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How to Open a Business in Brooklyn

New York City's biggest borough is as much a brand as a location, and it is ripe for start-ups of all stripes.
Brooklyn artist Lexy Funk began making messenger bags out of billboard vinyl in the 1990s. Today, her Brooklyn Industries has 14 storefronts nationwide.

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Brooklyn artist Lexy Funk began making messenger bags out of billboard vinyl in the 1990s. Today, her Brooklyn Industries has 14 storefronts nationwide.

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For Alexis Miesen, Atlantic Avenue had all the makings of the quintessential Brooklyn thoroughfare that combines the charm of a small town with the pace of city life. With its colorful boutique storefronts, diverse dining options, smattering of coffee shops, and antique stores, she expected to see happy families strolling along the street sharing ice cream cones.

There was one problem: There was no ice cream anywhere around.

'It's filled with all these fantastic bars and restaurants and shops and it just has this really great kind of energy. They have all these great amenities to the community but no great ice cream shop,' she said. 'This is a gap in what other people are offering.'

Less than three years later, Miesen and her partner Jennie Dundas had opened not only an ice cream shop on Atlantic Avenue, but also had rapidly expanded the franchise to two other Brooklyn locations, feeding summertime crowds that often form lines winding out the door. Blue Marble's organic, grass-fed dairy-based ice cream has been praised on The Martha Stewart Show, CNN, and in a bevy of New York City publications.

Brooklyn has become as much a brand these days as a location. Slap the word 'Brooklyn' on a piece of clothing and it's instantly edgy, and quite likely to sell. New York City's most populous borough remains a popular place to start a business, and Miesen and Dundas are emblematic of the grassroots, DIY entrepreneurs across the borough who've found a niche, and a loyal fan base that helps spread their brand along the way. (Check out Inc.com's slideshow on Brooklyn's Best Entrepreneurs.)

The surge of creative energy, young artists and recent graduates is putting Brooklyn on the map not just for its booming music scene but also as competition with San Francisco to see who will lead the next Internet revolution.

Business owners say starting a venture in Brooklyn requires creativity, a careful study of neighborhoods, and a good deal of Web 2.0 savvy. We talked with several successful companies about why the county of Kings is a bubbling cauldron of entrepreneurship, and how to get in on the action. 

 

Opening a Business in Brooklyn: Why Brooklyn?

While Brooklyn was once considered a sparse hinterland outside the bustling hub of Manhattan, now it's seen as the roomier, cheaper, less chaotic alternative, with a more stable population, and a reputation for creativity that draws artists, developers, and investors from across the world.

'It's a community actually that appreciates a lot of handmade goods, ethnic foods,' said Catalina Castano, director of the Brooklyn Small Business Development Center. 'It's not only ethnically diverse but it's also culturally diverse. People have really open minds.'

For those looking to tap into the excitement of New York City without getting tapped dry on cash, Brooklyn can be the savior. The average rent for prime commercial corridors in Brooklyn such as Court Street, Fifth Avenue in Park Slope, and Bedford Avenue in Williamsburg is between $35 and $100 per square foot, according to a 2010 retail report produced by CPEX Real Estate. Compare that to $125 to $2,000 per square foot in most of Manhattan's commercial areas.

'It is a bit closer to the real world,' said Taylor Mork, owner of Crop To Cup, a family-farm centric coffee importer based near downtown Brooklyn. 'It's not as fast-paced. I think people are willing to wait a little longer on their investment in you.'

With 2.7 million residents, the demand for goods and services is multitudinous and diverse. The first step, experts say, is figuring out where you need to put your business to best serve your clientele.

Dig Deeper: The View From Brooklyn


Opening a Business in Brooklyn: Location, Location, Location

Brooklyn's neighborhoods all have unique flavors and demographics, so Castano and others said the initial question any new business should ask is: Who are my customers?

If you're a family retailer like the boutique Area Kids, the answer is Park Slope, and the busy pedestrian and commercial thoroughfares of 7th and 5th Avenues.

'What I look for with kids stores is people pushing strollers,' said owner Loretta Gendville, who runs seven stores and spas in Brooklyn and two in Manhattan. 'I want a high density with parents, moms. I like people that are at home, people that are with their kids during the day.'

That means opening a space alongside kids hair salons, yoga studios and tea shops on those Park Slope streets.

Trying for a bar? The influx of artists, a vibrant music scene and a surge in condo construction make Williamsburg a hot spot for bar hopping.

