Here’s what payment data reveals about Hurricane Harvey’s impact on local businesses

Natural disasters wreak havoc on a number of dimensions. First, of course, there’s the human impact of lost lives, displaced families, and damaged or destroyed property. Then, there are the far-reaching economic effects. During the 2017 hurricane season, economic ripples included reduced oil refining capacity,  lack of power, and many other problems.

With so much analysis going on, we wanted to understand the impact on daily business revenue to small businesses. By working with scores of the nation’s top credit card processors, Womply has built a transaction database that sees more daily economic activity than Amazon and eBay combined. So, we have a pretty good lens on Main Street commerce.

Strangely, there appears to have been a huge difference in how local commerce was affected in Florida after Hurricane Irma compared to Texas after Hurricane Harvey. Despite the cost of damage from Harvey being considerably greater than the cost of Irma, the economic impact of Irma is likely to be much larger. The big reason: impact to local commerce.

Whereas in Florida things basically shut down, our data show that in Houston there was a relatively quick bounce back for many small businesses. Take a look at the chart below. This is a depiction of Harvey’s impact on revenue for small businesses in Houston during the period around the story’s landfall compared to an average sales day over the previous three-month period.

It’s important to note that our data provide a high-level picture of small business impact. Certainly, individual businesses may have had very different experiences, especially those in areas where floodwaters were especially problematic.

With that in mind, a few key observations about Harvey’s impact on SMBs in Houston:

SMB revenue definitely took a nosedive

Harvey clearly had a dramatic impact on sales in the short term. Businesses in entertainment, retail/wholesale, and healthcare industries, for example, crashed to only 7-13% of their typical daily sales hauls. The worst period of revenue decline was August 27-28, a few days after landfall, when flooding from Harvey was wreaking havoc in the Houston area.

But some industries actually did OK

Notably, the lodging industry skated by relatively unscathed. Lodging businesses as a category never plunged below 81% of their average daily revenue, even during the storm’s apex. While we’re not attempting to assign cause in this analysis, it makes sense that hotels and motels wouldn’t see a massive drop in revenue with so many people displaced.

Of course, a deeper geographic analysis would likely reveal that lodging businesses in less affected regions benefited while those in flooded regions may have shut down entirely.

SMBs rebounded surprisingly fast

Honestly, we expected this analysis to show a prolonged and significant decline in small business revenue across all industries. We were surprised to see that revenue for most industries started rebounding on August 29 and was back to 80-100% of daily averages for most industries by September 1.

Basically, the data suggest that Harvey had a tremendous impact on small business revenue, but it didn’t last long. Our chart shows a second dip on September 4, which is likely due to cleanup efforts and residual storm effects on Labor Day. After that, however, most industries were at or above pre-hurricane revenue levels.

While individual businesses may have suffered in ways that aren’t captured by these averages, this analysis suggests that Harvey’s greatest impact was to small business property, not revenue. This matters because, according to survey data we’ll release soon, SMBs don’t properly insure themselves against natural disasters, especially considering how little runway they often have with regard to cash on hand.

Look for our small business threat survey to be released soon. If you have questions about this analysis or Womply’s data, drop us a line at press@womply.com.

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