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By Jack Witthaus – Reporter, Houston Business Journal
A recent study showed that revenue for a majority of Houston small businesses rebounded within days of Harvey, going against statistics that forecast massive business closures following severe natural disasters.
Consumer spending, which fell by about 42 percent in the Houston area between Aug. 25 and 31, rebounded to normal sales around Sept. 1 for most Houston-area small businesses, a study by San Francisco-based information technology company Womply found. Harvey is expected to cost the Houston area tens of billions of dollars in one of the costliest natural disasters in U.S. history.
A majority of the companies studied returned to about 80 to 100 percent of typical revenue within a week. The study reviewed credit card transaction data of about 5,800 small businesses in the Houston area.
“While there are certainly businesses that will shut down,” Womply spokesman Brad Plothow said, “the aggregate impact is that it’s short term and that businesses are pretty resilient.”
Statistics showing the resiliency of small businesses after Harvey go against reports of massive small business closures following natural disasters, Plothow said. Some reports say that between 25 to 40 percent of small businesses that close due to natural disasters never reopen, but those statistics have been recently challenged by experts, according to Forbes.
Out of all the industries studied in the Houston area, lodging was barely nicked by Harvey. The sector didn’t see a drop below 80 percent of typical daily revenue during the storm, according to the study.
Results in Houston were similar to Florida where Hurricane Irma made landfall in early September, causing tens of billions of dollars of damage, Plothow said. The company didn’t have data on Puerto Rico.
Still, many small businesses are struggling to prepare for natural disasters or other threats to business, according to a separate national Womply study conducted in August. About 1 in 5 small businesses in the U.S. said they couldn’t survive if they lost about a month’s worth of revenue.
About 23 percent of respondents said they have business interruption insurance, which protects businesses from loss of income, per the study. An insurance expert told the Houston Business Journal in September that a majority of companies in Houston don’t have business interruption insurance.