If large-scale production is your game, the old manufacturing warehouse buildings on the north Brooklyn waterfront are considered prime real estate. When Rob Ferraroni was looking for a new location for his Ferra Designs metal fabrication shop 12 years ago, relocating to the Brooklyn Navy Yard seemed like a bold move.

Now, people are clamoring to get into the property, and the ground-level, 10,000-sqare foot space in a former World War II building trades shop is coveted. A lot of his work is for clients in Manhattan, which is a quick hop across the bridge.

'You need to be able to execute these ambitious projects, so you need room,' Ferraroni said.

People also doubted Doug Steiner when he started building Steiner Studios on in the Navy Yard in 1999.  But Steiner saw the potential for major growth, and the opportunity to fill a hole in the movie and television production market in New York City. Now Steiner Studios is the largest studio complex outside of Hollywood with aims of growing to a 50-acre campus, and New York City has helped roll out the welcome mat for the film industry in Brooklyn.

'Everyone under 30 in the business now lives in Brooklyn. Manhattan's gotten homogenized and nullified,' he said. 'The light and the air and the view and the waterfront make this a really special place to come to.'

In the tech community, the neighborhood of DUMBO (whose acronym stands for Down Under the Manhattan Bridge Overpass) is the hot trending 'hood. For instance, drop.io, a private file-sharing service, moved to the area in 2008 to grow its business alongside a rising district of art galleries, performance spaces and a newly expanded Brooklyn Bridge Park. Another perk: an incredible view of the Manhattan skyline.

'If you did it in Manhattan or Midtown or something, you'd basically have to get an office the size of a conference room,' said Steve Greenwood, drop.io's head of applications. Instead, the company got a cheaper, spacious headquarters with exposed brick ceilings and enough space to use for both work and after-hours social and networking events.

'The culture of DUMBO is very complimentary to starting up business,' he said. 'This is a very creative, imaginative place.'

Dig Deeper: How to Pick a Site for Your Business

 

Opening a Business in Brooklyn: Finding and Understanding Your Customers

If there's one thing people say is almost unanimous across Brooklyn it's that borough residents tend to be fiercely loyal and supportive of their local businesses.

But how can you earn that loyalty?

Business owners said Brooklyn is ripe with ways to discover and cultivate a customer base, even before you decide on a permanent location.

Mork spent months pitching his Crop to Cup coffee all over Manhattan only to be met with blank stares. In 2008, he decided to set up a $100-a-day booth at the first outing of the Brooklyn Flea, now a wildly popular market-style showcase of local artisans and antique dealers held in the Fort Greene neighborhood. There, his company's credo of farmer-centric coffee found an eager audience.

Within a few years, his coffee was on the shelves at several nearby businesses, and he recently opened a Crop To Cup café in Brooklyn Heights to serve customers directly.

'It was really Brooklyn that embraced the brand,' he said.

The abundance of community events – from music festivals to food truck showcases and street fairs — act as a testing ground for new companies trying to break into the borough.

Sixpoint Craft Ales brewery was an unknown new kid in town when its founder Shane Welch arrived in 2004 with a car full of homebrew. He and partner Jeff Gorlechen went from bar to bar across the borough, trying to convince owners to carry the new beer being produced in a discounted warehouse space in Red Hook. The following year, they set up as vendors to sell their beer at the Atlantic Antic, a mile-long street fair held in September that's one of the largest in all of New York. Amid the huge festival crowds, they found their thirsty fan base.

'The fact that we were (based) in Brooklyn, they would at least try it,' Kahn said. 'That October, every single bar on the street was pouring our beer. It was our coming out party. That was like the beginning.'

Dig Deeper: How to Use Your Local Flea Market as a Business Incubator

 

Opening a Business in Brooklyn: Hiring and Keeping a Great Staff

Is it tough to recruit and keep a talented staff when the borough is full of so many startups and grassroots businesses?

That may be a problem elsewhere in the country where there's a finite talent pool, business owners said, but the glut of people attracted to Brooklyn and New York City for the music, art, and education options is a huge boon to new companies.

 'You have to talk to a lot of people and find the team and the work that really resonates with you,' said Saadiq Rodgers-King, co-founder of Hot Potato, a social networking site that connects friends and fans around live events. 'For a really early stage company, you have to fall in love.' Being based in the cultural hub of Williamsburg – just a short subway ride from Manhattan – helps lure staff who share in the energy and passion of a startup, he said.

