DETROIT — Ask business owners what it is like to operate in Detroit and you will hear comparisons to the Wild West or a third-world country. They often mean it as a compliment.
“You can do things here that would be impossible in a more functional city,” said Andy Didorosi, 27, an entrepreneur who housed his first business, a car repair shop, in a vacant airport hangar that he rented for $300 a month. The arrangement ended when the Federal Aviation Administration caught on that Mr. Didorosi, then a teenager, did not actually own an airplane.
An urban area filled with empty buildings and an underused labor force offers some powerful advantages for entrepreneurs. The cost of starting here is a fraction of what it would be in other large American cities, which is one reason Mr. Didorosi’s ever-changing collection of enterprises includes successful ventures like the Detroit Bus Company, a fleet of biodiesel-fueled tour buses, and whimsical ones like the Thunderdrome, a motorcycle-racing series held at an abandoned velodrome.
But Detroit also poses daunting challenges. Crime is a constant problem, the city cannot afford to repair its aging infrastructure, and banks are not eager to work with businesses in such a troubled location. One owner speaks casually of the arsonists he regularly chases from his manufacturing building. Another simply laughs when asked how he financed his company’s expansion.
“You can’t get bank loans in this town,” said Matthew Naimi, 40, who acquired a 260,000-square-foot warehouse from the city by paying off the building’s $128,000 tax bill and then created a hodgepodge of businesses to fill it. “We’ve basically been growing out of profit and a bit of float from our accountant. When your accountant is your banker, you know your business is on solid footing.”
The largest American city to go bankrupt, Detroit has struggled to adapt a civic infrastructure meant to support a peak population of 1.8 million, to its current level of around 700,000. The bankruptcy itself, however, has yet to affect most of the city’s residents and business owners. “It’s a stack of papers in a courtroom,” said Rachel Lutz, 33, who owns a pair of boutiques, echoing a sentiment heard frequently around town. “It has nothing to do with how people live and do business in Detroit.”
The daily realities of the city’s financial struggles have taken a toll, though, and a growing number of towns face the same core issues confronting Detroit: unaffordable pension obligations and a stretched budget that forces wrenching choices about which municipal services to maintain. That changes the calculus for entrepreneurs, in ways both good and bad.
Ms. Lutz said Detroit’s inexpensive real estate allowed her to start a business with very little capital. “I was laid off, broke, and had about $1,500 left to live on,” she said. “I maxed out my credit cards and started doing pop-up shops. After five of those, I went looking for a retail location.”
Ms. Lutz’s landlord, eager to land a tenant for a long-vacant space, helped finance the construction of her first store, the Peacock Room, which opened in 2011. The spot had traditional selling points — foot traffic, original 1920s architectural details and a spacious window for displaying her wares — but what sealed the deal was an unusual perk: a private security force.
Ms. Lutz’s store is on a block of Midtown that is patrolled by Wayne State University’s police department. In a city where the average response time to the highest-priority 911 crime calls is nearly an hour, Ms. Lutz says she has phoned Wayne State’s emergency line and had an officer inside her store in 90 seconds.
Detroit’s unreliable public services encourage a do-it-yourself culture that is especially intense in the business community, which has a small-town vibe. “We all help each other,” said Erik Nordin, 46, an artist and one of the owners of the Detroit Design Center. “Your street’s not plowed? You call a friend with a truck and get dug out.”
Twenty years ago, the streetlights along the West Vernor Highway, a busy corridor filled with shops largely run by and for the neighborhood’s Latino population, operated reliably. Now, vast stretches of the strip are dark at night, scaring off customers and providing cover to vandals. City officials estimate that nearly half of Detroit’s 88,000 streetlights are broken.
Vernor’s merchants banded together seven years ago to create Detroit’s first — and so far only — business-improvement district, overseen by the Southwest Detroit Business Association. After an exhaustive fund-raising push, the group broke ground this month on a $6.4 million project to provide a 2.3-mile stretch of the district with new sidewalks, landscaping and streetlights.
The new lights’ LED bulbs reflect both environmental concerns and pragmatism. “There’s no copper in there,” said Theresa Zajac, the association’s vice president. “There’s nothing for the scrappers to strip.”
The flip side to Detroit’s obstacles are the opportunities it offers. “The cost of entry is very small compared to other cities,” said Vittoria Katanski, the executive director of Hatch Detroit, a local development nonprofit. “You’re able to afford almost anything you can envision.”
Detroit has more than 50 programs to nurture fledgling ventures. For young technology companies, there is TechTown, an accelerator that offers work space and mentorship. Invest Detroit makes loans of up to $500,000 to retail businesses. FoodLab Detroit brings together the city’s food entrepreneurs, while D:Hive offers training and support services in a range of fields. Detroit Creative Corridor Center works with those in the design and advertising industries, as well as with small manufacturing firms.
Many local business owners have an only-in-Detroit story. For Hugh Yaro, 40, whose restaurant Craft Work opened in January, it is the tale of how he secured his liquor license: on Craigslist, for $18,000. “They’re readily available,” he said. “You can actually negotiate it lower.” The license for his previous restaurant, in Royal Oak, a Detroit suburb, cost $300,000.
Tom Daguanno and Max Schmidt, both 26, started their custom men’s wear business, 1701 Bespoke, out of their homes last year, traveling to visit their customers. A client at Quicken Loans, one of the city’s largest employers, encouraged them to consider a retail location, and connected them with Bedrock Real Estate Services, one of Quicken’s sibling firms.
For token rent, Bedrock housed 1701 Bespoke in a pop-up shop to let it test its concept. Intended to last six days, the temporary store ran for nearly three months and catapulted the venture into profitability. The pair are now hunting for permanent space. “It completely changed our company,” Mr. Schmidt said. “Now we know there’s strong demand for a retail presence.”
For some entrepreneurs, Detroit’s mix of problems, opportunities and resources makes it irresistible. After buying his sprawling warehouse 17 years ago, Mr. Naimi wondered what to do with it. An ad he placed in the local alternative weekly advertising cheap, raw space drew an inquiry from a company looking for a place to process garbage. Mr. Naimi obtained a permit and entered the trash business.
His most successful enterprise, Green Safe Products, which sells biodegradable food service supplies, is lucrative enough to let Mr. Naimi spend most of his time running a nonprofit, Recycle Here, that he started seven years ago to fill a gap: Detroit is the largest city in America without municipal recycling.
For Mr. Naimi, Detroit’s anarchic edge is the heart of its appeal. “I like the freedom here,” he said, sitting in an unheated office furnished with castoffs. “I actually like how screwed up it is. I work every day to help fix Detroit, but if we ever complete the job, I’ll find somewhere else to go.”
This entry passed through the Full-Text RSS service — if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.
Powered by WPeMatico