derek Dominy, started prepping for the holiday retail season in May. They handcrafted jewelry, metal furniture, wall hangings and pillows in time for the rush of shoppers that normally arrives in November. Instead, a severe tropical storm called Sandy blew in, causing such extensive damage that their holiday business will be essentially wiped out. “It’s our stock and our equipment to make the things we do,our tools and molds,” said Ms. Carbonell, who is dealing with $150,000 worth of damage at her store, Metal and Thread, in Red Hook, Brooklyn. “We do more in those two months [November and December] than in the entire year.” Across the Northeast, retail experts estimate that stores lost about $4 Items made by hand cannot be replaced billion in sales for the week that Sandy hit. Footwear seller Steven Madden Ltd., a public company with 100 outposts, took a $1 million hammering, for example, from the weeklong closures of nine local stores. Chief Executive Ed Rosenfeld said in a conference call that this translates to about one or two pennies off the company’s earnings per share—hardly a lethal blow. But scores of merchants like Ms. Carbonell who already struggle to compete with their larger chainstore rivals face far more meaningful losses. In addition to potential sales, many entrepreneurs lost merchandise, store fixtures, tools and infrastructure. Most See HOLIDAYS on Page 21 NONPROFITS Giving season was supposed to save charities. Until Sandy BY THERESA AGOVINO A few weeks ago, Citymeals-on-Wheels Executive Director Beth Shapiro wasn’t especially worried that donations were down slightly since July.The holiday giving season was approaching,along with the nonprofit’s 26th annual Women’s Power Lunch, its largest fundraiser, which was expected to raise $1.2 million for the charity. Then Superstorm Sandy bore down on the city and Ms. Shapiro’s anxiety rose. In the 10 days after the storm, donations to Citymeals, which delivers food to the homebound elderly, dropped about 50% when compared with the corresponding period last year. Meanwhile, the nonprofit gave out an unplanned 50,000 meals to those affected by Sandy, consuming $500,000 of its annual budget of $17 million. “Of course we wanted to help,” said Ms. Shapiro. “But we need money to prepare meals.” Citymeals is one of scores of charities that rallied to help those affected by the storm, donating food, money and other supplies. Dozens of other groups did the same, even as they were forced to cancel or postpone fundraisers due to the bad weather or out of respect for the storm’s victims. Now nonprofit executives are grappling with how they will recoup the money they lost. And as the traditional giving season begins, these executives can’t help but wonder if donors will be more likely to open their wallets to Sandy-related charities, leaving their organizations strug- See CHARITIES on Page 22 BY ALI ELKIN Many waterlogged south shore Staten Islanders, for whom a car is a necessity, need a mechanic these days. But last week, they couldn’t find one at Guy’s Tire Buys on Hylan Boulevard. Its other store,on higher ground elsewhere on Staten Island, mainly sells tires and parts. But the Hylan shop does more complex repairs— at least before Superstorm Sandy. Last week,though,it was still without power. “We’re operating with half a facility,”said Frank Carbonaro,a parttime manager at the store. “We’re losing business terribly.” Hylan Boulevard, the 14- mile-long commercial artery that is the lifeblood of Staten Island’s south shore, took the brunt of Superstorm Sandy. The storm didn’t just fill homes and shops with sea- HIT BIG 14 HYLAN BLVD.’s length in miles $2M MAX. SBA disaster loan 10 HEIGHT, in feet, of debris piles outside homes water and sewage and push boats into backyards. It shut down the businesses that cater to the needs of daily life— supermarkets and salons, dry cleaners and delis. In the two weeks since Sandy struck, much of Hylan Boulevard remained closed for business. Larger stores—a ShopRite, a CVS— were able to reopen quickly, but the mom-and-pop shops that had thrived in recent years, providing services and employment for the island’s growing population, were in the dark last week, their steel shutters closed. Some may never come back. “We have a limited number of businesses,especially the middle- to large-size businesses,” said Linda Baran, president of the Staten Island Chamber of Commerce. “Our economy would take a huge hit, and we would hate to see them leave our borough.” The rising cost of Sandy could total $33 billion for the state. Lost economic activity for city businesses is estimated to be around $5 billion,according to the city comptrol- See SADDEST on Page 22 November 12, 2012 | Crain’s New York Business | 3
