Entrepreneurial Dreams in Brooklynby Terésa Stern
The young man who called himself Prophet knew exactly who would buy the alarm-clock pillow he had dreamed up: everyone! Millions and millions of people. After all, everyone sleeps on a pillow, and who doesn’t need an alarm clock? As a marketing coach to budding entrepreneurs at the nonprofit Brooklyn Enterprise Center in East New York, I taught segments of a 60-hour course designed to help individuals turn their business dreams into business plans. These ideas covered a wide span: decorative dishtowels made of fabric imported from Ghana, an organic juice bar, a children’s party center, a low-cost furniture store, mortgage services for people with bad credit, artisanal cheesecake, Italian clothing for boys, a nonprofit to raise funds for the creation of a public library in Ivory Coast—and alarm clock pillows. When Prophet smiled as he envisioned his wealth, fellow entrepreneurs asked whether his name wasn’t actually Profit.
During my year as an entrepreneurial coach, from 2006 to 2007, I was struck by my clients’ creativity, determination, and invincible attitudes. For most, the desire to start a business was the desire to turn a passion like baking, jewelry-making, landscaping, or internet savvy into a livelihood. Besides a wish to live their passion, clients saw launching a business as a way to establish wealth to pass on to children, offer a better service or product, serve the community, and be their own boss.
The odds against succeeding in small business are so notorious as to approach urban myth. The SBA claims that 66% of small businesses fail within the first four years, but the SBA numbers are optimistic, since they combine non-employer businesses—often home-based and involving the entrepreneur alone—and employer businesses, which pay up to five hundred employees. For many of the people I worked with, a business with employees and substantial start-up capital was well beyond their scope. Instead, they opened their businesses with little more than a phone and a kitchen table. While non-employers don’t have to raise or risk losing much money, they lack the funds necessary for equipment, supplies, marketing, or to pay their own salary. Most entrepreneurs that sought help at the BEC of East New York were struggling just to pay the bills, a modest goal that eluded all but a few.
The factors considered most critical by researchers to business survival are starting capital greater than $50,000, a college degree, and being an employer firm. A college education—more than any postgraduate degree—is an important ingredient in successful entrepreneurship. Race also remains a potent factor. According to the SBA, black-owned firms make 43¢ for every dollar made by white-owned firms. This disparity can be explained by a cycle of multiple disadvantages. Foremost is the simple fact that black-owned firms, on average, have less start-up money because nearly half of all black families possess less than $6,000 in total wealth. And banks are unlikely to make business loans to people with little collateral and poor credit.
At the BEC of East New York, most of my clients were African-American, did not have access to much capital, and many lacked college degrees.
When Kim Boyd and her husband Miles were dating, they enjoyed taking limos to add elegance to their nights out. But frequent disappointments with poorly maintained cars and informally dressed drivers who didn’t know where they were going inspired the Boyds to establish MKB, their own limousine company, in 1993. Miles, a retired sanitation worker, had moonlighted as a limo driver and knew a little about the business. In 1994, Kim left her transit job to run MKB full-time.
Kim vividly remembers the day when Miles called home excited because he had spotted a limo for sale that would be perfect for them. “It was a square car, I didn’t like the shape,” she said. “Lots of leg room, but it looked dated and it didn’t have a flat screen TV.” Miles believed it would make a good starter car anyway, and they bought it. They’d been saving for a house in North Carolina, and dipped into that reserve to finance the limo.
The Boyds, both African-American, had no business experience. Kim took classes at numerous colleges but never completed her degree. She described limo services as a cutthroat industry in which competitors do not share information. It wasn’t until buying their first limo that they learned about all the regulations involved—by getting fined. “I had no idea we had to get the car inspected every three months,” Kim explained. They also had to purchase a diamond permit for the car and insurance, available from a small pool of brokers who kept prices high due to a lack of competition between them. Then there was a TLC license, which requires getting a Class E license. Drivers also must take an annual drug test. As Kim put it, “Whenever we got a fine, we said, now we know.”