MakerBot, a Boerum-Hill based firm that makes open-source printers capable of producing three-dimensional objects, has no trouble convincing people to work there. Every job listing it posts on its blog or Craigslist results in hundreds of applicants who are excited by the buzzy energy of the technology company located in a great neighborhood, founder Bre Pettis said. It's located near a major transportation hub, but most of MakerBot's employees walk to work, he said.

Dig Deeper: The New Rules of Hiring

 

Opening a Business in Brooklyn: Marketing, 2.0

A lot of success in Brooklyn depends on eschewing traditional advertising in favor of social media and Web 2.0 interactions with customers, several business owners said. In the hyper-connected circles of Brooklyn, someone is more likely to hear about your business through Twitter than they are through a newspaper ad.  With that in mind, the Small Business Development Center has been holding seminars about how to adeptly use social media.

'Word of mouth is very important in Brooklyn,' Castano, the center's director, said. For businesses, that means having a Facebook page, a Twitter account, a blog and contributing to your business profile on Yelp. Restaurants, bars, and stores have helped build customer loyalty by offering rewards for people who 'check in' the most on location-based social networking service Foursquare. Project Parlor, a bar in the Bed-Stuy neighborhood, offers customers a free drink on their first check in; if you become 'mayor' (i.e. check in the most) at O'Barone, a Red Hook Italian restaurant, you get a free glass of wine.

Ann Jhun, co-owner of the Park Slope bar The Sackett, worked as a marketing director for years, but said she no longer believes in advertising.

The bar instead relies on word of mouth, Twitter updates, and its Facebook page to actively communicate with its customers on a personal level.

'You just have to try to engage people, try to get more followers, entice people with specials and events,' she said. 'Brooklyn is all about bloggers and kids with opinions and people who want to be heard. Because we want our bar to be a community, it just makes sense to create this community in a virtual space as well.'

Social media helps drop.io share ideas with its users and with other companies, Greenwood said. The company has created partnerships with the Brooklyn borough president's office to distribute official press releases through its PressLift service.

'There's a lot of great technology but we're also connecting it to people who have real needs for it,' he said.

In a further effort to change the boundaries of the customer-business relationship, drop.io has started hosting regular 'Startup Storyteller' events, where people can hear horror stories, tales of triumph and cautionary advice straight from different company founders themselves. The idea is to create a forum for people in Brooklyn to help one another out, and to provide a peak behind the curtain of how these companies do it.

'You wouldn't be able to have a conversation like that in an environment that felt hostile,' Greenwood said.

Dig Deeper: The Business Owner's Social Media Toolkit

 

Opening a Business in Brooklyn: Opportunities Abound, But So Do Challenges

Even with a collaborative atmosphere, opening shop in Brooklyn has its perils, and operating in a growing part of the city presents its own physical and psychological challenges.

As his Ferra Designs business grew over the years, Ferraroni added a line item to estimates to account for towing and parking tickets.

'It happens all the time," he said. 'No matter what.'

Mork of Crop To Cup uses public transit and a Zip Car from a nearby lot to make all his deliveries. But if the business keeps growing, he's expecting his transportation costs to get more complicated. Sixpoint brewery faces added labor costs and delivery upcharges from operating in New York City, which means the beer made locally can sometimes be more expensive than something from a West Coast brewery.

The creative mindset and local loyalty can backfire too. Ferraroni said the Web-based culture of many of the borough's young transplants often has them expecting advice and help for free.

'They think you're Google,' he said. 'They're rolling over here to the shop, a lot of these young cats, asking a zillion questions.'

Brooklynites are eager to root on their local businesses, but are suspicious of anyone trying to use the Brooklyn brand without really being involved in the community.

'If you want to come here, we welcome you, but you really have to know your customer base and naturally, organically fit into the demographic of the borough,' Blue Marble's Miesen said. 'People really sniff out an imposter very quickly. They're swift and decisive with their purchasing decisions.'

Dig Deeper: What Makes a Great Startup?

Opening a Business in Brooklyn: Additional Resources

New York City offers a business express interactive checklist to help you find out what steps you'll have to go through to open a business in different sectors.

The Brooklyn Small Business Development Center offers counseling, classes, training, and help finding financing.

New York City has the country's largest network of business improvement districts, areas where property owners and commercial tenants have agreed to tax themselves to pay for sanitation, maintenance and capital improvements. A list of the districts is available here.

Last updated: Jun 28, 2010

TIM DONNELLY | Columnist | Inc.com Contributor

Tim Donnelly is a freelance writer and managing editor of Brokelyn.com. His work has appeared in Billboard, The Atlantic, Thought Catalog, and The New York Post.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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