SMALL BUSINESS Plenty of work for cleanup firms. Now try to get paid Cash-flow problems confront some companies racing to undo Sandy’s harm BY CARA S. TRAGER Mike Conlon’s business, 360 National Restoration Ltd., is deluged with jobs—literally. From 23rd Street to Wall Street and from Long Island to New Jersey, the 10-employee Manhattan firm is pumping out water and dehumidifying properties while assisting maintenance companies in cleaning up the soggy mess left behind by the overflowing Hudson and East rivers. Mr. Conlon said 360 National was still “getting a lot of phone calls” but was “handling the volume” of work, thanks to alliances with other companies that have supplied his firm with additional labor and equipment.A veteran of the restoration field who launched 360 in 2011, Mr. Conlon said that a profitable firm’s revenue can fluctuate from year to year and can exceed $3 million annually. Throughout the city, small companies providing disaster recovery and tree-removal services are striving to keep up with the onslaught of business.With more work than they had ever imagined, these firms are doing everything from giving top priority to clients in the most hazardous circumstances to hiring more employees to handle the sudden influx of jobs. Emergency loans But there’s a flip side to the post- Sandy boom in business. Many companies are experiencing the same challenges as some of the customers seeking their help—no electricity,depleted fuel tanks and erratic phone service. “It’s an unprecedented challenge,” said Damon Gersh, president of Manhattan-based Maxons Restorations Inc., which regularly tackles flood, water, fire and smoke damage for its customers. “Cell service is spotty,and workers are living in blackout conditions.” Mr. Gersh said business is “far outpacing” his 50-employee firm’s manpower and equipment. “With 9/11,people had dust and could wait a few days, but they can’t wait with water,” he said. “Everyone’s clock is ticking at the same time—commercial, industrial, homes, small businesses—and the jobs we have are very labor-intensive.” Making matters even worse, To sign up for Crain’s SMALL BUSINESS newsletter, go to www.crainsnewyork.com/smallbiz. buck ennis GROWING DEMAND: To help storm-battered customers, garden expert Bill Logan has shifted his focus to removing downed trees. ‘Everyone’s clock is ticking at the same time’ many small firms are already experiencing cash-flow problems, courtesy of hiring more workers and buying additional equipment to meet the demand for their services. In the past week,Rohit Arora,CEO of Biz2Credit, which specializes in small business finance, said his Manhattan firm has helped 35 service companies, including tree- and trash-removal firms, apply for loans from banks and from the U.S. Federal Emergency Management Agency through the U.S. Small Business Administration. Mr. Arora anticipates an even greater need for small business financing in the next week to 10 days, as more homeowners and business owners return to their properties and seek to repair them but opt to wait until they receive checks from their insurance companies to pay for the work. In good times, it can take anywhere from 45 to 60 days for insurance firms to cut a check for reconstruction projects, he said. With as many as 40 jobs underway, including 25 that run “several hundred thousand and higher”—as in a large TriBeCa garage submerged in 16 feet of water—Mr. Gersh has partnered with a half-dozen companies from beyond New York City to secure additional personnel and equipment. And for his own arsenal of machinery,which encompasses 20 water pumps and 15 generators, he has purchased more than 50 of each for an expenditure of more than $300,000. Depleted gas tanks “Our expenses have gone up tremendously, so having a good banking relationship at this point is pretty helpful,” said Mr. Gersh. Although he declined to reveal the profitable firm’s annual revenues, he said post-Sandy business could double Maxons’ annual revenues within a two-month period. Three-employee firm Erik Maldonado Landscaping in Jamaica, HOW TO FILE