MKB has a website, but advertising to attract internet traffic costs money. The Boyds approached a bank for a loan but were turned down because they had a low credit score and hadn’t yet mastered proper financial management. “Everything was all mixed up,” Kim said. “We didn’t know how to separate personal from business income. I didn’t put myself on payroll until last year.”
The Boyds have a ten-year-old daughter, Kaya, and their desire to build MKB is fueled by their wish for Kaya to inherit a solid business as well as the opportunity for her to become an entrepreneur. “We’ve struggled all our lives,” Kim explained, “and so have our parents and our grandparents. We want to break the cycle with Kaya. So we keep making business investments from personal savings.”
Joshua Barker, owner of The B Shop, a space that combines a barbershop and an urban clothing boutique in East New York, would like to open a second store in Brooklyn but doesn’t have the capital. To raise $15,000 to open The B Shop, Joshua spent three years on the road selling clothing from the trunk of his car. The shop, now approaching its fourth anniversary, stands out as a bright, stylish spot on a gray stretch of Sutter Avenue. An African-American and a graduate of Transit Tech High School in East New York, Joshua found training and support at the nonprofit Project Enterprise. Asked whether he’d consider a bank loan, Joshua smiled and shook his head. “When I think of a bank,” he said, “I think of a wall.”
Even when an entrepreneur is white and college educated, growing a small business is a daunting challenge. Michelle Lewis opened Scooter Food in 2006, producing organic dog food with ingredients so unprocessed and fresh that it must be stored frozen.
Michelle holds an undergraduate degree as well as an MFA. “College gave me the skills for learning, to ask questions, research, and be open to what I can learn from others,” she said. The winner of a $5,000 award from Citibank and the Brooklyn Business Library for her outstanding business plan, Michelle has avidly pursued every resource available. She’s participated in programs and taken courses at Project Enterprise, The BEC of East New York, the Brooklyn Chamber of Commerce, Boricua Small Business Development Center, and others. She’s made extensive use of the Brooklyn Public Library’s business branch, studying canine nutrition along with business management.
Scooter Food has benefited from write-ups in the New York Times, the Daily News, Crain’s, the Brooklyn Eagle, AM New York, and spots on television including Telemundo, ABC, CT12, and the Food Network.
In 2006, many pet store owners were reluctant to carry Scooter Food because it required freezer space. Two years later, perishable pet food has become trendy. Scooter Food is now sold in sixteen stores and over the internet. Lewis has just received a grant to add e-commerce to her website to make purchasing as easy as it is on Amazon.
Michelle found commercial kitchen space at the nonprofit Maura Clarke-Ita Ford Center in Bedford Stuyvesant. Well-maintained and roomy enough for efficient food preparation, the kitchen’s single drawback is its lack of storage space, making it impossible to economize by purchasing ingredients in bulk.
Single and without dependents, Lewis must still maintain her consulting job as a relocation expert for people moving to New York from overseas. She estimates that Scooter Food would have to triple its volume before she could leave her day job. Despite excellent credit, she was refused a bank loan for expansion because her business wasn’t earning enough.
“I get so depressed reading about businesses that go from zero to a million in six months. That’s not my experience.” Seemingly relieved to confess that the hardship of small business is a kind of dirty little secret, Lewis adds, “You’re very vulnerable. You’re tiny. You don’t have a lot of money and power, so you’re vulnerable financially and you can’t let people see that.”
With an influx of capital, Michelle would invest in marketing and advertising, rent a store room, hire employees, create a bigger online presence, and buy a delivery van. “Not even a truck! Just a van,” she said. For now, her wish list is a long way off.
Asked to name the greatest obstacle for nascent entrepreneurs, Brooklyn Enterprise Center Director Elisa Balabram paused thoughtfully before answering: “Money.” Most entrepreneurs I asked identified education and access to money as their greatest needs. For many, the dream of owning a small business and earning a living from it, like Prophet’s alarm clock-pillow patent, is still pending.
Terésa Stern is a freelance writer, marketing consultant, and fitness trainer. She lives in Fort Greene, Brooklyn.