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Small businesses struggle to survive

Penka Gibinska, owner Pepi's Restaurant in Southold, which

Penka Gibinska, owner Pepi's Restaurant in Southold, which was lost due to Sandy. (Oct. 31, 2012) Credit: Randee Daddona

Superstorm Sandy cut a deep scar into the heart of Long Island's economy, leaving thousands of small businesses flooded, without power and struggling to survive.

From boarded-up surf shops in Long Beach to sodden restaurants on the North Fork, mom-and-pop establishments across the Island were forced to lock up cash registers last week as they dried out, waited for restoration of electric and phone service or considered whether to rebuild. Some lucky ones reopened. The others wait.

"Every day that we don't work, we have no income," said Marianne Ketcham, co-owner of Home Kingdom, a Port Jefferson gift shop that's been closed since the storm hit.

Long Island has about 85,000 businesses with fewer than 20 employees, according to the state Labor Department. They play a key role in the region's economy, supplying nearly one-third of all private-sector jobs. But with razor-thin profit margins, particularly in a troubled economy, most can't afford to stay closed for long.

"They're the backbone of our economy," said Kevin Law, president and chief executive of the Long Island Association, the area's largest business group. The association is organizing a forum for small business owners to speak with federal and state officials about recovery aid. "We need to make sure we do everything we can to help them weather this tremendous storm," Law said.

In Freeport, Sandy ravaged waterfront restaurants and bars along Woodcleft Avenue. The street on Wednesday hummed with industrial vacuums sucking up floodwater. Dumpsters overflowed with rotten food.

At the end of the avenue, people snapped photographs of the blackened ruins of a nightclub and a fish market that burned in the thick of the storm.

"I've been down here 33 years, and I've never had a loss like this," said Michael Gross, co-owner of the charred nightclub Tropix on the Mile.

In the short term, Sandy could sap $1 billion from Long Island's $122 billion annual economy, economists said. As insurance payments and federal relief checks arrive, those losses are likely to be offset. The ensuing reconstruction could ultimately grow the local economy by $500 million, said Irwin Kellner, Port Washington-based chief economist for the financial news organization MarketWatch.

A recovery, however, will be lengthy. And many small shops can't wait. "Some businesses are literally one month from going under," said attorney Lawrence Kushnick, vice chairman of the Huntington Township Chamber of Commerce.

Sandy's impact varied widely across the region. Towns at higher elevations along the Island's spine primarily suffered power outages. Wind and flooding wreaked havoc on the north and south shores.

"Everything is destroyed. Everything is upside down," said Penka Gibinska, owner of Pepi's Ristorante in Southold, which was gutted by floodwater.

The storm could force 1,000 to 5,000 local businesses to go under, estimated Martin Cantor, director of the Long Island Center for Socio-Economic Policy, a private think tank in Melville. While they are eligible for federal disaster relief, many small businesses don't have flood insurance. They lack adequate savings to tide them over. And they are far less likely than larger businesses to have access to credit, economists said.

Storms don't need to flood or destroy buildings to ruin businesses. Sandy's most pervasive impact is evident in the thousands of darkened storefronts, delis and restaurants cut off from their electric, phone and Internet service.

"I'm sitting in the dark. It's impossible to work," said Mike Ripp, owner of Phoenix Addressing Service, a direct-mail marketing company in Ronkonkoma.

Like many small-business owners, Ripp's work is seasonal. For him, the postcards, brochures and other campaign literature stuffed into mailboxes during election season are a boon. Ripp estimated the storm could cost him $10,000 to $20,000.

Long Island's large corporations will suffer, too. But they have far more resources, global supply chains and wider customer bases.

Customers of small businesses, meanwhile, tend to be local. And when local customers suffer, businesses that depend on them suffer. If those customers don't have phone service, they can't order pizza. If they can't put gas in their car, they are not going to bother to shop.

Small businesses also tend to have local supply chains. Take Mike Pitsakis, owner of Bagel Dock and Cafe in Freeport, which has been closed and without electricity since the storm. His napkins and other paper products come from a distributor on Sunrise Highway. His flour arrives from a company in Brooklyn.

Even when Pitsakis can reopen, his suppliers may not be ready to deliver. The same is true for any small business that depends on the legions of local distributors hobbled by the storm.

"The supply chain is broken. It's like dominoes falling. Everyone in the chain is going to suffer," said Carol Chastang, a spokeswoman for the U.S. Small Business Administration.

Some businesses had the means and foresight to plan ahead. Others didn't. The difference was stark at Jericho Commons in Jericho, where a Whole Foods Market was bustling with shoppers last week, thanks to a backup generator. Light from the grocery store's broad windows cast a faint glow on the adjacent row of smaller, shuttered shops, unable to open without electricity.

Owner Raj Bhatia stood in the darkened doorway of the UPS Store at Jericho Commons and lamented not having a generator.

"I'd buy one if I could. The expense might be $1,000, but that's pocket change compared to what I'm losing," he said.

Yet a severe storm can dash the best of plans. As Sandy approached, Long Island Checker Cab set up a central dispatch center in Mineola, leaving it ready for business within a day of the storm. Then the gas shortage hit. On Friday, the company was down to using just 15 of its 75 cars.

"It will take a year for us to regroup and get back on our feet," said Phil Fortuna, the owner. "It's been devastating."

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