Filling Empty Spaces, Supporting Entrepreneurs: An Econ Dev Match Game

By Eli Dile, International Economic Development Council

It’s no secret that Detroit has a good-sized inventory of underperforming real estate. However, it also has a citizenry with a lot of good business ideas that need a boost to be realized. Why not take on both issues at once?

That’s exactly what the Detroit Economic Growth Corporation (DEGC) has done through Motor City Match, a two-pronged initiative matches entrepreneurs with underutilized commercial space, and provides them with cash and support services as well.

The words “Detroit” and “renaissance” appear together quite frequently these days. And while big downtown investments grab headlines, it’s programs like Motor City Match that help ensure growth is equitably shared.

“We recognize that national credit tenants won’t go into certain neighborhoods,” said Rodrick Miller, president and CEO of DEGC. “But small businesses are the stabilizers of neighborhoods, and a source of good jobs for residents. Motor City Match supports these businesses with a complete suite of services.”

“Figure it out”

The idea for the program came out of a challenge from Mayor Mike Duggan. Michael Forsyth, DEGC’s director of small business services, recalls the meeting as follows: “He told us, ‘I want to build Detroit’s brand as the entrepreneurial capital of the world, and I want a business competition to do it. Figure it out.’ And that was about the extent of the meeting.”

The result was Motor City Match (MCM), a business competition with two ways to participate – either as an entrepreneur or a property owner. It’s a symbiotic program in which business owners receive space, grants or support services, and property owners gain new rent-paying commercial tenants.

Unlike many small business programs that simply provide gap financing to creditworthy applicants, Motor City Match offers comprehensive support no matter the stage of a business’s maturity. Business owners and entrepreneurs can participate in one of four tracks:

Business plan: In this track, first-time entrepreneurs receive help transforming their business idea into a plan. MCM offers up to 50 entrepreneurs free business planning classes each quarter.

Space: For proprietors with a strong business plan or a track record of success that are searching for space, MCM matches applicants with properties in its portfolio. It also provides guidance on leasing, financing planning, and market opportunity assessment.

Design: Business owners and landlords who have recently signed a lease but need help planning renovations and tenant improvements can receive design assistance from a professional architect, as well as priority permitting.

Cash: Business owners that have a location secured, a plan for build-out, and strong understanding of the money needed to complete their project prior to opening are eligible for grants as gap financing. MCM disburses up to $500,000 in grants each quarter (thanks to corporate and foundation sponsors).

For DEGC, the goal isn’t just to write a check, but to build an entrepreneurial pipeline through comprehensive support services. For example, fledgling businesses often face significant renovation challenges, which is where the design track can help. MCM helps business owners work with architects to improve frontages, build out space, or make other aesthetic improvements. The program provides up to $15,000 for such renovations.

Since Motor City Match launched in April of 2015, the program has helped eight new businesses open, and seven more are under construction. It has provided assistance to hundreds of additional businesses at all stages of maturity.

“In Detroit, if you have an idea, the city will actively invest in that idea,” Forsyth said.

Diverse results

Minority participation is another metric by which MCM measures its success. Seventy-two percent of businesses that have received awards are minority-owned, and 52 percent are minority women-owned.

The program also has achieved diversity in the types of businesses it supports. MCM winners have included retailers, food service businesses, hair care and cosmetic companies, a music studio, a co-working space, and a vertical farming operation, among others. Preference is given to businesses that would have a positive impact on the broader community. One of the grand prize winners of $100,000 was J&G Pallets, a company that began making wooden pallets in the proprietor’s garage and has since grown into a million-dollar business supplying some of Detroit’s largest companies. J&G Pallets hires many individuals that have faced barriers to employment, such as the formerly incarcerated. Another grand prize winner was the Detroit Training Center, which provides skills training for high-demand jobs in the construction trades.“We wanted out awardees to look and feel like Detroit,” Forsyth said. “The competition platform has enabled us to find those people. Or, I should say, them to find us.”

Another benefit has been a strengthened real estate portfolio. MCM helped identify more than 200 spaces representing two million square feet of development opportunities. Some of the more impoverished neighborhoods lack an active brokerage community, and much of the property there was unrepresented. In many cases, the city had no idea what condition the property was in, much less who owned it. Much of this real estate is now accounted for and represented on an easily navigable map that other interested investors also can peruse.

The benefits of competition

Pulling off a business competition of this scale four times a year is no easy feat.

“The quarterly schedule is…relentless,” Forsyth admits. Still, it’s not fast enough for businesses, who eagerly apply en masse each quarter. Yet the frequency allows DEGC to improve after every round, and the competition format makes DEGC’s job easier because it encourages businesses to approach them.

That means DEGC doesn’t have to do much marketing for the program. “It’s like fishing with a net rather than a pole,” Forsyth said. “When businesses help recruit and grow other businesses, you count that as a victory.”

Motor City Match offers a model in which to allocate scarce resources. The competition platform allows economic developers to connect with the most-motivated entrepreneurs that have the highest potential impact. Furthermore, the process is fair, transparent, and efficient. Businesses know when to apply, when award decisions are made, and where they stand in the process. And ultimately, it’s just good marketing.

“We have something to talk about every quarter,” Forsyth said. “There’s an energy about it that’s really special.”

Also critical to Motor City Match’s success are its corporate and philanthropic partners, who underwrite the program and assist during judging. Not only does this ease the burden on DEGC during application review, but it introduces lenders to a pool of potential lendees.

For a city that’s seen its share of disinvestment in recent years, Motor City Match is showing Detroiters the value of investing in each other.

“It’s been great to have people come together and rally around the project as a whole,” Forsyth said. “From lenders to our foundation community to the mayor’s office to the single mom who’s ready take what she learned on the job and do her own thing and be her own boss, it’s great to see the community that’s come out of it.”

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