Hidden Treasures

Inner-City Struggles

Although Westbrook is talking about his hometown, his sentiments are ones most inner-city small-business owners nationwide can appreciate. For years, they've stood as lone sentinels in communities abandoned by industry. They've provided jobs and badly needed services despite structural deterioration and neglect by city officials.

Most recently, many have served as role models for organizations such as the Initiative for a Competitive Inner City. Created in 1994 by Harvard Business School professor Michael Porter, the organization's goal is to present a compelling case for why corporate America should be in the inner cities. "There are competitive advantages there," notes the Initiative's Dierdre Coyle. "It's a strategic location with logistical advantages. There is a stable and underutilized work force with strong entrepreneurial potential. There's also an underserved local market with substantial purchasing power."

In fact, a June 1998 study conducted by PricewaterhouseCoopers LLP and the Boston Consulting Group estimated the value of the retail sector in the inner cities at about $100 billion.

That untapped potential is what motivated Westbrook. But opening his business wasn't easy. He unsuccessfully tried to convince five national pizza franchisors that opening a store on Jefferson Street was a good idea before getting a warmer reception from Sir Pizza, a regional chain.

Westbrook then spent months working with a local technical assistance program that helps entrepreneurs create solid business plans and smoothes the way for meetings with bankers. "At every bank we went to, the community development rep said, `I don't see how you could be turned down,' " remembers Westbrook, whose $50,000 loan package was backed by his dad's top-notch credit rating. Despite the positive feedback, the banks all turned him down. Westbrook was forced to take out a $28,000 equity loan on a piece of commercial property he owned and borrow the rest. Since opening in January, the entrepreneur still has not been able to obtain a line of credit.

Westbrook's limited access to capital is typical of inner-city entrepreneurs, says Coyle. Governments are trying to fill the gap by providing money that is lent directly or used to attract private capital. In addition, many states have created enterprise zones featuring incentives for companies starting, expanding or moving into designated urban areas.

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This article was originally published in the November 1998 print edition of Entrepreneur with the headline: Hidden Treasures.

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