Small businesses generate jobs, even in recession

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There’s no better time to start a business than during a recession, according to Abdirahman Ahmed.

As the owner of Safari Restaurant and Banquet Center in Minneapolis prepares to celebrate his business’ first anniversary, he has no trouble listing the reasons why he started the high-risk venture when the economy was at its worst.

“Usually there are a number of barriers to starting a business,” Ahmed said. “During a recession, those barriers are lower for small businesses. I’d been looking for the last five years to get into business and this was just the right time.”

Ahmed’s business, a full-scale restaurant with a banquet hall big enough for 700 people and an event management company, has put 30 people to work in the last year in varying capacities. (A spin-off, Safari Express to Go, is located in Midtown Global Market.)

He believes, as do many, that small businesses such as his that started during the recession will be the job generators of the future.

Nearly 47 percent of Twin Cities workers were employed at companies that have fewer than 100 workers, according to 2010 figures from the Minnesota Department of Employment and Economic Development.

If you go by the Small Business Administration’s definition of “small business” — companies that employ fewer than 500 workers — then almost 77 percent of Twin Cities workers were employed by small businesses.

Job incubators

New start-ups and small businesses have the potential to contribute significantly to the economy and employment in Minneapolis and St. Paul, said Mike LaFave, Vice President and Chief Operating Officer of the Neighborhood Development Center, a nonprofit that offers business training, financing and development services to entrepreneurs in low-income and underemployed neighborhoods.

The group has helped more than 500 businesses start up since 1993 and manages both the Mercado Central in St. Paul and the Midtown Global Market in Minneapolis.

“Many of our clients are immigrants or refugees, often with limited resources and training,” LaFave said. “But given the right tools, they have a real desire to succeed and create jobs and help their neighborhoods.”

Ann Yin and her husband, Yulin, had wanted to start their own business for years before they finally took the plunge in 2008, just as the housing market was deteriorating and the recession coming on.

“I was so invested in my research and focused on what we were doing, we didn’t really think about the economy collapsing as necessarily a bad thing,” she said. “If you’re going to start your own business, I think there’s really no right or wrong time to do it. You just have to do what it takes to make it work.”

The two started Local D’Lish on the north loop of Minneapolis, bringing fresh, local produce out of the farmer’s market and into a retail location. The Yins employ three part-time staff, but Ann Yin measures their impact on the economy by noting that 95 cents of every dollar spent in her store stays in the area to support local businesses.

Hurdles and goals

Yin’s business has had its ups and downs. Recently they and their customers have had to deal with wildly fluctuating food prices and unemployment in the neighborhood that has affected their clientele.

Both the Yins and Ahmed have received help from the Neighborhood Development Center, and both are continuing to plan for future growth

Ahmed said he’s negotiating to open Safari restaurants in two new locations, and is working on a plan to maximize the utility of his main location by adding a senior adult daycare center that would hire more people, this time trained health care professionals.

“Monday through Thursday, the hall is empty, so what can we do with it during the week?” he said.

Yin said sales are up 25 percent over the first quarter of last year and they’re planning to expand with a delicatessen, their own product line and a second location.

“We started on a shoestring budget,” she said. “I just paid myself a paycheck for the first time a couple weeks ago. But now we’re getting more aggressive in our plans and goals for the future.”

An April survey of NDC clients by the Wilder Foundation shows that 74 percent of surveyed clients want to hire new employees, in addition to the 688 they already employ.. If the owners meet their goals, they would hire an additional 1,800 workers.

The media wage for those employees is $11.42 an hour, up from $9 an hour in the last survey.

But, they need capital to do so — a total of $26 million. That’s usually the largest hurdle for small business owners, LaFave said.

Ahmed said lining up financing has been the biggest challenge to his plans.

“There is so much we can do, but if you can’t get the loans, it’s difficult to get started,” he said.

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