Building businesses, growing communities

Entrepreneur, June, 2005 by Julie Monahan

Savvy entrepreneurs know a business opportunity when they see one, but sometimes they need a helping hand to grab it.

In communities being revitalized around the nation, that help comes from community development agencies and nonprofit organizations that provide technical assistance, grants and low-interest loans to get new businesses off to a good start.

That support has made all the difference to small business owners like Jim Saucedo, a State Farm[R] insurance agent in Detroit. Saucedo opened his office in the heart of a business district revitalization effort led by the Southwest Detroit Business Association. For more than four years, SDBA has been spearheading a facade improvement effort, with the support of State Farm Insurance Companies in partnership with Local Initiatives Support Corporation (LISC), the nation's leading community-development support organization,

SDBA efforts have since succeeded in bringing dozens of good businesses to the diverse community, from shoe stores and music retailers to restaurants and other service businesses. But the corner building at Vernor and Junction, where Saucedo operates, was key.

"That office has done phenomenal business," says Deb Sumner, SDBA real estate manager. "From one person, Jim, by himself, there are now four bilingual agents working there. [State Farm] is creating jobs for the community and delivering much-needed services."

Saucedo says he appreciates the chance to run his business in the neighborhood where he was born and raised. "It feels great," he says. "On a daily basis I get to sell an insurance product to someone I grew up with, or went to school with one of their siblings."

That LISC played a role in Saucedo's success is welcome news to State Farm Insurance Companies, one of the organization's largest corporate partners. A dozen State Farm representatives serve on local LISC advisory boards, and the company has provided $16 million in grants and $17 million in loans to support LISC initiatives. This funding has helped develop 1.4 million square feet of commercial and community space and attract 525 businesses to neglected neighborhoods.

"Small businesses are one of the linchpins of a successful and economically vital neighborhood," says Clayton Adams, Vice President Community Development at State Farm. "Once one business prospers, there's a domino effect, and other businesses will grow or relocate there."

Moving into a community with limited services can be a boon for new businesses. There's little or no competition, and buyers are eager for easier access to goods and services. "We've certainly found that with regard to our agents," Adams says.

Christie Murdock (top right) saw her opportunity in Tremont West on Cleveland's near west side. After four years, her store, Banyan Tree, has made a name for itself in the now fast-growing neighborhood.

"We're a contemporary home accessory, arts, handbags and jewelry store--a sort of new-age little department store," Murdock says. "When I started, it was almost all consignments, but I've picked up things here and there and it's totally evolved." The business is growing so fast that Murdock is considering hiring her first employee.

Banyan Tree is one of several small businesses that have benefited from Tremont West Development Corp.'s Re$tore Tremont business development program. The program has also received funding from State Farm in partnership with LISC.

Today, ice cream shops, restaurants and other retail and business establishments dot the neighborhood, which many once considered "pretty scary," Murdock says. "Even when I first opened, not a lot of people knew about the neighborhood," she adds. "Now people are venturing out [here]."

Murdock's experience affirms the investment in community development by corporations, non-profits and individual donors. Says Adams, "State Farm believes being a good neighbor means investing in our neighborhoods to help make them great communities."