By John Gallagher
Detroit Free Press.
Visit Detroit’s Eastern Market district any Saturday morning and you’ll likely see a line of people waiting to eat breakfast at the popular Russell Street Deli, which not long ago celebrated its 25th year in business.
But the crowded tables and loyal customers may give a false impression that Deli owners Ben Hall and Jason Murphy have solved the secret of business success in Detroit.
The truth, the owners say, is more sobering.
Like other Detroit small business owners, Hall and Murphy say the experience has been a mix of highs and lows, moments of exhilaration with gut-wrenching worries over cash flow and making payroll. Long hours and constant fretting over expenses and how to introduce new products remain a never-ending part of a business owner’s lot.
At a time when Detroit celebrates the entrepreneurial culture with splashy contests like Comerica Hatch Detroit, which awards $50,000 to a winning start-up idea, stories of long-term business survival paint a real-life picture of pain and perseverance.
Clearly, it takes more than a clever idea or catchy product to make a go of a small business in Detroit.
The Free Press recently interviewed owners of three longtime successful Detroit small businesses. Besides Hall and Murphy, they include Bernard White of White Construction and Christina Lovio-George of the Lovio-George public relations firm. They have survived in the city for at least 25 years, and all are well-known in their fields.
But despite apparent success and longevity, the owners offered a surprisingly sober assessment of owning a small business. The firms are smaller now than at their peak years, in terms of either revenue or employee head count, and sometimes dramatically smaller.
And the owners say their success requires long hours and constant attention to detail — a life many would-be entrepreneurs only dimly perceive.
* Bernard White said his construction firm’s 2014 revenue of $12 million was down from $46 million in 2007 — in part a result of the long tail of the Great Recession that devastated the construction trades.
* Lovio-George has 13 employees compared to 18 at her firm’s prerecession peak.
* Hall and Murphy say their Deli’s revenue is down about 35% from a few years ago because of harsh winters and long-running reconstruction projections in Eastern Market that make parking and access more difficult.
Managing cash flow and making payroll may be the lot of business owners everywhere, but doing business in Detroit adds its own special challenges.
White, who is African American, acknowledges he has benefited from City of Detroit policies to give part of major construction jobs to minority-owned firms. But often those are the only jobs available to minority contractors, who have to overcome a perception that they’ve gotten their allotment and don’t need any more.
“The challenge is, ‘How can I stop being just utilized when they need a Detroit contractor?’ ” White said. “When I get work that has nothing to do with that, that’s the best feeling in the world. But it’s hard to do that.”
And Lovio-George said running a female-owned business often entails similar challenges, with some clients expecting her to accept less payment than a male-owned firm. And her suburban competitors don’t have to pay the taxes or other expenses she does as an owner headquartered in the city.
“We haven’t come as far as we should,” she said. “I just want an even starting point. I don’t expect to have any extra points because I’m female or Detroit, just don’t penalize me for that.”
These firms show that running a small business in Detroit requires both smarts and stamina — and can offer lessons for those hoping to start their own firms.
Russell Street Deli
Hall and Murphy started as dishwashers at the Russell Street Deli in the mid-’90s, working summers and studying Quaker-oriented mediation at a New England college during the school year. Later, they received master’s of fine arts degrees at Columbia before eventually buying out the Deli’s previous owner.
Over the past decade, they’ve offered employees health benefits and pay well above the minimum wage at fast-food outlets.
They’ve also started successful catering and wholesale businesses and have been planning to open a new restaurant on West Lafayette in the Corktown area.
But the revival of Eastern Market in recent years, including the renovation of market sheds and the rise of a food-oriented entrepreneurial culture in Detroit, has been a mixed blessing. Among other things, the long-running construction work at the Market has crimped access to the Deli. Introducing a new menu item is always fraught with concern. “What if people just don’t get it?,” Hall said. “What if we can’t market it properly?”
Even the arrival of food trucks in Eastern Market, celebrated by many as a sign of Detroit’s growing vibrancy, cut into the trade of existing businesses like Russell Street Deli.
Hall and Murphy say they’ve even considered closing the Deli if their wholesale line keeps growing and the new restaurant west of downtown does well. That admission might shock many of their regulars who line up outside the Deli’s door on Saturday morning waiting for a table.
“Move slowly,” Hall advises new entrepreneurs. Murphy agrees. “We don’t have a lot of room for error,” he said. “If we’re not careful, we’re going to make a $50,000 mistake.”
Graduating with a degree in civil engineering from Lawrence Technological University, Bernard White spent his early professional years with big local contracting firms Turner Construction and Walbridge. He started his own firm in 1989, working tiny jobs before eventually landing bigger work.
He benefited from being a minority-owned Detroit-based business just as the city was looking for qualified minority contractors. White won contracts at the Detroit Zoo, Campus Martius Park, Comerica Park and Ford Field, Detroit’s new police headquarters, M-1 Rail, and now the Ilitch family’s new arena project.
But affirmative action has a downside, too.
“Some people in the mainstream might think that White Construction has done enough,” he said. He perceives an attitude of “Let’s help someone else” or “He’s done pretty good for a black guy.” Once given the opportunities, “We have to excel,” he said. “We did a great job on everything, to a lot of folks’ surprise, candidly.”
The collapse of the construction industry during the Great Recession and its aftermath hit minority-owned firms particularly hard, not least in a city like Detroit that itself went through a bankruptcy.
“Part of the reason why we’re still here is because we did a great job of making money when the opportunity was there to make it,” White said. “We did really well in the ’90s and the early 2000s, and I’m still living off those fumes now. I’m not making a lot of money at all right now.”
But he’s still been able to start his own educational foundation for young men in the city. And he’s bringing along a son and a nephew to take over the business one day as he gradually winds down his own role.
For all the ups and downs of owning his own firm, White remains happy he took the risk.
“I didn’t want to wake up and be 60 years old, which I will be this year, and say I wished I had given it a shot,” he said.
Christina Lovio-George, the daughter of a West Virginia coal miner who moved his family to Detroit a half-century ago, got her start in public relations in the ’70s working for Wayne State University. A stint with one of Carl Levin’s senatorial campaigns followed before she launched her own firm in 1982, all while going to night school at Wayne State.
From the beginning, her firm, lodged in a historic house on West Forest in the city’s Midtown district, has been dedicated to “really changing perceptions and hopefully about changing behavior about Detroit.”
Her big break came when Lovio-George won the job of promoting the Detroit 300 tricentennial celebrations in 2001. The firm’s promotional work helped popularize the event and bring a million people downtown for fireworks, concerts, and tall ships.
“Overnight from that our profile and our client base changed,” she said.
The firm went on to represent many of the city’s showcase projects and events — the Detroit Riverfront Conservancy, the city’s Super Bowl XL effort, the Ryder Cup, the Parade Company, the annual fireworks show, and now the M-1 Rail project, plus the trendy Shinola watch and luxury goods maker and civic art projects like Art X and Dlectricity.
“All of a sudden we were the Detroit shop, that woman-owned thing on Forest and Third next to the Third Street Saloon. It was all about changing perceptions,” she said.
But the Great Recession hit hard.
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Lovio-George estimated that about 40% of her bookings evaporated. Everyone took a pay cut, and she didn’t replace staffers who left. The firm went from 18 just before the crash to half that, but has gained a few back since then.
“You can’t work here (in Detroit) and not be in love with this town. You won’t last,” she advises. “You have to feel that it’s work that’s worth doing. And the work that’s worth doing to me is always making a contribution to the city I love, that gave me so much.”