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Small business recovery and resilience after the London Riots

Updated Thursday 19th December 2013

During the 2011 riots, more than 2,000 commercial enterprises were affected. How did the business-owners bounce back?

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A smashed shop window. It occurred in the Birmingham city centre during the riots of 2011. Copyrighted image Icon Copyright: Dgendy | Dreamstime.com A smashed shop window during the British riots 2011 Beginning on the 6th August 2011, four days of civil disorder swept through London and other British cities following the police shooting of Mark Duggan, a 29-year-old black male and resident of Tottenham in North London. Current estimates suggest that the riots have cost the UK between £200-500 million in damages, lost trade and policing. More than 2000 commercial enterprises were affected. Several small independent retailers were the targets of looting, vandalism and arson. The thoughts that follow are based on in-depth discussions with 15 small business owners across London in the Autumn of that year and again more recently.

Previous studies suggest that small businesses are vulnerable and more likely to close following a crisis than larger businesses because they lack preparedness, have limited resources, and because such events have a personal impact on the owner. In the current study, I wanted to uncover how the riots had impacted on small businesses, examine the reactions of owner-managers to the riots and how they made sense of events, and identify some of the factors that facilitated or inhibited recovery.

The nature, pace and experience of recovery for small businesses following the London riots have been influenced by many things, including the extent of the damages and length of business closure, the ease of replacing stock, the speed of and access to external information and advice, physical, financial and emotional support, and the attitudes, experiences and determination of the business owners. Below, I discuss the issues in brief and provide some examples as illustrations.

Direct damages to businesses were mainly structural (broken windows, doors, shutters, fittings and fixtures) and content related (a loss of inventory). All owners spoke of indirect damages as well: abandoned plans to expand, and a loss of staff, customers and sales, the latter of which negatively impacted on cash flow. Financial losses to businesses ranged from £10,000-15,000 at the low end, £50,000-£100,000 on average, and between half a million and a million pounds at the upper end. While a couple had to relocate, most closed for a period of time, two to three weeks, and re-opened with limited stock and ongoing structural repairs. One owner was forced to close her bespoke clothing shop for three months while she found the money to repair the damages and re-create, with her small team, made-to-order stock that had been looted. She relied on personal savings and a loan from the council to stay afloat as the insurance money was delayed and emergency loans from the bank failed to manifest.

The extent and speed of financial support has been crucial both for those with insurance and without. Businesses were underinsured. Owners explained that they could not afford policies to cover “every worst case scenario” whereby all windows and contents were destroyed and the stock looted in its entirety. Several applauded the ‘High Street Fund’, a registered charity set up to help small businesses affected by the riots with the backing of corporate and private donors. One owner of a small business specialising in sporting and recreational goods said, “We got a payment after a week, an emergency payment of £2,000 … [and later] they gave us £8,000… And that covered all our loss of turnover, so they’ve been brilliant.” Financial support from councils has varied. In the best cases, they offered business rate relief, one-off payments or bridging loans. In the worst cases, very little was done. One owner of a clothing shop was disappointed when told, “We’re not allowed to give you [business] rates for free!” The success of claims made through insurers via the ‘Riots Damages Act’ varied as well. Some payments were delayed, others partial in nature. A few owners did not have insurance and in a couple of the cases fundraising was carried out by members of the public. The owner of a corner store said, “It’s the only good thing [that] happened”.

The riots also produced a great deal of psychological anguish for business owners. Many felt bereaved: “It’s like mourning someone’s death and not actually being able to take time off to mourn”. A few said it was the “worst” thing that had ever happened to them. One owner almost “cracked up” after events, chasing insurers, and another felt it had been a real “challenge” to feel safe again in the shop. Prior research suggests that riots more so than other kinds of crises create negative psychological effects for victims. For this reason, emotional support has been particularly important. Support from friends and family members aside, the encouragement of councils and MPs where received was deeply appreciated. Nevertheless, some were disheartened by the lack of support: “[The] riots finish and what? Where is everybody?! … If on that day, if the local MP comes to our shop, you know how good they make us feel? … [It would] make us feel good. Then all we get our energy back”.

Owners extended their praise to local businesses and members of the public for donating building materials, storage space, marketing space, fundraising or cleaning assistance. They were “overwhelmed” by kind words and good wishes. This gave them a sense of “purpose”, the motivation to start again. The owner of a small electronics shop noted, “The riots might have been the catalyst to stopping me altogether and I did think, should I or shouldn’t I? … A lot of encouragement from local people [made a difference]: Don’t let them beat you”. The positive feelings this created was vital in counteracting somewhat the negativity they felt towards the rioters who had destroyed their businesses, the police for failing to protect them and the variable responses of councils and insurers. Moreover, whereas the actions of some left them feeling vulnerable, this support strengthened their resilience and reasserted that small businesses were valued members of the community.

Finally, I have found that recovery from the riots has ultimately depended in part on the attitudes of business owners towards the riots (looking for the positive in what happened) and on their past experiences. The owner of a novelty shop noted:

“I wasn’t completely phased by it [the riots]. I’m very stoical … I haven’t told you half the [XXXX] I’ve gone through in life; personal tragedies that pale into insignificance. Which basically, you know, what the hell, it’s a shop. None of our family is suffering … Live with it. Cope with it”. 

Recovery also seems to be a matter of determination. One owner explained, “I want my shop back. That’s my motive … I love my shop”. Another stressed, “I’m the fighter. Simple as that … I fight for it … I don’t give up. Similarly one said: “I will never give somebody the power to laugh. To say, ‘Oh we smashed up his place and look he is in the street now’. I will show [them] that I still have that courage to do it again, because if I did it [before] I can do it [again]”. 

 

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