Entrepreneurs Take to 'Big Easy'
August 25, 2009
In a Wall Street Journal article highlighting New Orleans’ entrepreneurial economy, Michael Hecht, President and CEO of Greater New Orleans, Inc., is quoted on the city’s new identity as a hub of innovation.
Four years after Hurricane Katrina's devastation, New Orleans is experiencing a rebirth of entrepreneurship.
Small-business owners who left are now coming back, driven by a sense of mission to help the struggling city and to take advantage of generous tax breaks. Young professionals have moved to the Big Easy to help with its recovery, enjoy its cultural offerings and start businesses. Surviving companies entered niche business lines as competitors folded or left.
Kenneth Purcell, chief executive of iSeatz.com, uprooted the travel-and-entertainment booking company to New York after Katrina. He returned the company's headquarters to New Orleans in January 2008.
"We moved back to New Orleans so that we can be involved with the redevelopment of one of America's greatest cities," says Mr. Purcell. He was also lured by tax incentives, such as the 6% wage rebate on payroll when he imported about a dozen out-of-state employees. He says the tax breaks have saved the company about $200,000 over the past three years.
Last year, revenue topped $28 million for iSeatz.com. This year, because of new product initiatives and expansion overseas, Mr. Purcell projects $50 million to $60 million in revenue.
Since Katrina, an influx of talent and new businesses has transformed the city's business community. In the past, New Orleans relied on old-world industries such as oil, hospitality and tourism. But now, the city is seeking to diversify its economy, even embracing technology start-ups. For-profit entrepreneurial centers have popped up to support and connect business owners.
"This place, which was rooted in tradition, has now become a place of innovation," says Michael Hecht, president and chief executive of Greater New Orleans Inc., a nonprofit economic-development agency.
As the Aug. 29 anniversary of Katrina looms, the city's transformation as a burgeoning hotbed of entrepreneurs isn't so hard to imagine. New Orleans is the fastest-growing city in the country, with population up 8.2% last year from 2007, according to the U.S. Census. Visits rose to 7.6 million in 2008 from 7.1 million the previous year, as tourism spending increased to $5.1 billion from $4.8 billion. Plus, the New Orleans metro area has recovered about 86% of its pre-Katrina employment. Last year, the region tallied 526,600 jobs, up from 426,000 immediately post-Katrina but down from 610,000 before the storm.
In October 2006, McKenzie Coco, 33 years old, and her husband Kirk, 41, moved to the city from San Diego and saw opportunities immediately. They each started a business -- an advertising agency for her and a microbrewery for him called Nola Brewing Co.
Ms. Coco, owner of FSC Interactive LLC, saw an untapped niche in online marketing as the city's small businesses increasingly depended on online sales for growth. Her company became profitable three months after it opened in May 2007 and now has 34 clients.
"New Orleans is truly a wonderful place to do business right now," Ms. Coco says.
At least $20 billion of construction projects are under way, according to Mayor C. Ray Nagin in a "State of the City" address in May.
To be sure, the city is still navigating its recovery, and is plagued by high crime statistics. New Orleans had the worst crime rate in the country last year, according to an annual report by CQ Press. The city was also the nation's murder capital in 2008, with 64 murders per 100,000 residents, according to the Federal Bureau of Investigation.
"New Orleans is not an easy town to live in," says Mr. Purcell of iSeatz.com. "The infrastructure is still getting back together. It definitely is challenging."
And native small businesses are struggling to reinvent themselves. Carmen Sunda, director of the Louisiana Small Business Development Center, says existing businesses have been reluctant to redo their business model and take advantage of new market opportunities, such as establishing a presence online.
But for others, the Big Easy is ripe with opportunities. Kyle Berner, 28, started a flip-flop sandal retail company, Feelgoodz LLC, in April. This year, Feelgoodz is set to reach $80,000 in revenue as the company expands.
"It's a very special time in New Orleans," says Mr. Berner, a native New Orleanian. "There's just this entrepreneurial feeling that's happening right now in the city."