STRATEGY

Concrete Tips for Urban Pioneers

What to keep in mind if you do business in the inner city.
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Any CEO of an Inner City 100 company could give you a long list of reasons why it is good business to set up shop in the 'hood. Research indicates that the benefits include a conveniently accessible location, a diverse and underutilized work force with a turnover rate well below the national average, and low-cost commercial real estate. But if you're thinking of moving your company to (or starting a business in) an inner city neighborhood, here are some pointers to keep in mind:

1. Tell the locals. First of all, make sure city officials know that you're planning to move to the area. "It's good to get to know everyone ahead of time, before you start imposing your needs," says Glynn Lloyd, founder of City Fresh Foods in Boston. A state or city department for economic development can be your greatest ally, assisting you with applications for programs and helping you get settled. Also introduce yourself to the chamber of commerce.

2. Get in the zone. When talking to the local department of economic development, be sure to ask about city, state, and federal designations connected with the area. Many of the companies on the Inner City 100 list have received special incentives for setting up shop in a Historically Underutilized Business Zone (HUBZone), an enterprise zone, or an empowerment zone. There are often additional tax abatements, job creation tax credits, or other incentives available, so ask about those, too. Be forewarned: Joe Contorno of HDS Cosmetics, which makes the DDF line of high end skin care products in Yonkers, N.Y., was disappointed by how long it took to get the tax abatements he was promised.

3. Join private civic groups. Local neighborhood development groups are a great source of advice, particularly when it comes to real estate. Lloyd of City Fresh Foods sits on the board of the local chapter of Boston's Main Street program, a private organization that works to foster the development of downtown areas. "They know how the city works," he says, "what property is available, what the going rates are, and who owns what."

4. Use your address to raise money. Some private development groups, like the Community Development Venture Capital Alliance (CDVCA), invest exclusively in distressed communities. Contorno of HDS Cosmetics received more than $2 million in venture funding from investors to whom he was introduced by CDVCA people. The government also finances inner city companies through programs like the Treasury Department's Community Development Financial Institutions (CDFI) Fund.

5. Make sure the train goes your way. When picking a location, consider proximity to public transportation. "About 95% of our full-time and seasonal workers commute here via subway from all over the city," says Fred Schwam, CEO of American Christmas Decorations in New York City's South Bronx. "An easy walk from the subway is a high priority for us." In urban areas that don't have much to offer by way of mass transit, look at your proximity to interstate highways. "There's not a lot of public transport in Phoenix," says Chuck Haney, founder of Newport Furnishings. But of his headquarters, he says, "it's very accessible by car, which as a retailer boosts our ability to receive merchandise. We're only a couple of turns off the freeway."

6. Go to school. Universities, which are often located in city neighborhoods, provide a big boost to business. They are often lucrative customers, and are sometimes willing to rent facilities and high-tech equipment. For example, Robert Schmidt started his company, Orbital Research, in an incubator set up by Case Western Reserve University in Cleveland. Colleges can also help you recruit workers from their student body. Tom Goematt, of Shawmut Design & Construction in Boston, says he relies heavily on the graduate programs at Harvard and MIT to find managers and engineers.

7. Check out other labor resources. Look into work force development and education programs that are available to you on the local and federal level, including employee training programs and Welfare to Work. Local religious groups and community centers can also help you recruit and train workers. And remember that members of an extended family, particularly in some ethnic communities, can serve as a powerful referral network.

8. Claim your space. Oftentimes, cities have limited space for expansion or parking. Talk with city officials and plan ahead--think about how much space you'll need, not only in the near future but down the road.

9. You have leverage--use it. Each city is different, but if your company is creating jobs, generating taxable income, and employing a large number of voters, chances are you have leverage with the city officials--especially if, as in many cities, the large corporations that once ruled the roost have long since closed their plants and moved their offices elsewhere. That's what CEO Lars Roulund of High End Products discovered. The city of Santa Ana, Calif., was extremely accommodating, he says, adding that the city's economic development team that administers the local enterprise zone program has bent over backwards when his company needed help renewing a permit, finding a new building, or getting needed tax relief.

10. Be a good neighbor. Just as you can lobby the city to help your business, so can you use your position to help make the neighborhood a better place: Ask for improvements and renovation that residents might not be able to get on their own. "Sometimes companies move in and set up walls around themselves, and in the long run, that doesn't help you," says Lloyd, of City Fresh Foods.

Ultimately, if the neighborhood views your company as an asset, it is much more likely to support it and protect it in mutually beneficial areas ranging from recruiting to security. Case in point: On a street plagued by graffiti, Inc. columnist Norm Brodsky's CitiStorage buildings in Brooklyn remain pristine. Why? Brodsky employed a local graffiti artist to paint a large mural on the side of his warehouse. "Reach in. Volunteer," suggests Lloyd. "Build a relationship. People around the neighborhood, they talk. They know who the good citizens are." If you're one of them, you'll enjoy many benefits.

Last updated: May 1, 2004




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