A POST-SANDY COMMERCIAL PROPERTY CLAIM GETTING AN EARLY START is essential to speeding reimbursement for damages. According to Eqecat, a firm that tracks hurricanes and analyzes their damage, estimated losses from Hurricane Sandy could be between $30 billion and $50 billion and economic damages between $10 billion and $20 billion. The city is offering small and medium-size businesses whose operations were interrupted an emergency loan of up to $10,000, but for many that won’t be nearly enough to get them up and running again. They will be relying heavily on their insurance coverage. Flooding, a common problem from the storm, however, is “one of the more challenging parts of insurance,” said Rick Miller, managing director of Aon Risk Solutions Property Practice. Aon has a substantial number of clients in New York City, and its largest office is on Water Street (and was knocked out of service by the storm). So what do you do if you have a commercial property claim Here’s some advice from Mr. Miller: ● CALL YOUR AGENT RIGHT AWAY. Even if you haven’t completely assessed the storm’s property damage, contact your agent or broker—it’s best to use the claim hotline—and get the ball rolling. “Even if you can’t give specific information, give a general assessment, like ‘The storeroom has several feet of water.’ Making contact is critical,” said Mr. Miller. Keep in mind that your insurance company is going to be dealing with thousands of claims, and the process of adjusting those claims takes time. “The sooner you can get to your insurance company, the better,” he said. ● KEEP SPECIFIC RECORDS, AND PHOTOGRAPH DAMAGE. Ultimately, insurance claims require proof. Mr. Miller suggested writing down and describing everything you see that either is damaged or is causing damage, whether it’s wrecked equipment, a broken freezer with food rotting, three feet of water on the floor or a hole in the roof. Be as specific as you can, he said, and take photos and videos documenting what’s been damaged. “If you can bring some chronological order to what happened and how it happened, that will help support your claim,” said Mr. Miller. “Having a lot of information may also move you up in the adjustment process.” ● EXPECT TO TAP SOME OF YOUR OWN RESOURCES. Flood claims can be trickier than other claims, said Mr. Miller, and flood insurance is one of the more restricted coverage areas within property insurance. “You may have a certain damage limit for flood, and there can also be some qualifying situations—meaning if you’re in a flood-susceptible area, you may have limited coverage. So don’t rely only on the insurance because it may not cover everything.” If you can, get the process of restoration and recovery started on your own, said Mr. Miller. No matter what amount of money you ultimately receive, with a catastrophic event like Sandy, it will likely take a while for the insurance company to process your claim. —EILENE ZIMMERMAN Queens,has brought in an additional worker to handle the upsurge in business, which includes tree removal and leaf pickup. But, according to owner Erik Maldonado, fallen trees blocking side streets and the gas shortage have cut into his company’s ability to meet the surge in demand for its services. Mr. Maldonado said the firm, which generates annual revenue of $100,000, anticipated pulling its trucks off the streets because of depleted gas tanks. With a 12-person crew, Bill Logan,president of Urban Arborists in Brooklyn, said emergency “triage work,” including removing a large tulip tree with a vertical crack on the Lower East Side, represented his immediate priority. The profitable firm, which generates more than $1 million in annual revenue,is generally handling one to three jobs a day.Urban has no plans to hire more employees because its projects require “highly skilled” workers, Mr. Logan said. While Urban’s tree-removal fees can go as high as $10,000, depending on a tree’s size,condition and location and whether equipment is required, the post-superstorm work, said Mr. Logan, comes at the expense of designing gardens and fall plantings, which represent “a great deal” of the firm’s revenue. Tree-removal jobs also take their toll on the human spirit. “It’s exhausting and sad work,” said Mr. Logan.“We love trees and don’t like them destroyed.” bloomberg news 20 | Crain’s New York Business | November 12, 2012
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