Detroit is hot!
Yes, when it comes to entrepreneurship, it’s on a roll with new businesses sprouting across the city.
According to a recently published report, nearly two dozen restaurants, stores and service businesses have opened in Detroit’s Midtown neighborhood over the past year — and at least a dozen more are on the way in the coming months across the city.
For example, ex-Detroit Lion and Detroit-native, Ron Bartell recently opened Kuzzo’s Chicken & Waffles in Northwest Detroit. Since opening in January, 2015, the restaurant has experienced long waits and excellent neighborhood support. And Kuzzo’s has hired 20 employees (mostly from the surrounding neighborhood) and is looking to expand and hire more.
Bartell says, “Livernois Avenue, specifically, the Avenue of Fashion, is a hidden gem in the city. I felt the area had long been overlooked and underserved. So much of the revitalization talk regarding the city centers on downtown, Midtown, Corktown but often neglects the “neighborhoods.”
With approximately 32,000, the 2010 U.S. Census data reports Detroit is the fourth largest city in the country for minority-owned businesses . if there are more Bartells opening in neighborhoods across the city, think about the impact this would have on economic, job and neighborhood development.
David Blaszkiewicz, President, Invest Detroit, was recently quoted as saying , “There’s a strong black business class in Detroit, and maybe other businesses will look at Detroit as a place for expansion.”
Regarding women-owned businesses and with approximately 242,000 small businesses, Michigan is the ninth largest in the nation.
Bottom line, small businesses are job creators and fueling economic growth.
According to the Bureau of Labor Statistics, small firms accounted for approximately 63% of net new jobs created between 1993 and mid-2013. Since the end of the 2008 recession, small businesses accounted for 60 percent of the net new jobs created across the country.
The 2008 recession was a key driver for entrepreneurial growth. Flushed with buyout cash resulting from corporate downsizing, many ex-employees decided to take it and launch their own business.
Small businesses continue to play a critical role in Detroit’s transformation. With investment dollars readily available supporting the small business ecosystem, it’s clear the entrepreneurial spirit will have an integral part in Detroit’s future.
And providing access to capital will have a major role in small business growth.
Carolyn Cassin, President & CEO, Michigan Women’s Foundation (MWF) stated the organization, in 2014, allocated nearly $600,000 to 32 women-owned businesses with funding ranging from $5k to $50k. Nearly 90% of the allocated resources went specifically to Detroit-based, women businesses.
“Non-traditional financing is available now to entrepreneurs because the traditional forms of financing just don’t work for everyone starting a business”, Cassin continues, ” they don’t have access to friends and family (with potentially the same levels of funding opportunities) or to any of their own personal resources. ”
Therefore, the challenge is to ensure start-ups have access to capital to longer-term sustainability.
The SBA’s Office of Advocacy reports approximately half (50%) of all new businesses survive five years or more and about one-third survive 10 years or more.
Why high failure rates?
- Access to Capital: In post-recession 2008, many start-ups didn’t have the financial resources for longer-term sustainability. While there was short-term cash due to corporate buyouts, longer-term financial planning to support a business was sorely lacking, and
- Longer-term planning: A strategic plan may not have been properly developed and implemented effectively. The lack of having an effective plan leaves a business with no direction and with no direction, there’ a higher probability of failure
What can be done?
- Promote accelerator and incubator programs. These programs, which are industry specific, provide value by providing education and experience using real-life business examples, i.e., your business, and can assist in develop strategy-based plans focused on business priorities.
- Provide” hands-on” training opportunities with business mentors who are readily accessible
- Enhance access to capital awareness opportunities. and
- Focus on excellence every time.
Priscilla Archangel, President & CEO, Archangel & Associates, a Detroit-area consulting firm, believes there are several factors driving small business failure rates beginning with the lack of proper organizational leadership. Additionally, she cites:
- Lack of proper organizational leadership
- Operational inefficiencies, and
- Not having a succession plan
For entrepreneurs, Archangel suggests having strategic plan focused on business priorities, key strategies and specific steps to mitigate risks.
Archangel concludes, “You can’t have the mentality of building it and they will come.” But, you must have a plan which addresses key components focused on business sustainability.
Regarding his success, Bartell says, “I feel like if you want people to patronize and spend their hard-earned dollar with you, they deserve your best. I’ve changed things such as logos, colors, menu options countless times. My drive to be the best can wear on people.”