Disaster does not always strike the business on the 6:00 news, in some other town, or some more natural-disaster-prone region. It can occur anywhere, at any time. And, for the unprepared small business owner, an unanticipated tangle with nature’s fury or man-made disaster can mean business interruption, crippling property loss, or worse.But--thanks to assistance from the SBA’s Disaster Loan Program--southeastern Pennsylvania entrepreneurs Larry Klebanoff and Drew Wolf’s business, League Collegiate Wear, was spared from the brunt of those worst-case scenarios.
Getting off of the Ground
In 1991, Klebanoff and Wolf founded their collegiate-logo sports apparel business—League Collegiate Wear, Inc.—to target a market starved for on-trend college-themed gear updated to suit current fashion. By 1999, Klebanoff and Wolf had built that once home-based business into a market leader. They had planned for fashion trends, and they had planned for market demand, and all of that planning had paid off.
But, without a disaster preparedness plan in place, they didn’t plan for what happened next.
That year, Hurricane Floyd struck southeastern Pennsylvania with a vengeance, and League Collegiate Wear was hit hard. When the storm subsided, Klebanoff and Wolf found their 9,000-foot facility—located in a flood plain—virtually underwater. In the face of that level of devastation, Klebanoff and Wolf were forced to close their business for necessary restoration.
In the weeks that followed, League faced many challenges, but relied on support from their staff and from the SBA to re-build their business.
Perhaps the hardest blow of the recovery process came when Klebanoff and Wolf realized that their misunderstanding of their insurance coverage could cost them their business. Because League’s insurance policy contained a coverage exception for business interruption coverage caused by flood, League’s insurance carrier would not cover the flood damage as Klebanoff and Wolf had hoped.
Undeterred, Klebanoff, Wolf, and League’s loyal staff worked tirelessly to restore the business. League staffers—all of whom remained on payroll, despite the shut-down—maintained vendor and client relationships through the crisis with regular, transparent communication regarding League’s business resumption status. Meanwhile, League turned to the SBA’s disaster program for the funds that League needed to rebuild.
The disaster program is SBA’s largest direct loan program, and the only SBA program for entities other than small businesses. Through the program, SBA provides financial assistance to homeowners, renters, businesses of all sizes, and private, non-profit organizations following declared disasters.
Due to the flood damage, League was unable to re-start production at all for one month following the flood, and a total of three months passed before League was fully operational.
Up and running again by early 2000, League was ready to put the past behind it and looking to a promising future. But, in 2001—just two short years after the flood—fate again intervened when a devastating electrical fire shut down League’s production. After the fire, insurance inspectors confirmed what Klebanoff and Wolf already knew—their building was a total loss.
This time, halted production cost League almost $2 million in damages before it was able to physically move to a new facility where it resumed production one month later.
But, this time, League had a disaster preparedness plan—albeit informal—in place. Thanks to the disaster preparedness experience that League gained through grappling with the 1999 flood damage, League was ready to jump into action.
A near-miss with the loss of its server in the flood (League staffers were able to rescue its server, intact, from the flooded building, narrowly avoiding a complete loss of all of the information stored on it and a resultant longer delay in operations resumption after the flood), had spurred League to back-up the server nightly and save tapes off-sight. This time, the fire could not even threaten to affect League’s information system integrity.
Also, League’s insurance claim process was much improved over their 1999 experience. After the flood, Klebanoff and Wolf had made understanding their insurance a priority, and League’s coverage was appropriate. (Notably, League’s post-1999-flood insurance coverage review included obtaining an expensive insurance policy that would cover business interruption, even in the case of a flood).
Finally, League again turned to its staff and the SBA to see it through the recovery process. Building on what they had learned from the 1999 flood, League staffers kept vendors and clients fully apprised of League’s business resumption status. Meanwhile, Klabanoff and Wolf worked with the SBA to secure the disaster loan funds that they needed to re-build.
Within three weeks, League had used SBA disaster loan funds to relocate the business to an office park ¼ mile from their original location—this time, not in a flood plain—and constructed 6 feet from ground level. League was back in business again and continuing to grow.
Having survived both flood and fire--despite its location in relatively storm-safe southeastern Pennsylvania—League has emerged with a clear, focused disaster preparedness plan and a deeper appreciation for the SBA. In the words of Wolf regarding his experience with the SBA’s Disaster Loan Program, “The SBA people were super-helpful. I was proud to be an American. I was proud that I pay taxes.”
As for League’s disaster preparedness plan, Klebanoff and Wolf are committed to: (1) maintaining a quality off-sight information systems back-up program; (2) periodically and vigilantly reviewing League’s insurance coverage, to be sure that coverage is appropriate; (3) focusing on maintaining a cordial working relationship with a bank with which League is in good standing (to help insure efficient access to capital as needed); and (4) standing ready to maintain vendor and client relationships through a crisis with regular, transparent communication regarding League’s business resumption status.
Today, Klebanoff and Wolf remain at the helm of the still-thriving League Collegiate Wear. Well-seasoned business owners, having weathered nearly 20 years in business together and two major disasters, they have learned how to endure many a literal and figurative storm. And now, armed with a formal disaster preparedness plan and the knowledge that SBA disaster loans are available to fund disaster recovery, they face the future with re-doubled strength.
This article does not constitute or imply an endorsement by SBA of any opinions, products or services of any private individual or entity.