Businesses' options: stay or go

The fate of Wet Dog Glass hangs in the balance.

The roof is off the studio that housed the glass-blowing equipment. Owners Angela Bernard and her husband knew that right away from aerial pictures of New Orleans posted online.

"With something like this, you have to make the decision whether you want to go on," said Ms. Bernard, who had not yet been back to the city.

To rebuild or relocate is a dilemma facing many small-business owners along the hurricane-damaged Gulf Coast. It's an especially difficult choice for the Bernards and other minority entrepreneurs.

Their businesses, concentrated in the service and retail industries, were hit disproportionately hard, and community leaders worry their loss could threaten minority employment and unravel the social fabric of neighborhoods in the Gulf.

Unlike larger corporations, some of which have already relocated to temporary headquarters in Baton Rouge, La., or Houston, many small-business owners depend on community contact with their customers. Many have lost not only their shops, but also their client base, employees, and any hope of a quick return to normal business.

"The neighbors are gone. The route you walked to the grocery store is gone," Bernard says.

In largely African-American east Biloxi, many businesses had closed their doors long before Katrina, driven out by gangs and drugs. But community leaders say those that stuck it out - like Inez's Lounge & Café, or Tyrone's Barber & Beauty Shop - anchored the community and gave hope that east Biloxi could join in the revitalization taking place in other cities.

Now, in Katrina's aftermath, some entrepreneurs here are considering closing, or relocating to other cities. Either choice would set back a region trying to rebuild.

"I never thought I'd be in this shape," says Inez Thomas, who has cooked soul food in the same location for 17 years and calls her customers family. The water rose to the 11th step of her café's staircase; in one day she lost her business, her home, and her car. "If I don't change my mind, then no, I won't reopen," she says.

The storm, of course, hit entrepreneurs of all races, ethnicities, and classes.

Take the white Gruich family, who've owned a pharmacy in Biloxi for more than 20 years. It still stands, and their records are intact. But the road ahead is daunting. "There's all our customers," says Frank Gruich III, pointing to debris where homes once stood. "Flattened."

While the rebuilding will be hard on all business owners, some say that minority owners - and the workers they employ - may take the hardest hit. In New Orleans, for example, more than half of whites worked as managers or professionals, while most blacks were service workers, craft workers, or laborers.

"If you're under water and happen to be working in financial services, your bank can pick up and move to a new city and open doors tomorrow," says Gregory Fairchild, a professor at the University of Virginia's Darden Graduate School of Business. "But if you have a job that depends on materials or working with people, if no one is there, there is no job."

The city had seen a small boom in minority-owned businesses recently, lifting the percentage of Louisiana entrepreneurs who are black from 8.8 percent in 1997 to 12.2 percent in 2002.

If a lot of black-owned businesses leave the area, or simply go bankrupt, jobs in minority neighborhoods will be scarcer. "African-American folks in New Orleans will probably be the last to return to work," says Professor Fairchild.

Bill Stallworth, a Biloxi city councillor who owns a now-flooded computer repair store, says Katrina has further chilled the minority business climate. Many who lost businesses employed local minorities. "This could knock some people off entirely," he says, "people who won't be able to rebuild."