A new effort is directing support to an often-ignored category of
entrepreneurs: "underground" microenterprises in three of Detroit's
immigrant and impoverished neighborhoods.
The Global Detroit Neighborhood Development Collaborative
will provide training and microloans to grassroots purveyors of goods
and services such as catering, automotive repair, haircuts and
janitorial or construction services in Detroit's north end, southwest
and western Cody-Rouge neighborhoods.
The goal of the three-year
program is to help create businesses that will improve incomes for
neighborhood residents while building the local tax base.
"The
census data often doesn't track all the economic hours and
entrepreneurism flowing through ... low-income, African-American and
immigrant communities," said former state representative Steve Tobocman,
who serves as director of the larger Global Detroit initiative, which
is administered by the Detroit Regional Chamber and is leading work on the neighborhood initiative.
Those neighborhoods are often some of the most difficult to reach for economic development initiatives, he said.
The
Global Detroit Neighborhood project aims to help meet grassroots
entrepreneurs "where they are and give them the tools they need to build
the American dream by growing their business and doing the things that
are necessary to get access to loan funds," Tobocman said.
"If
you look at who's getting the jobs, who is making the profits and where
the jobs are being located, that's what makes this work so powerful."
Based on a highly successful model launched 19 years ago in Minneapolis-St. Paul by the Neighborhood Development Center,
the Detroit initiative will rely on community organizations to help
identify entrepreneurs in each community and to get them engaged in
training.
The effort hopes to train more than 600 people from
the neighborhoods over the next three years and create at least 60
businesses.
Backing the effort is $2.1 million from the Battle Creek-based W.K. Kellogg Foundation and another $335,000 from the New Economy Initiative.
About $300,000 will go to fund microloans of $2,000-$10,000, said Tim Thorland, executive director of Southwest Housing Solutions, which is administering the program.
The
remainder of the grant money will go to fund the purchase of the
Neighborhood Development Center's training program, coordinating staff
at Southwest Housing and working with community development
organizations to strengthen their operations so they can provide the
program's training.
Southwest is recruiting community
development corporations that have won residents' trust in the three
neighborhoods and can help identify local entrepreneurs for the training
and provide it.
In the north end, where there is a large population of low-income African-Americans, the collaborative is talking with Vanguard Community Development Corp., Central Detroit Christian Community Development Corp. and Focus: Hope, Tobocman said.
In Cody-Rouge, where there's a strong Arab-American demographic, it's talking with Arab Community Center for Economic & Social Services. And in southwest Detroit, where there's a large Hispanic population, it's in talks with the Southwest Detroit Business Association, SER Metro Detroit, Latino Family Services, the Consortium of Hispanic Agencies, Society of Hispanic Business Owners and Professionals and the Michigan Hispanic Chamber of Commerce, he said.
"If
we can help get 600 people engaged in training classes and help 10 to
15 percent of them start a business ... that helps beget jobs ...
creates payroll for those individuals (and) starts to contribute to the
regional economy," Southwest's Thorland said.
The initiative is
being finalized but could call for 20 weeks worth of training that
begins in a group setting and changes to one-on-one sessions, Thorland
said. While some who sign on may have nothing more than an idea that
needs to be moved to achievable goals, others may have a microenterprise
but need to perfect a business plan, he said.
The grassroots nature of the program is what drew Kellogg's funding, said program officer Linda Jo Doctor.
"While
many other efforts focus on funding and training immigrants with
high-tech expertise, Kellogg thought it was important to foster
grassroots microenterprises, people who are on low wages, who have been
living in those neighborhoods for long periods of time," she said.
"We'd
like to see more opportunities for low-wage workers so they ... (can)
benefit in the (development) ... happening in Detroit."
The Minneapolis-St. Paul effort has trained 4,000 residents of immigrant and low-income neighborhoods since its 1993 inception.
Those
entrepreneurs were doing hair, auto repair, cakes or child care out of
their homes, making up a "kind of an informal economy underground," said
Mihailo Temali, founder, president and CEO of the Neighborhood
Development Center.
Of the total in training, about 800 started
businesses and the other 80 percent learned "the easy, inexpensive way
that their business concept was not a viable idea at this point," Temali
said.
According to the Amherst H. Wilder Foundation's
biennial evaluation of the program in April 2011, there were 468
businesses launched from trainees operating at that point, he said.
Those
businesses annually returned $68 million to the economy in the form of
payroll, business expenses, taxes and rent, yielding a 64 percent return
on investment for the project.
The payroll, property and sales
taxes, alone, paid by those businesses pays back the program's cost
every 18 months, Temali said.
To date, the program has spawned 550 businesses that collectively employ 2,000 people.
Entrepreneurs
in immigrant and low-income neighborhoods have a variety of barriers to
building a business, "but they have the most essential ingredient of
all, which is entrepreneurial talent and energy," Temali said.
Sherri Welch: (313) 446-1694, swelch@crain.com. Twitter: @sherriwelch
