Chicago woman builds a business "incubator" where she helps inner-city entrepreneurs.
On the way to building her state-of-the-art business incubator, June Lavelle has learned what it takes to keep a company alive and healthy
A nonprofit, partially government-funded, relatively small enterprise sounds like it would be a snap to run. But that isn't necessarily the case. Over the past decade June Lavelle has had to use her street smarts and ingenuity to overcome more business problems than many fast-growing, for-profit companies face -- including the 77 in her Fulton-Carroll Center for Industry incubator. -- R.A.M.
On a frosty October day in 1980, at the age of 29, without having purchased so much as a new automobile in her life, June Lavelle found herself the proud owner of a city block in Chicago. No Trump or Helmsley, Lavelle had just shelled out $320,000, a sum whose paltriness suggests that her acquisition couldn't be called prime property.
Maybe it wasn't a tower or a palace, but at least she could take heart that what sat on her block was big: a 350,000-square-foot, three-story factory. In an odd way she could even boast that the empty, century-old brick structure had "location, location, location" -- between Fulton and Carroll was one of the meanest blocks in the city. So mean, in fact, that when Lavelle secured the building with an electronic alarm system, the apparatus got ripped off overnight without a sound.
Some start as a landlord. But the money wasn't really hers. It came from a $1.7-million federal grant through which it fell to Lavelle, as executive director of the Industrial Council of Northwest Chicago, to purchase and rehabilitate a property within the inner city and establish a self-funding small-business incubator in it. The idea was that, given deeply discounted floor space and communal office services in the soon-to-be-shored-up edifice, potential proprietors would be coaxed from the middle and lower classes to cash in their life savings, set up shop on far less capital than a start-up would require elsewhere, hire the local unemployed, and hope for the best. This, the Department of Commerce presumed, would upgrade the locale, sort of by osmosis.
It's not Lavelle's fault that after nearly a decade the northwest sector of Chicago still is not a place where most entrepreneurs would elect to found their businesses. Desolate lots remain heaped fence high with detritus that even the destitute can't devise uses for. The neighborhood's mostly black and Hispanic residents are captives of the Chicago Housing Authority school of architecture -- high-rise, broken-windowed shambles. On-street parking consists mainly of burned-out wrecks. Consumer amenities remain scarce and certainly don't include much conventional banking; the lion's share of exchange takes place in storefront shops, whose check-cashing operatives scoop a hefty percentage off the top for the favor of converting financial instruments such as welfare stipends to coin of the realm.
Virtually shanghaied into administrative duty from the professional stage of The Lyric Opera of Chicago, Lavelle doesn't have an M.B.A.; indeed, until assuming the directorship of the council by agreeing to give it a try when no one else wanted it, she'd never been in business or even come close. Yet standing practically alone in the tactile swath of poverty that family-owned, all-white businesses had long ago left behind, the Fulton-Carroll Center for Industry has been outstandingly adept at encouraging enterprise. This year the 77 start-ups that fill the center are expected to gross about $41 million -- an average of $532,000 each. Even though it's a record high for the nine-year span, "they're not going to be $100-million businesses with thousands of employees," Lavelle concedes. "When you think about what somebody starting with $10,000 and leveraging it into $1 million in sales means in economic terms, that ain't chopped liver, either."
As one of the government's most successful economic-development projects, the shell of the not-for-profit business incubator may be duplicatable. But at its core, where more than six dozen racially mixed, individualistic merchants in search of separate profit must be convinced to exist in sink-or-swim-together harmony, not much can be taught. "No outsider can truly tell what goes on in here, it's so mushed together," says Lavelle, who manipulates the process almost wholly on instinct.
Keeping the wolf from closing the door has been a constant and single-handed battle against longer odds than the chanciest of her tenants faces. One constraint, for example, is the federal grant's stipulation that real estate cannot be used to collateralize a loan. Another is that the government's money could not be used as working capital; it had to go only into purchasing hard assets and/or making hard capital improvements.
"In order to survive," Lavelle exults (now that, with nearly $1 million in rentals and other fees pouring in for the year, she's reasonably convinced she has), "I've beaten every tenant in the building at managing money. Cash Flow is my middle name." The appellation, however, doesn't come close to describing the person behind it. Neither does the person herself: "My biggest problem is explaining to people what it is I am." The answer she gives comes straight from Popeye, another tough-talking, never-say-die personality: "I yam what I yam, and that's all that I yam."
A farmer's daughter from central Illinois, Lavelle conceived of her incubator as a means of revitalizing fallow land, not unlike the challenge of raising corn and alfalfa for a living. "A farm is a testing business, a hard way to make a living," she recalls of her youth. "All I did was transfer the rural networking experience -- when you're out in the middle of nowhere, you have to have a certain respect and concern for your neighbors -- to an urban environment." As independent as the American farmer is reputed to be, to Lavelle he also represents interdependency: "There's a lot of farmer-to-farmer cooperation: lending money, sharing equipment and labor." A similar relationship ought to obtain among entrepreneurs, she assumed.
First, though, the new landlady had to make it through to next spring. "Slam-bam on October 22, 1980," Lavelle recalls in still-vivid horror, "here I am going into winter, and I had to repair the roof, fix the windows, get rid of the rats and pigeons, build the spaces. I had no tenants, I had no income, and I couldn't borrow. I couldn't even meet payroll [including her own salary of $15,000 a year], yet I had to pay for heating a whole city block simply so the sprinklers wouldn't freeze!" For all practical purposes, it was like starting up a million-dollar company with zero money.
