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How To Pitch A Business In Detroit And Win $100K

By Susan Tompor Detroit Free Press

WWR Article Summary (tl;dr) This year, Comerica Hatch Detroit is offering $100,000 -- doubling its prize -- for upstart businesses. The Hatch contest is designed to be a catalyst for economic development for storefront businesses, such as restaurants and stores, in city neighborhoods.

Detroit Free Press

Elias Khalil, a co-owner of La Feria Spanish Tapas, just expected to stop by to say hello and congrats to a fellow entrepreneur the day that Caribbean cuisine restaurant, Norma G's, opened last fall in Detroit's Jefferson-Chalmers neighborhood.

But when Khalil saw customers lining out the door, order tickets flying into the kitchen and the commotion of a frenzied first night, he took a step back and offered a hand to fellow Comerica Hatch Detroit contest alumni Lester Gouvia.

Khalil remembered how hard it was to get something brand new off the ground.

"He clearly needed help," said Khalil, who worked much of the night expediting orders.

It's that got-your-back kind of spirit that the nonprofit Hatch program hopes to build upon in order to promote the growth of independent restaurants, retail and other storefront businesses in the city.

"You have to pay it forward," Khalil said. "Goodness and kindness are going to give meaning to everything we do." "We all win if we're all successful."

This year, Comerica Hatch Detroit is offering $100,000 -- doubling its prize -- for upstart businesses in Detroit, Hamtramck and Highland Park. The deadline to apply is July 31. More than 270 applications are expected this year.

The Hatch contest is designed to be a catalyst for economic development for storefront businesses, such as restaurants and stores, in city neighborhoods.

Business plans can be submitted at HatchDetroit.com/apply.

The top 10 businesses will be announced in late September. And then popularity contest begins when the public can cast votes to determine the winner. The public has cast 520,000 votes overall in the past eight years.

In addition to startup money, the winner will receive accounting, legal, IT and public relations support.

Contest has boosted 42 businesses Since the contest began in 2011, there have been 42 Hatch participants that have opened businesses in Detroit. Six of the eight winners are located in Detroit neighborhoods, such as Midtown, Corktown and West Village.

Hatch alums include: The Lip Bar, Live Cycle Delight, Third Wave Music, Skin Bar 7, Hugh, Bumbo's and Bird Bee.

One of the unusual features of the contest is that applicants can request personal feedback after the contest is over to better understand how to move forward with their idea. Hatch offers applicants advice about other programs in the Detroit area that could help them or tips on improvements they could make to their startup proposal.

Here's a look at some lessons learned and tips for burgeoning entrepreneurs:

It's costing more to start up in Detroit

The Comerica Hatch Detroit prize is bigger because, frankly, it's more expensive to open a new brick-and-mortar restaurant or store in Detroit as it was six or seven years ago.

"The costs of opening a business in the city has skyrocketed since we started the contest in 2011," said Vittoria Katanski, executive director for Hatch Detroit.

Years ago, Hatch participants said it wasn't impossible for a bar or restaurant to obtain a liquor license in Detroit for around $10,000 to $15,000. Now, the cost might range from about $70,000 to $90,000. It's all about supply and demand.

If someone wants to purchase a liquor license from someone who already holds one, they have to pay the seller whatever amount is agreed to, as with any other transferable piece of property.

Competition exists elsewhere too.

"Contractors have gone up at least 25%. Supplies have gone up considerably," Katanski said.

Michael T. Ritchie, Comerica Bank Michigan president, said the seed capital that Comerica has provided the winners in the past has worked. But the bank recognized that times had changed and agreed to double the prize from $50,000.

"Detroit's own resurgence is driving up expense," Ritchie said.

While Detroit has seen tremendous improvement in the past several years, he said, the momentum needs to continue, particularly by adding more retail in the city and its neighborhoods.

Here are other things to think about for contestants.

It's smart to be humble One of the biggest lessons to be learned by any startup business is how much you don't really know.

Many times, it's necessary to hire outside experts -- such as accountants or someone to manage your marketing and social media.

"There's just no end to how much there is to learn," said Khalil, 48, who is now a board member for the Hatch. The co-owners of La Feria won the 2012 Hatch challenge

Originally, the owners -- Pilar Baron-Hildago and her two friends siblings Elias and Naomi Khalil -- entered the Comerica Hatch Detroit contest for start-up businesses with the idea of opening a neighborhood tapas bar. La Feria's goal was to bring authentic Spanish food to Detroit's Cass Corridor, now called Midtown Detroit.

But the business -- which won a $50,000 top prize -- evolved to be more of a sit-down restaurant than a casual bar.

Khalil blames, in part, the signage.

He said he's heard that some millennials interpreted the cursive font in the La Feria sign as something designed for a fancier restaurant.

Who knew that would be the vibe?

Maybe if you spent $30,000 on a design consultant you'd have a better idea of the public's perception, he said, but most startups aren't hiring design consultants.

"We were perceived as an upper scale restaurant as opposed to a casual bar," he said.

So he said the business went with the flow.

Khalil, who had been a high school teacher for 15 years in Farmington Hills, said entrepreneurs need to be humble enough to realize that they really don't know how a business is going to evolve and be perceived by the public.

Often, you must give into what he calls the "humbling realities" of a situation.

Feel free to express real joy No doubt, no one starts a business without believing that they've got an idea that can make money. But it's not enough to be only focused on the cash.

Take Lisa Ludwinski, the winner of the 2014 Hatch Detroit competition and founder and owner of Sister Pie. She has some passion for the business beyond just one kind of dough.

"When she talks about baking, her face lights up," said Vittoria Katanski, executive director for Hatch Detroit.

She started the business in 2012 and opened her bakery in Detroit's West Village at the corner of Kercheval and Parker in 2015. She has plans to open a new location on Mack in the spring or summer of 2020.

To move along in the Hatch contest, people want to see a real commitment to the neighborhood, too.

Hatch Detroit includes two rounds of public voting that begins in late September and early October -- encouraging "crowd entrepreneurship" so that the community can help decide what new restaurant, retailer or other business would be a welcome addition in their area. (This is not a contest for online-only businesses.)

Don't just bank on a good idea "There have been a lot of great, great ideas. But the winners have more than just an idea. They have an actual business plan that looks like it has a very good chance of opening and staying open," Ritchie said.

Getting a business off the ground involves having a good concept, willing investors or financing and strong management.

"In a lot of cases, there's a lot more capital than just the prize money that's needed," he said.

Ritchie said applicants don't want to rush. It's best to take as much time as possible to put in a solid, well-thought-out application that is read over by friends or others in business.

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