Sign of the Times

Lots of Space Here

Yesterday, I participated in a telephone interview with Joyce Rosenberg, the small business writer of the Associated Press for an article she was researching on small business disaster preparedness. To see the article, which was published today, click here.

In addition to covering the small business beat, Joyce also writes about banking and finance issues for the Associated Press. As we are both based in the New York City area, our conversation took a turn around the topic of the banking crisis and its implications for our local economy. I took this photograph of an empty subway car (the #5 from the Wall Street station!), a sure sign of the times. It wasn’t that long ago when we worried about the risk of injury to passengers on overcrowded subway platforms. For the local small businesses that serve banking clients, such as restaurants, accounting firms, law firms, messenger services and copy and printing businesses, the ripple effects have been devastating. Unfortunately, business interruption insurance only obtains when there is a triggering physical event, not an economic downturn.  In my former neighborhood (where residents choose to live largely because of its proximity to Wall Street), there is an entire apartment building in foreclosure. Tenants who have lost their jobs are seeking to terminate their leases without penalties.

Speaking from experience, one of the most challenging issues in disaster recovery is for the small business to make a hard-headed assessment about whether cash reserves can sustain the business until revenues return to pre-disaster levels. This is not an easy assessment to make as small business people are optimistic by nature. In discussions with my peers in the Lower Manhattan small business community today, we arrived at a consensus view that the economy will recover, but Lower Manhattan and Wall Street will likely never again return to the wealth-generating capacity of the past. It is difficult to be a global financial capital within a debtor nation. For the local small businesses that depend on banking clients, it is time to make some tough decisions.